Why did Sony buy Queen's entire back catalogue for $US1.7 billion?

Queen is much more than just music

It’s an interesting question to ask which of the Top 10 music today will be relevant in five, 10 or even 30 years. But an even better question would be: who will this music be relevant to?

As this back-of-the-envelope study found, fewer than ten of the current 60+ artists on the charts at any single point will still be famous in a decade. Those aren’t good odds if you are an aspiring guitar player looking to be the next famous rock star. Add another ten years into the window for staying famous and almost no music band makes it over the event horizon.

It’s always been this way. Becoming famous is a bit like throwing an apple seed through the eye of a needle from three basketball courts away. There are thousands of artists competing for only a handful of “fame” positions in the public consciousness. Their work has a very small chance of being picked up by a record label or corporation and thrust into the limelight. Even if it is, the chance of their music becoming popular isn’t always guaranteed either – despite millions invested in advertising by the record company. If – and it’s a big ‘if’ – an artist does get famous, it’s unlikely that they will get repeat success across multiple years. Life is tough for artists.

But when it pays off, it can pay off in huge ways.

For example, Sony is in the process of finalising a negotiation to acquire the rights to the music band Queen’s entire catalogue for $US1.27 billion. Sony joined the negotiation about buying Queen’s intangible assets in February and a deal was finally struck when a rival mystery bidder reportedly stopped at $US900 million.

Sony is expected to buy everything associated with Queen, except for the revenue it generates in the future from live performances since two of the founding members, Brian May and Roger Taylor, are still touring the world along with their new lead singer, Adam Lambert. Everything Queen has ever built will now belong to Sony, including its master recordings, publishing rights, name, image and likeness rights.

However, the deal has some complicated layers. Disney presently owns Queen’s recorded music rights in both the US and Canada and has been paying royalties directly to Brian May and Roger Taylor. Because of the new deal, those payments will now be redirected to Sony instead. Universal also has a distribution agreement with Queen which extends through to the end of 2027, after which distribution rights outside the US and Canada will revert to Sony.

For the band, this is a fairytale ending. The ageing rockers likely never imagined they’d see such success when jamming in the studio back in the 1970s. Queen is now one of those lucky bands whose music has survived the test of time and escaped the gravity of fickle fame to boost into the (metaphorical) stars forever.

I want it all

Perhaps some people at Sony genuinely appreciate Queen’s music. But if Sony simply cared about the songs, it could have just bought the catalogue. Instead, the record label insisted on buying the full set of intangible assets – especially the brand and image rights. Why?

The reason is that the real worth of Queen is not (just) its music, but what that music represents to the LGBTQ demographic. There is a lot of money to be made by attaching Queen’s brand to products targeted to this market, and now Sony has full rights to do so.

In case you’ve been living under a rock for the last 20 years, the LGBTQ community has pretty much adopted Queen as its unofficial symbolic anthem. Freddie Mercury himself was a homosexual, which did a lot to reinforce the connection between the band and this community. Queen wasn’t marketed as a “gay band” by its original record label EMI. But over time, the LGBTQ community found much affinity with the band’s songs and the association has stuck.

This connection is nothing to be sniffed at. According to the US National LGBT Chamber of Commerce (NGLCC), there are an estimated 1.4 million LGBTQ business owners in the US. These businesses contribute $US1.7 trillion to the US economy annually, while the community as a whole spends more than $US917 billion every year on goods and services.

Considering the total population of LGBTQ people in the US hovers near 7% on any given year, and the size of the US economy is $US28.7 trillion, that means this tiny chunk of the American population is responsible for 11% of the US economy. If one music band can connect with 11% of the economy, that would be a pretty good investment by Sony.

When music becomes a brand

Does a deal like this mean that the intangible assets of other bands aren’t as valuable as Queen’s? The unfortunate answer is yes. Some music really is worth more – from a commercial point of view.

The commercial overlay is important because it’s hard to put a price tag on a subjective art. Only when a band transcends its art and becomes a brand, when it turns into a symbol, can its value can be quantified by corporations. The key to the value of any band is asking: who will its music be relevant to?

In other words, there is a $US1.7 billion difference between saying “This music is popular” and “This music is popular among LGBTQ people.” The first sentence is vague (popular to whom?) while the second sentence is specific, and specific means money.

LGBTQ is a definable demographic that can be tracked with data, connected to trends, introduced to new trends and all the rest of the thousands of metrics in marketing. A definable demographic is valuable because it can be shown to exist on paper (and on the shelves). When a corporation has a clear way to get its goods or services in front of such a demographic, it will spend a decent amount of money to secure that advantage. Sony judged such an opportunity to be worth about $US1.7 billion.

Queen – like Michael Jackson or David Bowie in years before – transcended the music and became a brand to a specific demographic, which turned their music into an intangible asset.

For the bunch of 16-year-olds jamming in their garage, starting on the long road to success, it may be too “adult” for them to sit down and think about which demographic they should write music for. But they would be wise to learn from the example of Queen that businesses may be happy to buy their catalogue years after its peak fame, potentially for billions of dollars, so long as it has a brand that can be monetised.

After all, most popular music is already heavily formulaic, and a decent amount isn’t even written by the artists who perform the songs on stage. So, if an artist manages to get famous knowing that their star will burn brightly for a fleeting moment, why not play the long game by writing songs for a specific demographic? You never know, it might attract a billion-dollar investment in 10 years.

We’ve heard of worse career advice for struggling artists.