The Broken Economics of the Music Industry

The biggest lie in the music industry is that your catalogue is your retirement plan.

Artists hear it constantly: hold onto your masters, build your catalogue, and one day you’ll cash out for generational wealth. It’s the gospel preached by managers, lawyers, and business advisors across the industry. Retaining ownership is good advice - but it’s dangerously incomplete.

The truth is that even for artists who do everything right—own their catalogues and achieve commercial success—the economic infrastructure of the music industry caps their upside in ways that would be unthinkable in any other sector. A catalogue sale isn’t a liquidity event like a tech IPO. It’s a fire sale to a small club of private equity buyers who set prices based on their own return requirements, not competitive market dynamics. And for most artists, it’s the only exit that exists.

Meanwhile, the catalogue itself represents just one slice of what a successful artist actually builds. The touring operation generates eight or nine figures. The merchandise business. The sync placements. The brand deals. The NIL opportunities. And increasingly, the equity stakes in businesses that trade on an artist’s name and influence: tequila brands, cannabis ventures, fashion lines, restaurant concepts, skincare companies, headphone partnerships. These assets—often worth more than the recorded music—sit in separate silos, unvalued, unleveraged, invisible to the capital markets framework that prices the catalogue alone.

The music industry hasn’t just failed to keep pace with modern finance. It’s operating on economic rails laid before most of today’s artists were born—and almost no one, including the artists themselves, fully understands how much value is being left on the table.

The False Choice

For most of recorded music history, artists have faced a binary when it came to funding their careers: sign to a label or go it alone.

The label deal, in its traditional form, is not an investment—it’s a loan dressed up as one. Artists sign over a majority stake in their future recorded music earnings in exchange for an advance that must be recouped before they see another dollar. The label assumes risk, yes, but also captures nearly all the upside. If the artist succeeds, the label wins disproportionately. If they fail, the artist is left with debt against future earnings they may never make and masters they no longer own.

The independent path offers ownership but denies capital. Artists who choose to stay independent retain their masters and a larger share of revenue, but they forfeit the marketing dollars, distribution leverage, and operational support that labels provide. More critically, they have no mechanism to convert future earnings potential into present-day capital for growth. A tech founder can potentially raise against projected revenue. An independent artist cannot.

In recent years, a third option has emerged: the catalogue sale. Artists can now sell their back catalogues to private equity firms, family offices, and specialized music investment funds. Bruce Springsteen, Bob Dylan, Justin Bieber, Katy Perry—the list of artists who have sold their catalogues for nine-figure sums grows monthly. But this is the music industry’s version of a full exit. It’s cashing out, not raising capital. The artist walks away with liquidity but loses ongoing participation in the asset they spent their career building.

The Weeknd Blueprint

In December 2025, The Weeknd and Lyric Capital Group announced a deal that represented something genuinely new: a partnership valued in the billion-dollar range where the artist retained ownership and creative control.

The structure was deliberately unconventional. Rather than a traditional catalogue sale, Lyric’s investment came as a joint venture. Abel Tesfaye and his team remain shareholders and owners, maintaining creative authority over both masters and publishing. The deal was reportedly structured with senior debt, junior debt, and equity—a financing stack more familiar to corporate M&A than artist transactions.

The Weeknd’s representatives were explicit about what they were trying to achieve. They described constructing “a new business model” and a “first-of-its-kind partnership” that would “change the way an artist thinks about his assets, music and legacy.”

But even this innovative deal illustrates the constraints of the current system. The valuation, reportedly around $1 billion based on approximately $55 million in annual earnings, implies a multiple of roughly 18x. This places it at the very top of the private market range—blue chip legacy catalogue territory—but still within a valuation framework that caps what artists can achieve.

The Multiple Problem

Private market music catalogue valuations typically range from 10x to 18x net publisher share, with only the most iconic assets reaching the higher end. Shot Tower Capital’s 2024 analysis found average multiples of 16-17x for “iconic” transactions over $200 million. Even in competitive bidding situations, the ceiling remains fixed by a small universe of institutional buyers who use similar DCF models and comparable transaction analyses.

Compare this to virtually any other asset class. Public Software as a Service (“SaaS”) companies trade at median multiples of 6-7x revenue in today's "new normal" market—and that's considered a down cycle. During growth phases, top tech companies have commanded 40x, 80x, even 100x revenue. Snowflake traded above 100x at its peak. Zoom hit 50x during the pandemic. Even mature companies like Salesforce sustain 6-10x revenue multiples indefinitely. And crucially, these are multiples on revenue, not earnings—applied to forward-looking projections of where the business is going, not historical averages of where it's been.

The difference is profound. A technology company that demonstrates growth potential gets valued on where it’s going. A music catalogue gets valued on where it’s been. Tech founders raise capital against a vision of the future; artists are priced on a historical audit of the past.

This isn’t just about valuation philosophy—it reflects a complete absence of capital markets infrastructure around artist enterprises. There’s no public market for music assets where price discovery happens continuously. There’s no secondary market where investors can trade positions. There’s no venture ecosystem that invests in artist businesses at early stages based on potential. The private market for catalogues is thin, illiquid, and dominated by a handful of buyers who set prices based on their own return requirements.

The Enterprise Blindspot

The catalogue-centric view of artist valuation misses something fundamental: modern artists are multi-revenue enterprises.

Take The Weeknd as an example. His recent After Hours ’Til Dawn tour crossed the $1 billion threshold, setting a record for a solo male artist. That touring revenue represents a separate business line from his recorded music and publishing—one that generates substantial cash flow but typically isn’t captured in catalogue valuations. Add merchandise, brand partnerships, sync placements, and emerging NIL opportunities, and you have an enterprise that dwarfs the recorded music component alone.

Yet current structures force a fragmented approach. An artist might leverage their catalogue with one partner, their touring with another, their merchandise through a licensee. There’s no mechanism to capitalize the entire enterprise as a unified entity—to raise against the full scope of an artist’s business the way a corporation would.

From a conventional startup perspective, artists are founders who lack the ability to value their enterprises at multiples of forward-looking revenue. They can’t raise a Series A to fund their next album and tour. They can’t bring in strategic investors who take minority stakes while providing capital and expertise. They can’t go public to access permanent capital and broader ownership.

One Artist, One Enterprise

Amazon sells cloud computing, streams movies, operates a logistics network, runs physical grocery stores, manufactures consumer electronics, and provides advertising services. These businesses share almost nothing in common operationally. Yet no one suggests Amazon should be valued as six separate companies. Investors buy shares in Amazon, Inc.—a unified enterprise whose diverse revenue streams combine into a single set of financials, a single valuation, and a single security.

Now consider an artist like The Weeknd. His recorded music generates streaming royalties. His publishing generates a separate royalty stream. His touring operation is essentially a live entertainment company. His merchandise is a consumer products business. His sync placements are a licensing operation. His brand partnerships function like an influencer marketing agency. His NIL deals monetize his personal brand independent of his music. And beyond all of this, many artists of his stature hold equity stakes in ventures that trade entirely on their cultural influence: liquor brands, fashion labels, restaurant groups, beauty lines, tech investments, sports franchises.

Look at what artists have built outside music. Jay-Z’s Armand de Brignac champagne and D’Ussé cognac, sold to LVMH and Bacardi respectively for reported nine-figure sums. Rihanna’s Fenty Beauty, valued in the billions. Travis Scott’s Cacti hard seltzer and McDonald’s collaborations. George Strait’s Codigo tequila. Post Malone’s Maison No. 9 rosé. Dr. Dre’s Beats, sold to Apple for $3 billion—more than any catalogue sale in history. These aren’t side projects. They’re core assets of the artist’s enterprise, built on the same brand equity that drives the music. Yet they exist in completely separate ownership structures, valued independently, with no mechanism to consolidate them into a unified picture of what the artist is actually worth.

These revenue streams are not dissimilar to Amazon’s. Yet they’re valued, financed, and transacted entirely in isolation. The catalogue gets sold to one buyer. The touring might be advanced by a different lender. The merchandise gets licensed to a third party. There is no “Weeknd Enterprises” that consolidates these businesses under one corporate umbrella, reports unified financials, and offers investors exposure to the whole.

This fragmentation isn’t just inefficient—it leaves a ton of value behind. When revenue streams are separated, each gets valued on its own risk profile. Catalogue buyers discount for concentration risk. Touring lenders discount for volatility. Merchandise licensees capture margin that could accrue to the artist. But combined, these streams help diversify each other. Touring promotes the catalogue. The catalogue drives merchandise sales. Brand partnerships amplify everything. The correlation between streams means the unified enterprise is actually less risky than any individual component—yet current structures force artists to sell the parts for less than the whole would command.

Worse, the piecemeal approach means investors often buy into revenue streams that haven’t been through rigorous diligence. A catalogue sale might involve audited royalty statements, but many artist transactions happen with limited financial verification. There’s no standardized disclosure. No SEC-level scrutiny. No ongoing reporting requirements. Investors in artist assets operate in an information environment that public market participants would find unacceptable.

What artists need is the ability to incorporate their full enterprise—every revenue stream, every business line, every brand extension—into a properly structured entity that can be securitized and offered to investors through registered channels. Not a catalogue sale. Not a touring advance. A true equity offering in the artist’s unified business, with audited financials, proper disclosure, and the regulatory framework that gives investors confidence they’re buying what they think they’re buying.

This is how most other industries work. Nike doesn’t sell its footwear division to one investor and its apparel division to another. These companies consolidate, report, and offer securities in the whole enterprise—and investors pay premiums for that structure, that transparency, and that efficiency.

What Capital Markets Could Unlock

First, catalogues could potentially command higher multiples. When assets trade on marketplaces with continuous price discovery and sufficient liquidity, buyers compete more broadly. The ceiling imposed by a handful of private equity return requirements gets replaced by a market that prices assets based on all available information and all interested participants. 

Second, artists could leverage their entire enterprises, not just their catalogues. A proper capital structure could incorporate touring revenue, merchandise, sync income, and brand partnerships into a unified valuation. This isn’t theoretical—it’s how every other operating business raises capital. The sum of the parts exceeds what any individual revenue stream would fetch in isolation.

Third, artists could access capital without full exits. They could sell minority stakes to fund growth, the way founders do in venture rounds. They could tap capital markets for expansion capital while maintaining control, the way companies do through equity offerings. The binary of “keep everything” or “sell everything” would give way to a spectrum of options appropriate to different stages of an artist’s career.

Fourth, valuation could become forward-looking. An artist with demonstrated audience growth, strong streaming trajectory, and a clear pipeline of releases could be priced on potential, not just historical performance. This is standard practice for growth companies in every other sector. There’s no  reason it couldn’t apply to artist enterprises.

The Structural Gap

The music industry didn’t deliberately choose to exclude itself from modern capital markets—it simply evolved alongside different structures that made sense in an earlier era. When labels controlled distribution and artists had no independent path to market, the advance-and-recoup model was the only game in town. When catalogues were illiquid assets that traded hands once a generation, there was no need for secondary markets.

But the industry has changed faster than its economic structures. Streaming has made catalogue revenue more predictable and transparent—exactly the conditions that support public market investing. Distribution has been democratized, allowing artists to build enterprises independent of label infrastructure. Data has proliferated, providing the performance metrics that investors require for due diligence.

The missing piece is infrastructure: properly structured investment vehicles, registered securities that can trade on secondary markets, valuation frameworks that incorporate forward projections, and a depth of market participants beyond the current handful of funds and family offices.

The Weeknd’s deal with Lyric Capital was innovative precisely because it tried to work around these constraints—creating a partnership structure that mimicked some features of equity investment within the existing private market framework. But it remains a bespoke transaction available only to artists with billion-dollar catalogues and sophisticated management teams. It’s proof of concept, not a solution.

What Artists Deserve

Artists deserve access to capital markets the way founders in every other industry have it.

They deserve to raise capital without signing over the majority of their future earnings. They deserve valuations that reflect their full enterprise potential, not just one revenue stream priced on historical averages. They deserve the ability to sell partial stakes when they need liquidity rather than choosing between keeping everything and selling everything. They deserve forward-looking multiples that recognize growth potential, not just backward-looking multiples that discount anything uncertain.

The technology exists. The data exists. The investor appetite exists—private equity has poured billions into music assets precisely because they’ve proven to be stable, predictable, and uncorrelated with traditional markets. What’s missing is the structure: the registered infrastructure, the secondary markets, the valuation frameworks, and the ecosystem that every other industry takes for granted.

Music has been left in the past not because it’s fundamentally different from other industries, but because no one has built the capital markets infrastructure to bring it forward. Until someone does, artists will remain founders without the tools that founders everywhere else use to build, grow, and retain ownership of what they create.

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Sources

The Weeknd/Lyric Capital Deal: Variety, “The Weeknd Closes Catalog Partnership With Lyric Capital Said to Be in $1 Billion Range,” December 2025; Billboard, “The Weeknd’s Catalog Partnership Deal Is One of the Biggest Ever,” December 2025; Music Business Worldwide, December 2025.

Music Catalogue Valuation Multiples: Shot Tower Capital, “Year in Review and Music Industry Outlook,” 2024; Billboard, “Music Catalog Market to Stay Attractive Despite Slowing Industry Growth,” April 2025; Royalty Exchange, “Music Multiple Mania: What Buyers Are Really Paying for Music Catalogs,” 2024.

SaaS Valuation Multiples: SaaS Capital, “2025 Private SaaS Company Valuations,” January 2025; Aventis Advisors, “SaaS Valuation Multiples: 2015-2025,” October 2025.

Jay-Z/LVMH Armand de Brignac: CNBC, “LVMH buys 50% stake in Jay-Z’s champagne brand Armand de Brignac,” February 2021; Forbes estimate of $630 million valuation, March 2021.

Jay-Z/Bacardi D’Ussé: Bloomberg, February 2023; Brewbound, “Shawn ‘Jay-Z’ Carter, Bacardi Settle Multibillion-Dollar Battle Over D’ussé Cognac Venture,” February 2023. D’Ussé valued at $3 billion per court documents; Jay-Z reportedly received approximately $750 million for majority of his stake.

Rihanna/Fenty Beauty: Forbes, 2021; Business of Fashion, “Rihanna Is Now Worth $1.7 Billion, Thanks to Fenty Beauty and Savage Lines,” 2021. Fenty Beauty valued at $2.8 billion; Rihanna owns 50% through joint venture with LVMH.

Dr. Dre/Apple Beats Acquisition: Apple Newsroom, “Apple to Acquire Beats Music & Beats Electronics,” May 28, 2014; NPR, “Apple Buys Dr. Dre’s Beats Electronics For $3 Billion,” May 2014.

The Weeknd After Hours ’Til Dawn Tour: Billboard, tour crossed $1 billion mark in November 2025, setting record for solo male artist.

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