Red Hot Chili Peppers have transcended being a 'rock band' to become a financial asset
-- The meaning behind the Red Hot Chili Peppers selling their music catalog for over $300 million
According to Rolling Stone, the American rock band I love so much, Red Hot Chili Peppers, have sold their recorded music catalog for $300 million (over 45 billion yen).
According to the article, the buyer is Warner Music Group, to which the Chili Peppers are also signed. Moreover, it is not a standalone deal, but part of a joint venture with investment firm Bain Capital. This is not just a 'band selling assets.' Isn't this also the moment when music itself has been completely 'financialized'?
■ What did the Chili Peppers sell?
What was sold this time was not the 'publishing rights' to the songs themselves, but the 'rights to the recorded music.' In other words, these are assets that generate cash flow from Spotify, Apple Music, YouTube, movies, commercial usage, and future streaming revenue. According to the article, the Chili Peppers' recording catalog generates $26 million (about 4 billion yen) annually. And it was valued in the market at around $350 million.
■ They sold 'other rights' five years ago as well
I remember it clearly, but in fact, the Chili Peppers also sold their publishing rights for about $150 million in 2021. In other words, the Chili Peppers sold their 'rights to write songs' and 'rights to recorded material' as separate financial products. At this point, the Chili Peppers' moves are closer to those of a highly profitable IP (intellectual property) holding company than a 'rock band'.
■ Why are music catalogs skyrocketing in value right now?
In the last few years, huge artists like Bob Dylan, Bruce Springsteen, Pink Floyd, and Queen have been selling their rights one after another. Why? The reason is extremely simple. It is because music has become a 'perpetual billing model'. In the old CD era, the main revenue for musicians and record companies came from new album releases, tours, and merchandise. But the streaming era is different. "Blood Sugar Sex Magik" from 1991, "Californication" from 1999, and "By the Way" from 2002 are all being played every single day all over the world. In other words, we have entered an era where 'past works continue to generate cash forever'. To an investment fund, this looks like an ideal business.
■ The Chili Peppers have not become 'oldies'
Moreover, while the Chili Peppers are 'legends,' they have not become a pure nostalgia business. Even though more than 40 years have passed since their formation, they are still fully active. In 2022, they released "Unlimited Love" and "Return of the Dream Canteen" back-to-back. Furthermore, they were touring the world until 2024. In other words, they have become a 'perpetual circular IP (intellectual property)' business where past works are played, new works sell, and stadium tours are massive, with younger generations listening as well. In fact, when I saw them in Los Angeles before, there were many fans who came as parents and children (the children being young adults). Consumption is being passed down from parent to child.
■ The Chili Peppers to me
I have been listening to the Chili Peppers since I was 13. I have been to their live shows a total of 11 times. Flea was the reason I started playing bass. I have even received autographs directly from Flea and Chad. I tried talking to John, but he ignored me, haha. That personality of John Frusciante is quite close to my own mental OS. That's why reading this article gave me a strange feeling. The music that saved me has now become a financial product worth tens of billions of yen. But even so, I still feel a 'soul' in it. Because the Chili Peppers are not just commercial music, but a band that has turned vulnerability, chaos, addiction, recovery, friendship, and the very atmosphere of the city of Los Angeles into music.
■ An era where 'music' and 'PE funds' intersect
This article was one where the world of PE funds, IP business, the subscription economy, and perpetual cash flow—which I have been interested in for a long time—and the Chili Peppers, who shaped my life, completely connected. And what's interesting is that what the Chili Peppers sold is not just 'music.' What they sold is the 'right for humans to have their emotions moved for all eternity'. Wall Street understands that. That's why they pay 30 billion or 45 billion yen. Perhaps the music industry is now an 'emotional infrastructure industry'. In an era where even music can be created by AI, the organic and genuine moving music created by the four of them—Flea, John, Chad, and Anthony—jamming together is music that even AI cannot create after learning, music that can only be made by an "Organic Anti-Beat Box Band".
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