Songs are long term profit producing assets

I read several analysis on music publishing companies and music industry experts about how songs could be a potential good income producing asset. There are variety of views made from both parties, the consumer and the music industry executives. Both have different views, although one seems to be right.

Consumer thinks music is not a good asset and should be made for free. It is why breaking into music business is like climbing a “90 degrees slippery cliff”, and every music entrepreneur is faced with a lot of threats to ownership, things such as piracy, illegal downloading seems to affect music business badly. It is why many people will just go to the internet and download file sharing programs to get those songs. This is tough for the business and that affect sales., But when I say it is like climbing cliffs, it means every entrepreneur will eventually succeed in the long run. File sharing will be overtaken by government powers (protecting constitution and copyright laws) and that will either be mandated to pay licenses or else will be gone. File sharing promotes song performance due to viral nature of the songs, it helps song promotion (the positive side of file sharing).

On the other side ,music industry thinks songs are a good asset. And I agree with this.

The explanation is more technical and involves complicated marketing scenario that cannot be comprehended by average music consumer. First, songs are recognized by government as a property to be owned by someone else, it is why there is such thing as “copyright”.

The person who holds the copyright is the legal owner of the song, just like a “land title” is to a “land owner”. The owner of the song (holder of the copyright) earns the right to publish and earns money from the use of the song, just like vacant lot rentals is to a real estate owner. There is no joke in this business as there are documentations involved too. Again if there is a land title certificate (for real estate brokers), there is also a copyright certificate for music publishers/songwriters.

Songs always increase in value, unlike other markets. This is one of the strengths in this business. If you have just crafted a very good song, then it means a good future for you. Licensing cost seems to increase in value, so as the mechanical licensing rates for recording labels.

When I say long term is that it will take time for songs to really accumulate value. I observed that this is a bit sluggish industry when it comes to processing payments and that one music publisher should be patient. Some of the contracts dictate that you will get paid only if the song gets cut, or for example if the film is released, earns money. One of the common contracts is about mechanical licensing. You can read more about that in this Taxi article: Learning Where The Money Comes From.

It really depends on what type of agreement being entered. But so far as songs are concerned, if you have songs out there being played in radio and getting constant exposure, it will remain for a long time and tend to accumulate more in value.

This also strategy dependent as music publishers who will stop promoting their songs and getting it used anywhere means, sooner or later these long term producing assets will get affected. A hit song has a life, just like other commodity. The good thing with songs, is that it can be re-used to other purposes and only in specific area. This is where marketing strategy in the part of music publisher is highly important. There is no such thing as dead product or worn out product in music publishing. I even remember when I was a kid, the song “Unchained Melody” gets insanely re-popularized due to the movie “Ghost”. The original release of that song is around 1965.

This tells every music publisher and songwriter that songs can be re-born, re-popularize and earns even more profit. This advantage unlike any other commodities is a huge advantage and that also makes that songs as a long term producing assets.

If you are songwriter , consider to become a “publisher”. Laws of copyright says that you have publishing rights when you own the song copyrights. If you own the publishing, music for license you get 100% of the share. You can start by putting up your office, or you can start online like my music publishing, Any things are possible if you can start with a plan and have some determination to work those things out. Success should follow in the long run.

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