Master Recording Rights
Definition
Master recording rights (masters) grant ownership of the specific recorded performance of a song—the particular studio recording including all vocals, instrumentation, production elements, and mixing/mastering. Masters generate revenue from: digital streaming (artist/label receives 80-85% of per-stream revenue), permanent downloads, physical sales (CDs, vinyl), master sync licensing for film/TV/ads (equal to or greater than composition sync fees), and sample clearances. Typically owned by record labels who funded recording costs ($50K-$500K+ for major label recordings), though independent artists increasingly retain master ownership by self-funding. Masters are completely separate from composition (publishing) rights—same song has two distinct copyrights controlled by different parties.
Why it matters
Master ownership determines who captures the lion's share of music economics—labels with master ownership receive 80-85% of streaming revenue while composition owners (publishers/songwriters) receive 15-20%. This asymmetry explains why master catalog acquisitions (Round Hill buying Mötley Crüe masters for $150M, Universal buying Bob Dylan masters for $300M+) command higher valuations per dollar of cash flow than publishing catalog acquisitions. Artist master ownership has become central issue in music industry—Taylor Swift re-recording masters to own them, Kanye West demanding master ownership, independent artists using DistroKid/TuneCore retaining 100% master ownership. For investors, understanding master vs publishing split is critical: streaming-heavy catalog needs master ownership for full value capture, sync-heavy catalog can succeed with publishing alone, radio-heavy catalog benefits from owning both (performance royalties flow to publisher, not master owner except digital radio).
Common misconceptions
- •Master ownership doesn't control the song—only the specific recording. Taylor Swift re-recording '1989' creates new masters she owns, but original recordings still exist owned by her former label. Both versions compete in marketplace.
- •Artists signed to labels don't typically own masters—labels fund recording costs and recoup through master ownership. Only after recoupment and contract expiration might masters revert to artist (rare, usually requires negotiation).
- •Owning masters doesn't grant sync licensing rights alone—must also license composition from publisher. Need both clearances. Master-only ownership limits monetization optionality compared to owning both master and publishing.
Technical details
Label vs artist master ownership economics
Traditional label deal: Label funds recording ($100K-$500K for major artist), owns masters, pays artist 15-25% royalty rate on net receipts after recoupment. Example: Song generates $1M streaming revenue. Label receives $850K (master portion), pays artist 20% × $850K = $170K after recouping recording costs and advances. Label keeps $680K. Songwriter/publisher receives $150K composition portion separately.
Independent artist self-ownership: Artist funds recording ($10K-$50K for quality indie production), distributes through TuneCore/DistroKid (10-20% fee), keeps 80-90% of master revenue. Same $1M streaming: Artist receives $700K-$765K (master portion after distributor fee), songwriter/publisher receives $150K composition portion. If artist also wrote song, total $850K-$915K (85-91.5% of gross) vs $170K+$150K = $320K (32%) in label deal.
360 deals and master sharing: Modern labels often structure 360 deals taking 15-30% of all artist revenue (touring, merch, endorsements) in exchange for lower recoupment thresholds and sometimes master reversion after 7-15 years. Artists trade short-term master ownership for label marketing support and infrastructure. Risk: if album flops, artist owes nothing but gained label funding. Upside: if successful, artist eventually reclaims masters worth millions.
Master reversion clauses: Some contracts include master reversion provisions—after 15-35 years or once recoupment satisfied, masters transfer to artist. Rare in modern deals (labels want permanent ownership). More common in legacy contracts from 1970s-1990s before labels recognized full master value. Examples: Paul McCartney negotiated master reversion, Madonna regained some masters after Warner contract expiration.
Master revenue streams and splits
Streaming master economics: Streaming platforms pay ~70% of revenue to rights holders. Of that 70%, master receives 80-85%, composition receives 15-20%. Example: Spotify generates $100M revenue on song catalog. $70M to rights holders. $59.5M to master owners (labels/artists), $10.5M to composition owners (publishers/songwriters). Master owners then split among label (if applicable) and artist per contract terms.
Physical and download master splits: Label receives 100% of net revenue (after manufacturing, distribution costs) then pays artist royalty percentage. CD wholesale $10, manufacturing $1.50, distribution $1.00 = $7.50 net. Artist with 20% rate receives $1.50, label keeps $6.00. Digital download $0.99, no manufacturing, platform keeps $0.30 = $0.69 net. Artist receives $0.14, label keeps $0.55.
Master sync licensing: Master owner negotiates sync fees independently from publisher. Typical arrangement: production pays $50K composition sync + $50K master sync. If label owns master, label receives full $50K master fee (artist might get 20% = $10K per contract). If artist owns master, artist receives full $50K. Creates strong incentive for master ownership—sync can be 100x daily streaming value in single transaction.
Sample clearance and interpolation: When another artist samples master recording, master owner and composition owner both entitled to fees/royalties. Master sample clearance: typically $10K-$100K upfront + 5-10% of new song royalties in perpetuity. Composition clearance similar. Total cost: $20K-$200K + 10-20% ongoing royalties. Expensive enough that many artists avoid sampling or risk lawsuit. Interpolation (re-recording melody/lyrics) only requires composition license avoiding master clearance.
Master catalog investment and valuation
Revenue quality assessment: Master-heavy catalogs (labels own recordings) trade at 10-15x Net Label Share for stable streaming catalogs. Growth catalogs command 15-20x. Publishing-only catalogs trade at 12-18x Net Publisher's Share (higher multiple reflecting lower absolute cash flows but cleaner ownership). Catalogs owning both masters and publishing trade at premium multiples—reduces counterparty risk and captures full economics.
Streaming concentration risk: Modern master catalogs derive 70-85% of revenue from streaming vs 40-50% for publishing catalogs (more diversified across streaming, performance, sync, mechanical). Makes master value highly correlated with Spotify/Apple policy changes. 2023-2024 streaming rate pressures hit master values harder than publishing values. Buyers increasingly demand 10-15% valuation discount for streaming concentration.
Artist cooperation importance: Master catalogs often include rights to artist name/likeness for promotion. Valuable for marketing but requires artist cooperation. Strained artist relationships reduce master value 20-30%—artist can refuse interview/promo, record competing versions, publicly criticize catalog owner. Publishing catalogs less dependent on artist goodwill—song can be licensed to covers/sync without original artist involvement.
Re-recording risk: Since 2020, high-profile artist re-recordings (Taylor Swift, JoJo) created risk for master catalogs—new recordings compete with originals, fragmenting streams. Investors now scrutinize artist contracts for re-recording restrictions (typically prohibited for 2-5 years post-contract), assess artist motivation to re-record, and discount values 10-20% for catalogs with significant re-recording risk. New master acquisitions often require artist agreements prohibiting competitive re-recordings.
Copyright duration and termination rights
Master copyright term: Sound recordings published after 1972: 95 years from publication (work for hire basis for label-owned masters). Recordings created after 1978 but unpublished: 70 years from creation. Pre-1972 recordings protected under state law until 2067 at latest (federalized by Music Modernization Act 2018). Practical impact: post-1972 catalog has 80+ years remaining protection—longer than commercial relevance for most recordings.
Composition termination rights: Songwriters can reclaim composition copyrights 35 years after transfer (Copyright Act §203). Creates risk for publishing buyers—Bruce Springsteen, Bob Dylan copyrights potentially reverting 2017-2025 (35 years post-1982-1990 transfers). Master recordings as works for hire generally not subject to termination rights—labels retain masters permanently. Exception: if artist signed as independent contractor not employee, potentially could terminate after 35 years (untested).
International copyright variations: EU/UK: master copyright 50 years from publication, extended to 70 years in 2013 (retroactively reviving some catalogs). Creates geographic arbitrage—pre-1973 recordings public domain in some territories but protected in US. Catalog buyers must analyze territory-by-territory copyright status for international exploitation. Lost protection in one major territory (UK, Germany, Japan) can reduce overall catalog value 15-25%.
Public domain and catalog decay: As masters enter public domain (post-copyright expiration), anyone can sell/stream recordings without payment to former owner. Creates 'terminal value' problem in DCF valuations—revenue doesn't perpetually grow, eventually falls to zero. However, master public domain less impactful than composition public domain—performance/mechanical royalties cease for public domain compositions, but master recordings can still monetize through exclusive distribution deals, superior remastering, brand/packaging differentiation. Catalog buyers typically assume 2-3% annual decay for tail-end-of-copyright-term recordings.