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Are there any general accounting rules on what value song copyrights can be claimed as an asset on a balance sheet?
I would imagine it would be based on how much income has been generated in the past. Maybe 4-5x gross over the last 5 years? Just guessing here.
That’s a very good, but tricky question. If you’re hoping to convince a banker to lend you money with your copyrights as some sort of equity, you’re going to have a hard time.
I would imagine it would be based on how much income has been generated in the past. Maybe 4-5x gross over the last 5 years? Just guessing here.
There are companies that do business evaluations. However, it would be very hard to place a value on production music because much of it has a self life and may go through a bell curve sort of earning cycle.
On the other hand, song catalogs of well-known artist’s pop tunes, even lesser artists, can have great value. I know of one catalog from an artist who had some success in the 50’s and 60’s that sold for seven figures.
FWIW this is just for a home mortgage refi and my main income comes from outside the music business.
Let us know if the underwriters accept your copyrights as an asset.
Best of luck!
There are companies that do business evaluations. However, it would be very hard to place a value on production music because much of it has a self life and may go through a bell curve sort of earning cycle.
Ah, really good point Michael.
Music has value. IMO, it’s got a pretty long shelf life. Certainly more than 5 years. I’ve got music making me money from films and shows I did over 20 years ago. Those things hit syndication or end up playing foreign forever….. Then again, I don’t tend to write trendy EDM that’s passe in 6 months – I balance things out over music that (I hope anyway) stands the test of time.
So – to the OPs question – I think a valuation has merit – I just don’t think my banker will value it as much as it will actually earn…..
John – let us know how it works out for you. I’m intestred.
LAw
Music has value. IMO, it’s got a pretty long shelf life. Certainly more than 5 years. I’ve got music making me money from films and shows I did over 20 years ago.
Yes, it does. I have music that’s been in syndication for 16 years that is still making money, although a lot less now thanit used to. A few library tracks from back then still make a few dollars now and then. My CD’s from the mid 90’s still make a few dollars through streaming and downloads.
Unfortunately, not every show will go into syndication nor will every piece of music stand the test of time.
But, you hit the nail on the head here:
So – to the OPs question – I think a valuation has merit – I just don’t think my banker will value it as much as it will actually earn…..
Bankers and bean counters are very conservative when it comes to valuation or counting royalties as income. I handed a banker ten years worth of consistent royalty statments and was told they couldn’t use much of it. They wanted a ‘pay stub.”
Just ran across this today and while they refer to hit artists it still would follow valuing library music.
Royalties: The Alternative Assets of the Music Industry
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