No matter what type of IP valuation a valuation analyst performs, each one will have a different set of aspects to consider. Because intellectual property is unique, each engagement brings different considerations, which is what makes IP valuation a challenging profession. Celebrity valuations for musicians are no different. However, IP valuation analysts should consider the following four criteria in musician valuations.
Publicity – How much publicity is the musician receiving? Do most people know who the musician is? Or is the musician only well known within certain circles (e.g., a blues singer, a rapper, a heavy metal singer, etc.)? Musicians who are more popular will command more value than those only known within specialized genres. For this reason, musicians will go the extra mile to gain attention. Lady Gaga dresses bizarrely so the media will focus on her. Even negative publicity is better than no publicity at all. This may explain why Janet Jackson’s wardrobe malfunction occurred during one of the biggest events in the United States – the Super Bowl. Is it a coincidence that this happened at the same time she had a new album coming out?
Leverage – Where is the musician getting leverage? Musicians who can expand beyond one talent (singing) will have higher leverage. Sean Combs is a good example because he’s been effective at a lot of different things: actor, entrepreneur, record producer, and singer. In 2011, Forbes listed his net worth at $500 million.
Relevance – How relevant is the musician to the public? Does the musician have a large following? Musicians who have wide audiences have a higher value. Take Taylor Swift for instance. She appeals to children and adults alike, and her music falls into more than one music genre: country and pop.
Durability - How durable is the music? Today, the number one selling artists are still the oldies, such as the Rolling Stones, AC/DC, etc. Young artists today are having a hard time bridging the generation gap.
Celebrity valuation engagements for musicians are difficult because of the intrinsic nature of the components that comprise celebrity value. A musician’s value is a very public affair because monetization must occur in the public eye in order to be valuable. Celebrity valuations for musicians do not afford easy quantification for several reasons. First, the market is fickle regarding musicians, moving from fad to fad over time. For example, dramatic shifts occurred in consumer tastes for music from the 1980s to the 1990s and on into the 2000s. Those changes in consumer tastes changed demand for goods and services associated with musicians from the era. Second, celebrity valuations for musicians can cover a multitude of assets including musical productions and dance moves (e.g., Michael Jackson’s “Moon Walk”). Copyright law, which covers many of these types of assets, is large and complex. Third, many musician assets are at risk of easy and unidentifiable infringement, which can impair value. These challenges of course make it not only difficult for valuation analysts to quantify assets that comprise musician value, but more importantly, they make it difficult for financiers to provide working capital for musicians or to assess monetization risk.