Musical Works and Compositions: IP Valuation Guide

Music Catalogues: The Asset Class That Attracted Wall Street

Musical works and compositions have emerged as one of the most actively traded categories of intangible asset in the past decade. The rise of streaming has transformed music catalogues from declining assets into predictable, long-duration income streams — attracting institutional investors, pension funds, and specialist acquisition vehicles like Hipgnosis Songs Fund, Round Hill Music, and Primary Wave.

Under IFRS 3, musical works are classified as artistic-related intangible assets. They encompass both the underlying composition (the musical work — melody, harmony, lyrics) and the sound recording (the specific recorded performance). These are distinct copyrights with different owners, different income streams, and different valuations.

$4B+ Bob Dylan catalogue sale (2022, Universal Music)

15-30x NPS multiple for premium catalogues

$28.6B global recorded music revenue (2023)

The Two Music Copyrights

Understanding the dual copyright structure is essential for valuation:

Element	Musical Composition	Sound Recording
What it covers	Melody, harmony, lyrics	The specific recorded performance
Typical owner	Songwriter / music publisher	Record label / performing artist
Income streams	Performance royalties, mechanical royalties, sync licences	Streaming revenue, physical sales, sync licences
Collection	Via PROs (PRS, ASCAP, BMI) and publishers	Via labels and distributors
Duration	Life + 70 years	70 years from release (UK/EU)
Typical multiple	12-20x NPS	8-15x NPS

A complete music asset — what an artist like Bob Dylan or Bruce Springsteen sells — typically includes both copyrights, maximising the revenue capture and commanding premium valuations.

★ Key Takeaway

Music valuation requires understanding which rights are being acquired. A publishing catalogue (compositions) generates different revenue streams at different multiples than a master catalogue (recordings). The most valuable transactions combine both rights sets in a single portfolio.

Valuation Approaches

Net Publisher Share (NPS) Multiple

The music industry's standard valuation metric is the NPS multiple — the ratio of the acquisition price to the annual net publisher share (royalty income net of collection costs and administration fees). This market approach provides the most direct evidence of value because of the high volume of comparable transactions.

Current market multiples (as of 2025-2026):

Catalogue Profile	NPS Multiple Range
Iconic catalogues (household names, evergreen hits)	25-35x
Established hit catalogues (consistent chart history)	18-25x
Solid mid-tier catalogues (reliable income, modest hits)	12-18x
Emerging or niche catalogues	8-12x

Income Approach

The income approach projects future royalty cash flows and discounts them to present value. Key inputs include:

Historical royalty income — typically averaged over 3-5 years to smooth annual volatility
Growth assumptions — streaming revenue growth, sync licensing trends, emerging markets
Catalogue decay — the rate at which older songs lose relevance and streaming volumes decline
Discount rate — typically 8-12% for established catalogues, reflecting low correlation with broader markets

Analyse historical royalty streams

Disaggregate income by source: streaming, performance, mechanical, sync, print, and other. Each stream has different growth dynamics and risk profiles.

Project forward with streaming-adjusted growth

Streaming penetration continues to grow globally. Emerging markets (Latin America, Africa, Southeast Asia) represent significant upside for catalogues with international appeal.

Apply catalogue-specific decay rates

Evergreen catalogues (The Beatles, ABBA) show minimal decay. Contemporary catalogues show faster initial decay but may stabilise as songs become established.

Discount at an asset-appropriate rate

Music royalties have low cyclical correlation — people listen to music in recessions. This supports lower discount rates than many other asset classes.

The Streaming Revolution and Catalogue Value

Streaming has fundamentally transformed music catalogue economics. Under the physical and download model, a song generated most of its revenue in the first 2-3 years after release, then declined sharply. Under streaming, older songs generate perpetual micro-payments every time they are played — creating long-tail revenue that can persist for decades.

This shift has made catalogues more valuable because:

Revenue is more predictable — streaming income is smoother than hit-dependent physical sales
Revenue is more durable — songs on playlists generate consistent income indefinitely
Revenue is growing — global streaming subscribers continue to increase, lifting catalogue income
Revenue is diversifying — geographic diversification through global platforms reduces concentration risk

✔ Example

A mid-tier songwriter's catalogue of 150 compositions generates £600,000 in annual NPS, split across streaming (55%), performance royalties (25%), sync licences (15%), and mechanical royalties (5%). At an 18x NPS multiple, the catalogue is valued at approximately £10.8 million. The income approach — projecting 5% annual growth for 5 years, then 2% terminal growth at a 9% discount rate — produces a consistent valuation of approximately £10.5 million.

Sync Licensing: The Premium Revenue Stream

Synchronisation licences — the right to use music in films, television, advertising, video games, and online content — represent a small proportion of total revenue but a high-margin, high-value stream. A single sync placement in a major advertising campaign can generate £50,000-500,000 for a single use.

Sync potential is highly specific to individual songs:

Emotional resonance and recognition matter more than chart position
Songs used in iconic sync placements gain long-term streaming upside (the "Stranger Things" effect)
Catalogues with sync-friendly music command premium multiples

The AI Licensing Dimension

AI music generation companies and platforms are beginning to negotiate licences for training data derived from existing musical works. While this market is nascent and legally contested, it represents a potential new revenue stream for catalogue owners. Major publishers and labels are positioning to monetise this emerging opportunity — a development that may further support catalogue valuations in coming years.

Useful Life and Amortisation

Musical works have extremely long legal lives (70+ years), and iconic catalogues demonstrate enduring economic value across generations. The useful life assessment depends on the catalogue profile:

Iconic/evergreen catalogues: Indefinite useful life may be supportable, with annual impairment testing
Established hit catalogues: 20-30 years of meaningful economic contribution
Contemporary catalogues: 10-20 years, reflecting higher uncertainty about long-term relevance
Niche or regional catalogues: 5-10 years

⚠ Warning

The music industry is entering a period of structural uncertainty with AI-generated music, changing platform economics, and regulatory scrutiny of streaming royalty rates. While the long-term trend is positive, valuation assumptions should be stress-tested against downside scenarios including rate compression and market saturation.

Musical works are one of five artistic-related intangible assets under IFRS 3. For the full taxonomy, see 35 types of intangible assets. To understand the income approach to valuation, read our guide to intangible asset valuation methods.

Tony Hillier is an Advisor at Opagio with over 30 years of experience in structured finance, M&A advisory, and intangible asset valuation. Meet the team.

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Tony Hillier — Chairman, Co-Founder

MA, Balliol College, University of Oxford | Harvard Business School MBA with Distinction

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