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Valuation of Music Catalogs

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  • Sasha Stoikov
  • Ivan Kosyuk

Abstract

We propose a risk neutral approach to forecast the cashflows of music catalogs, based on historical revenue data. We use a discounted cashflows formula to produce reasonable ranges of multipliers for these assets, based on the age of the catalog, the last-twelve-months revenue and the duration of the contract. We compare the multipliers implied by the cashflows of top, median and bottom performing songs on the Royalty Exchange platform. We find that ask prices are close to the multipliers justified by median song cashflows. The best bids are near the multipliers justified by the bottom decile of song cashflows.

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  • Sasha Stoikov & Ivan Kosyuk, 2022. "Valuation of Music Catalogs," Papers 2209.09719, arXiv.org.
    • Handle: RePEc:arx:papers:2209.09719
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    References listed on IDEAS

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    1. Kristelia García & James Hicks & Justin McCrary, 2020. "Copyright and Economic Viability: Evidence from the Music Industry," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 17(4), pages 696-721, December.
    2. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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