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Audio Rewind: Where Does Royalty Money Go When Artists Die?

Audio Rewind: Where Does Royalty Money Go When Artists Die?

Royalties, the payments made in exchange for use of another party’s property, are a fickle, complicated beast. And as the world continues to adjust to an online economy, they become more and more fickle and complicated. The model made sense before the Internet, when physical copies were the primary medium for music and other kinds of entertainment, but, in the streaming age, they provide artists a mere pittance. And it’s not like these artists are spending less time on their art than those that went before them. The art is not cheaper, but the market has cheapened it nonetheless.

Some of the artists from that bygone era of royalty benevolence, though, are still making gratuitous amounts of money—even the dead ones. Forbes monitors these types of things, and, at this time 15 years back, the business magazine began what has become an annual examination of the most lucrative dead celebrities. That year Elvis Presley led the pack with $35 million in earnings (in 2001 alone), and he was followed by Charles Schulz ($20 million+), and John Lennon ($20 million). But, if someone is dead, where does that money go? And if royalties are partial to physical commodities, how are they still making so much money in this digital age? These are the questions we’re exploring in this week’s edition of Audio Rewind.

In one of the later editions of this study (2006), Forbes delineates a rubric for qualification for their hallowing (and harrowing) list. To be eligible, the fallen star needed to net at least $7 million in the latest calendar year, and, in their analysis, Forbes differentiates between two primary methods of income: solitary events like estate sales and iconic images that are simply long-lasting. That year, Elvis, whose lasting appeal has kept him at or near the top of the list every single year, had both. Entertainment tycoon Robert Sillerman’ paid $100 million that year for an 85% share of Presley’’s estate, adding to the King’s enduring image and his already sumptuous fortune.

OK, sales like this make sense, but how are people profiting from ‘lasting appeal’? Well, often times, after people of Elvis’s stature die, their legacies are used to spawn (or maintain) massive merchandising empires; in other words, people still living capitalize on their brand power to rake in tons of dough. The name, and the memory of the person who had it, are the commodities and even death can’t kill their market potential. $15 million of Elvis’s earnings in 2001, for instance, were from ticketing sales at the Graceland property alone. The one-time residence has become a veritable pilgrimage for those that want to feel as close as they can to Elvis and all that his memory entails.

But who’s getting all that money? Well, heirs are, for starters. Elvis’s daughter Lisa Marie Presley has a 15% stake in his assets. Courtney Love is another example, and in 2006 she sold a 25% share of Kurt Cobain‘s song catalog for $50 million.

It pays (quite literally) to be part of these people’s estates. Michael Jackson, who has become the titan of Forbes’ lists since his passing in 2009, accrued an ungodly $825 million in 2016, mostly from the sale of his half share of the Beatles’ song catalog (the whole of which Jackson purchased for $47.5 million in 1985—it sold for $750 million). But enter into consideration the rights of writers, publishers, labels, and other ancillary contributors and things get muddled quickly. (Look most recently at Prince and his purported heir). The mess that is asset acquisition and transfer of estate and intellectual copyright is so convoluted that it’s not worth going into; suffice to say that copyright lawyers will always have jobs.

So, in short, the estates and the legacies of pre-Internet stars are where the big money’s at, and that’s what Forbes’ lists are largely reliant on, but royalties were once also a hefty supplement to any artist’s income—and not just the megastars. And how do those work? Well, it’s also overly complicated. Sold recordings are based on a statutory rate set by the US Congress that’s adjusted for flux in the economy. Currently, that’s $.08 for songs less than five minutes long and $.0155 for song more than five minutes long. But these rates can be negotiated (and they almost always are), and when it comes to other forms of consumption—like music streaming, and even online downloads—companies generally pay out a fraction of the royalties, and artists agree to these terms because the market forces them to do so. It has become the norm.

This understanding has rendered sites like Spotify and (especially) Youtube as contentious platforms that compensate artists insufficiently. Gone are the days when artists could rely on royalties as a living wage. Aloe Blacc, a relatively successful and well-known singer/songwriter, for example, was paid just $4,000 for 168 million Spotify plays. Is his art cheaper than Elvis’s, or any less meaningful to his fans? Or has the accessibility of the Internet simply created a market that makes it feel cheaper. Questions to ponder.

En masse, these are simply a handful of vignettes that allude to the overcomplicated royalty system, its failure to adapt to changing times, and the necessity to do something to change it (and this is all without mentioning the intransigence of the outmoded recording industry). For a culture that values art so much (Spotify has more than 100 million active users), we can assuredly do more to support it. Perhaps we should encourage the intact and self-sustaining estates of our posthumous heroes to pay it forward and prop up some of our under-compensated artists. It’s an idealistic thought, but why not? Surely Graceland’s upkeep shouldn’t trump the bourgeoning art of so many of our generation’s artists.

After all, we’re already witnessing a desire for authenticity in a music industry that’s moving further and further away from it. The resurgence of vinyl. A newfound love for reel-to-reel recording. When it comes to music, we want it to be true. We want to love it for the right reasons. And the industry propelling it should foster a model that better supports that truth.

Image: AVON/MGM

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