Justin Timberlake And Irv Gotti Are Selling Their Masters: Is This An Accelerating Trend?

Justin Timberlake And Irv Gotti Are Selling Their Masters: Is This An Accelerating Trend?


Photo: Irv Gotti on Aug. 19, 2019, in New York. (Photo by Charles Sykes/Invision/AP)

Hip-hop mega-producer and co-founder of Murder Inc. Records Irv Gotti recently announced that he had made a major deal to sell his masters for a whopping $300 million. He’s not the only one selling off their music masters. Pop star Justin Timberlake made a similar deal, as has a rash of artists and producers. So why is there an accelerated trend of superstar artists ready to sell their rights?

A master recording is the original recording of a song. Ownership of a song tends to go to the writer of the song, and not the singer.

“By definition, that makes it the most authentic superior sonic account of the song. Everything else is a copy, and after that, in the digital world, a copy of a copy,” Philadelphia Inquirer music critic Dan DeLuca wrote. Because of the quality of the masters, the recordings can be used in movies, commercials, for example. Those who own the masters make money from royalties, licensing, brand deals, and other revenue streams.    

Gotti has produced multiple number-one records for such artists as Ashanti, Ja Rule, and Jennifer Lopez, as well as his collaborations with Jay-Z, DMX, and Kanye West. He owns the masters for many of his creations, even the ones made with other artists. As a solo artist, Justin Timberlake, a former member of boy band NSYNC, has had nearly 50 hit singles, such as “SexyBack,” “Cry Me A River,” and “Summer Love.”

Timberlake sold his entire music catalog–valued at an estimated $100 million to Hipgnosis Song Management, according to The Wall Street Journal. The deal includes copyrights to approximately 200 songs that Timberlake wrote or co-wrote.

Gotti took to social media to announce his deal.

“I’m signing a deal worth $300 million,” Gotti said on his Instagram page on June 28. “$100 million of the deal is me selling my masters…My masters — and I only own half, I own 50-50 with Universal Music Group — half my masters is worth $100 million. That’s f-cking insane.”

He added, “Not only is the company buying my masters, but they’re giving me like a $200 million line of credit for me to not just produce and create, but now own my television [properties].”

Two upstart companies–Hipgnosis Songs Fund and Primary Wave–have been on a buying spree for masters. Lil Wayne sold his masters for $100 million. Fleetwood Mac, Neil Young, Shakira, the estate of John Lennon, and Dire Straits have all sold their masters. Primary Wave paid $50 million for the publishing rights of some of the late Reggae singer Bob Marley’s songs, Rolling Stone reported.

Besides receiving a flush of money, there are other reasons songwriters are selling off their masters.

There’s a tax benefit, for one. But there won’t be for long, explaining the rush to sell. President Joe Biden’s tax plans will change the U.S. capital gains tax so that it falls in line with income tax for any asset sale over $1 million. This will increase the tax rate on the sale of a major asset from around 20 percent to around 37 percent for high-earners, Rolling Stone reported.

Bob Dylan sold his publishing catalog for $400 million: At the current 20 percent tax rate, he owns the government $80 million but at 37 percent, he’d owe $148 million–a substantial difference.

Age is another reason. Some aging artists, such as 80-year-old Dylan, find it more prudent leave cash to heirs than a music catalog. Lastly, the changing music landscape has also caused a spike in master deals. During the covid-19 pandemic it was difficult, if not impossible, for artists to make money from touring. Selling their masters brought in revenue.

And as Gotti noted, there isn’t as much money to be made by artists in the music business. “More money is made in TV and with movies than in music,” he said.

Musicians are making less on recorded music sales because an increasing amount of royalty payments are based on sales of 99 cent singles, not $15 albums, Future of Music reported. Also, with the arious free ways to hear music, consumers aren’t paying anything at all.

Photo: Irv Gotti attends the premieres of We TV’s “Growing Up Hip Hop: New York” and “Untold Stories of Hip Hop” at The Paley Center on Aug. 19, 2019, in New York. (Photo by Charles Sykes/Invision/AP)