Catalog Valuation
The process of determining the fair market value of a music catalog based on its revenue and assets.
What it means
Catalog valuation is the financial assessment process used to determine what a music catalog is worth on the open market. This process takes into account historical revenue, projected future earnings, the quality and diversity of the catalog's revenue streams, and broader market conditions. Valuation is critical when selling a catalog, seeking investment or financing, estate planning, or simply understanding the worth of your creative assets. The most common valuation method in the music industry is the revenue multiple approach, where a catalog's average annual net publisher share (NPS) revenue is multiplied by a factor (the "multiple") to arrive at a total valuation. The multiple reflects how many years' worth of current revenue a buyer is willing to pay upfront. For example, a catalog earning $10,000 per year with a 10x multiple would be valued at $100,000. Several factors influence the multiple applied: catalogs with growing revenue command higher multiples, as do catalogs with diversified income sources, clean metadata, and compositions in evergreen genres. Ambient and meditation music catalogs often receive favorable valuations because their revenue tends to be remarkably stable — listener behavior in these genres is habitual rather than trend-driven, meaning revenue is less susceptible to the peaks and valleys seen in pop or hip-hop catalogs.
Technical details
Professional catalog valuations typically analyze 3-5 years of historical revenue data broken down by source (streaming mechanicals, streaming performance, sync, physical, download, etc.), territory, and trend. The valuation model projects future cash flows using a discounted cash flow (DCF) analysis, adjusting for streaming market growth rates (typically 5-10% annually), potential catalog decay rates (1-3% per year for non-evergreen content), and discount rates reflecting the risk profile of the asset (typically 8-15%). The Net Publisher Share (NPS) is used as the baseline — this is revenue after distribution fees, admin fees, and co-writer shares are deducted. Market comparables from recent catalog transactions are used to benchmark multiples. Due diligence includes copyright chain of title verification, metadata audit, identification of unmatched or uncollected royalties, and assessment of contractual encumbrances.
Frequently asked questions
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