Nothing to Crow about: Musician Sheryl Crow is among the artists mentioned in the records from Appleby law firm office on Jersey from whose music a stream of royalties were collected. Other musicians included John Denver and Duke Ellington Picture: REUTERS
Nothing to Crow about: Musician Sheryl Crow is among the artists mentioned in the records from Appleby law firm office on Jersey from whose music a stream of royalties were collected. Other musicians included John Denver and Duke Ellington Picture: REUTERS

Rummaging through the records of offshore havens turns up a fairly predictable list of assets — real estate, cash, multinational companies shifting earnings to low-tax jurisdictions, hidden masterpieces by Picasso and other artists, antique cars, yachts and aircraft.

But musical memories? The songs that you danced to in your youth or at your son’s or daughter’s wedding? The summertime hit you sang driving down back roads or the reggae tune blasting at the beach? What are they doing offshore? They’re there for the same reason as other assets — tax advantages. Skipping taxes helps increase earnings from intellectual property — patents, copyrights, trademarks and trade secrets — as well as other holdings.


Files from the Appleby law firm office on Jersey include a cache of music-publishing rights, a stream of royalties to be collected for music produced by artists that included John Denver of Country Roads fame, Duke Ellington, Chubby Checker and Sheryl Crow.

It’s a music catalogue, held until 2014 by a Jersey-registered company and originally managed by another company registered in Ireland. Jersey’s standard corporate tax rate is zero.

Music publishing rights have retained value despite turmoil in the music industry that has eroded the worth of related rights, creating steep declines in royalties for sales of vinyl records and compact discs.

"There is a burgeoning market for music catalogues among institutional investors who are looking for fairly reliable revenues in the future," says Chris Hayes, economist at research firm Enders Analysis, which specialises in media, entertainment and telecommunications.

Publishing rights generate income from a diversified pool of sources that includes licensing the music to gyms, bars and even ringtone services. That steadiness has attracted new institutional investors to the market, including pension funds. And, just like owners of other valuable commodities, music-rights owners have looked to maximise value by stashing money-making music where the earnings flow tax-free.

It is not surprising that music publishers would want to go offshore. There is "a global structure in the music industry with national laws that are very different from country to country," Luiz Augusto Buff, a Brazilian specialist on the industry, says. "But the users are global so that tends to make sense, with that much international transactions happening, to try to find a more efficient strategy tax-wise."

If the owner plays it right, music catalogues can be real money makers. "The music-publishing industry generates around $6bn a year globally," a 2015 analysis in the Berklee College of Music’s Music Business Journal reads. Every time a song is used in a movie or on TV, in a video game, on the internet or sold as sheet music, the owners of those rights cash in.

The Trammps’ 1976 Disco Inferno was the Jersey catalogue’s most profitable song in 2009 and ’10, producing royalties of more than $600,000.

The owner of the catalogue-owning Jersey company, First State Media Works Fund I, attracted investment from pension plans in North America, Europe and Australia. It created the Jersey subsidiary FS Media Holding Company (Jersey) as an investment vehicle that was managed by First State Media Group (Ireland) (FSMG) acting as a publisher.

Steve McMellon, former MD of FSMG and now director of Southern Crossroads Music, did not respond to repeated requests for comment.

The subsidiary was set up in 2007 specifically to acquire music rights. In July 2009, Crow sold the rights to 153 songs written between 1993 and 2008 to the Jersey company for about $14m. The package included chart-topping hits All I Wanna Do and My Favourite Mistake.

Crow did not respond to requests for comment.

In April 2010, FSMG was acquired by the UK media company Chrysalis for about $16.8m. The sale did not include the catalogue. The combined companies were acquired by Bertelsmann Music Group less than a year later for $168.6m.

Steve Redmond, head of communications for BMG, says that the company had been offered the catalogue but did not acquire it. "We merely inherited a company that had a deal to manage those assets on behalf of the owners." In time, the catalogue owned by First Media grew to 26,000 songs from the past seven decades.

The Jersey company continued to make money on royalties from Ellington’s Day Dream, Bob Marley’s Get Up Stand Up, Avril Lavigne’s Nobody’s Home, Kelly Clarkson’s Because of You and others. From 2010 to 2012, it made on average $4.6m a year in royalties. And, in a 2013 overview written for its proposed sale, the catalogue was described as "one of the larger aggregations of copyrights to have been recently available on the market".

The review of the catalogue-owning Jersey company by the accounting firm KPMG noted its tax advantages. In the first half of 2012, 68% of the royalties earned by the publisher after paying writers, copyright collection societies, commissions and charges, came from the US. Yet, according to KPMG, the fund, an English limited partnership, paid no taxes in the UK and was not subject to US federal income tax. Nor was withholding tax associated with the catalogue.

KPMG observed: "We have assumed the tax-structure position of the company as an off-shore tax structure whereby no tax is payable on income generated by the catalogue."

KPMG declined to comment on details of these reports. The company underlined that "they were prepared, not in connection with tax, but as a basis for the valuation of certain assets to be included in the company’s financial statements".

Despite those savings, things weren’t looking good for the catalogue sale. Making money also requires good marketing.

An earlier analysis by accounting firm PwC in 2011 found that the portfolio dropped more than half of its value in a single year — to $75m in 2010, from $153m in 2009. The 2013 KPMG analysis confirmed a decline in value of the catalogue’s assets, underlining that the biggest drop came from the Crow tunes, which suffered a 24% downturn.

The catalogue was sold in 2014 to Reservoir Media Management, which declined to comment. The company, an independent music publisher based in New York City but incorporated in Delaware, acquired it for $38m — about a quarter of its value five years before. It sold for a song.

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