Music catalogue multiples: benchmarking the comparables without fooling yourself

Catalogue comparables benchmarking sits at the centre of almost every rights transaction, yet it remains one of the most frequently misapplied tools in the market. A multiple struck on one catalogue gets quoted as though it were a price tag that transfers cleanly to the next. It rarely does. The comparable is a starting point for enquiry, not a substitute for it.

The temptation is understandable. A published multiple offers a single, portable number that can be dropped into a memo, a pitch or a loan covenant without much further work. But every multiple is the output of a specific set of facts: the royalty streams included, the collection efficiency behind them, the rights actually owned, the currency and territory mix, and the assumptions the buyer made about decay and renewal. Strip those facts away and the number becomes noise dressed as precision.

What catalogue comparables actually compare

Before any multiple is useful, it needs to be decomposed. Is the reported figure built on gross receipts or on the net income actually flowing to the rights holder after collection society deductions, administration fees and any third-party shares? Does it include mechanical, performance, synchronisation and neighbouring rights in the same proportion as the catalogue under review, or is it skewed towards one income type that behaves differently through a cycle? Was the underlying data audited or self-reported?

These are not academic distinctions. Two catalogues can show near-identical historic income and still support very different multiples once collection efficiency, rights completeness and income concentration are taken into account. A catalogue reliant on a small number of tracks for the bulk of its income carries a different risk profile to one with broad, evenly distributed earnings, even if the trailing twelve months look similar on paper.

Adjusting before comparing, not after

Genre and vintage matter too. Catalogues weighted towards synchronisation-friendly instrumental works behave differently to those built on chart-era pop with strong touring and merchandising halo effects. A multiple lifted from a heritage catalogue tells a lender little about a contemporary catalogue with a shorter earnings history, however similar the headline income figures appear.

The discipline, then, is to normalise before comparing rather than after. That means restating each comparable on a consistent net income basis, adjusting for rights actually held, and testing whether the income history is long and stable enough to support the multiple implied. Only once that groundwork is done does a set of comparables become genuinely informative rather than merely convenient.

For lenders in particular, the stakes are higher than for a curious observer. A covenant or facility sized against an unadjusted comparable inherits every distortion contained in it, and the distortion does not announce itself until income falls short of expectation. The work of proper benchmarking is unglamorous and takes longer than quoting a headline multiple. That is precisely why it tends to be worth doing.

The market will always have plenty of multiples on offer. Far fewer of them will have been tested for what they actually measure. Value sits in that difference, not in the number itself.