Randall Wixen On Selling Your Publishing

Bob, we have been the back-office administrators for a number of catalog investment vehicles. We've seen first-hand how many of them operate. It's easy to tout how great your marketing department is if you're getting a ton of licenses by giving quotes on your newly purchased assets at a third of what they're worth. (I'm not talking about any company in particular here). And we had one client who sold their songs a year ago to one of the ubiquitous catalog buyers, and only just this month we got a note from BMI informing us of the new income claimant. Writers can expect income to go down if they sell to someone whose administration is done based on the lowest percentage administration cost rather than by finding the highest quality administrator who is going to collect a hell of a lot more money (like us) than the low-cost leader. 90% of a big pie is a lot more than 97.5% of a tiny pie.

Other factors: Are first negotiation rights to buy additional publishing or writer shares involved in these sales? Are there back-end bumps to the purchase price if income goes up over the next few years? And are both of these factors an incentive to the buyer to not collect and/or report the maximum amount of income after they own the catalog?

Read the full prospectus on some of these publishing investment vehicles. Does anyone have matching rights to buy the assets if they bankrupt the company? Do any of the fund leaders get a percentage of what they can spend, catalog investment quality or expected return be damned? How is the track record of the folks who have put these things together, and have they made money for their investors in the past? What are these companies spending on their own salaries, offices, advertising, parties, PR firms, and overhead compared to the rest of the industry?

And what kind of safe return can your heirs get in an alternative investment (to the extent that you yourself don't blow it all before you die)? After you pay 20% in capital gains and (let's just say) 10% to your lawyers and advisors, you're maybe getting ¾ of 1% in a money market fund on a balance that is 70% of the value of the appreciating asset you once had. Is your lawyer or manager driving the sale so he/she has something to charge you a lot of money for that probably wasn't something he/she should have advised you to do in the first place?

And as Diane Warren pointed out in her comment on the Dylan sale, these songs may be special to you or may even have changed the life of someone you don't even know.

I don't know a single person that has sold their catalog that hasn't eventually regretted it. I always try and talk clients out of selling, and when they ignore me I feel more comfortable in making them an offer.

Anyway, I hope these thoughts are useful and interesting to someone. As a person who has built a career out of protecting creators, it just kills me to see people selling their lives' work in this manner.

Best regards.

Randall Wixen

Wixen Music Publishing, Inc.
24025 Park Sorrento #130
Calabasas, CA 91302

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