Opens in a new tab

Tax savings likely are part of why popular musicians are selling their catalogs

February 5, 2022

The continuing Joe Rogan Spotify podcast controversy also has refocused attention on the streamer’s relationship with musicians.

Supporters of Spotify and other mainly music subscription services — Apple Music, Tidal, and Amazon, to name a few — say streaming rescued the music industry by providing it with regular monthly revenue.

Opponents of the services say industry is the key word. The big winners, they point out, are the streamers and large record companies, while the artists who make the music aren’t benefiting unless they are at the superstar level. Think Taylor Swift, Beyoncé, Ed Sheeran, Drake.

That disparity of payments to musicians came up in India Arie’s announcements that she is pulling her music from the streamer:

Supportive, but unable to act: Arie’s actions came after Neil Young amplified his Rogan/Spotify concerns on social media, and got his music removed from the service. Others have expressed support of the protest, but they can’t pull their songs because they don’t own them.

Young’s former bandmate David Crosby, with whom he famously clashed on musical issues over the years, totally agrees with Young’s boycott, but Crosby sold his recorded music and publishing rights in 2020 to Irving Azoff’s Iconic Artists Group. He has no control over where and how his songs now are played.

Crosby also cited streaming as a reason for the sale of his music catalog. Following word that Bob Dylan sold his entire musical catalog to Universal, Crosby said on Twitter, “I am selling mine also …I can’t work …and streaming stole my record money …I have a family and a mortgage and I have to take care of them so it’s my only option ..I’m sure the others feel the same.”

While we can’t say precisely why they sold, Crosby is right about there being others. Most recently, Bruce Springsteen sold his catalog of work to Sony Music Entertainment for an estimated $550 million. Other artists who recently decided to cash in include Stevie Nicks, Paul Simon, Tina Turner, John Legend, Travis Tritt, and David Bowie’s estate.

“The biggest reason for me selling was not to leave a huge headache for my family that would have to try to administrate a catalog. I’d rather leave them cash,” said Tritt.

Tax-saving musical move: Getting cash, or more specifically keeping cash out of the Internal Revenue Service’s hands (you knew I’d eventually get to taxes!) also is a likely reason for the rash of recent music catalog sales.

When performers and composers get royalty payments, usually a lump sum once a year, that money is taxed as ordinary income. For high-earning stars, that’s at a top 37 percent individual income tax rate.

But by selling their catalogs, a capital asset, they face a one-time capital gains tax on the profits. That’s a maximum 20 percent long-term capital gains tax rate. Of course, depending on the personal and business structure of a successful artist or songwriter, their tax rate could be higher. But any amount of income taxed at a lower rate is welcome by anyone.

And while a Biden Administration proposal to make capital gains taxes less beneficial has stalled, some musicians apparently aren’t taking any chances.

That tax consideration is part of Washington Post reporter Travis M. Andrews’ recent look at why artists are suddenly selling their catalogues. It’s also this weekend’s Saturday Shout Out feature.

Andrews’ mention of taxes is toward the end of the story (I would have led with that), where he cites the 2006 tax law change that lets musicians to treat catalogue sales as capital gains rather than ordinary income. But if you’re a music fan like me, the whole story is worth the read.

And yes, I did blog about this back then in, shameless shoutout to myself, Money for nothing and more tax breaks for me.

Now, I’m off to turn on some tunes, which geezing I still get by buying CDs or purchasing individual song downloads for my iPod Nano, to while away the rest of my Saturday.

You also might find these items of interest:

Advertisements



Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
confused office worker
8 workplace benefits questions to ask this enrollment season

October 26, 2026

Millions of U.S. workers are now deciding what workplace benefits, some of which also offer…

Read More
TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment