Kanye West has been quietly and intermittently shopping his publishing catalog — an asset that generates about $5 million a year for the hip-hop star, sources tell Billboard. Over the past 10 months, representatives for West have met selectively with prospective buyers to explore what kind of valuation his song catalog could fetch, these sources say.
While no price tag has been put on the catalog as far as Billboard’s reporting could determine, it is understood among those who’ve been queried about the catalog that the superstar is seeking an eye-popping valuation: as much as 35 times net publisher’s share, or gross profit. To entice buyers to pay that much — a multiple beyond the upper end of current catalog valuation pricing — sources say that the buyer would also get the opportunity to sign a go-forward publishing deal with the multi-platinum artist.
Billboard estimates that the songs in West’s catalog generates upwards of $13.25 million in publishing royalties annually. But because songs from his later albums can have anywhere from 10 to 24 songwriters credited for each song (including songwriters on the sampled songs), it’s difficult to come up with an exact valuation for his share of the publishing payday. Looking at the catalog piecemeal, Billboard estimates that West has a 35% share of the songwriting on his first four albums, while on the later albums, it appears he has a 20% share of the writing. Sources say West’s share comes to $5 million annually.
At $5 million in annual income, a 35 times multiple suggests a $175 million valuation. While most superstar songwriters nowadays often seek a 30-times multiple, that’s rarely, if ever, been reached with even the highest-profile deals. The Bob Dylan publishing catalog, for example, is said to have gone to UMG for a 28 to 29 times multiple. Last year, sources told Billboard that some members in the Billy Joel camp were also testing the market to see what kind of valuation his catalog would fetch; it was unclear if Joel himself was on board with the play to test the waters. The Joel camp started out with even higher hopes before coming down to seeking a 35 times valuation. But potential suitors found that multiple too rich for their appetite, and no deal progressed to the point at which due diligence was performed, sources indicated.
West’s catalog presents several challenges for potential buyers. For one, his catalog hasn’t matured yet and a number of his songs are still enjoying hit status, which means the amount of revenue these hits generate annually is likely to “decay” over the near future and it’s still unclear at what level of activity each will stabilize. That makes it difficult for investors to predict their returns. Of course that won’t prevent them from trying: Justin Timberlake, another artist with a number of hits that are likely still in the decaying stage, was able to sell his song catalog to Hipgnosis Songs Capital for at most a 28-times gross profit, Billboard estimated at the time.
Another problem: the songwriter splits on some hit songs in West’s catalog are still in dispute. That may make prospective buyers hesitate, since they don’t know exactly what share of these songs West will wind up with after these disputes are resolved.
Finally, West’s unpredictable personality adds a further element of risk, potential suitors say, to what they already view as an expensive deal. Yet, West’s hit power is undeniable with 69 Top 40 hits, of which 20 songs reached the Top 10 and four of the latter topped the Hot 100. His catalog has accumulated 34 million units worth of album consumption activity, while ten of his albums have hit the No. 1 spot on The Billboard 200. On a going forward basis, he doesn’t show any sign of letting up on his hit-making activity.
According to sources, efforts to test the market for his catalog, which is currently administered by Sony Music Publishing, have slowed down in recent months. To some music asset buyers, that indicates that the West camp may have landed a bidder willing to meet the songwriter’s pricing expectations and the two parties are in the process of putting together a deal. Or more likely, the efforts to shop the catalog failed to generate the pricing expectations of the West camp and so the West music assets have been withdrawn from the auction block. Still other sources say that the West catalog was never actively shopped, but like all hit songwriters, West has received offers from private equity and other music asset buyers.
Billboard reached out to the West management camp and to Sony Music Publishing, but neither responded to a request for comment.