Oldies but goodies: music libraries prove reliable earners as new releases languish.

IF the music industry is in trouble, nobody tell lyricist Hal David.

The partner of pop composer Burt Bacharach on such '60s toe-tappers as "Walk on By" and "Promises, Promises," David is making a fortune off his songs.

He commands at least $10,000 from singers who want to record new renditions of "I'll Never Fall in Love Again." Millions more will come from movie studios, advertising folks and even music kiosk companies.

David and his family aren't the only ones who know about this gold mine. Music labels that often run publishing libraries on the side are stepping up their acquisitions of smaller, privately held collections. They're getting competition from pension funds and Wall Street firms that also want in on the act.

"We're getting more offers and the numbers are getting better. But we haven't succumbed," said Jim David, who is helping his father oversee the collection.

Other catalog owners aren't passing up offers.

In May, Japanese-controlled music firm Windswept Holdings LLC beat out several firms, including billionaire Haim Saban, to buy the Trio collection of hits -- including oldie staple "Da Doo Run Run" -- owned (but not written by) songwriters Jerry Leiber and Mike Stoller. A month earlier, British music giant EMI Plc paid a reported $170 million to gain control of Motown mastermind Berry Gordy's catalog, which includes such classics as "My Girl" and "I Heard It Through the Grapevine."

The labels are spending handsomely for the privilege, paying multiples as high as 20 times "net publisher's share," the income generated by the catalogs. Last year, Sony/ATV Music, the joint venture controlled by Sony Corp.'s music division and pop icon Michael Jackson, snapped up the Acuff-Rose catalog -- which includes the songs of country legends Hank Williams and Johnny Cash -- for $157 million, or more than 16 times its 2001 income of $9.8 million.

"It used to be that you could only get nine, 10 times your income if you're lucky. Now the labels are just handing over bags of cash," said Bob Kirsch, president of the publishing division of Welk Music Group, the Santa Monica music firm controlled by the family of the "champagne music" bandleader who began buying and selling music rights five decades ago.

Industry shift

Driving the buying spree is a host of factors whose net effect has been to increase the value of older hits while depressing the value of newer music.

Free music downloads on the Internet, aided by Napster and now Kazaa and Morpheus, have combined with the lack of any breakthrough artist since the rise of Eminem five years ago to hurt the retail end of the music business.

Shipments of all recorded music fell 8.2 percent last year, to $12.6 billion, according to the Recording Industry Association of America.

Because a label only generates revenues from record sales and the use of the "master" recordings in movies or on soundtracks, it's become less attractive. What adds to the attraction of owning the catalogs (still called "music publishing" because of its origins in the sheet music trade) is that there are several revenue sources to milk.

Besides the federally mandated "mechanical" royalties of 8 cents per song from retail sales, there is the "performance" paid to the copyright owner (net of artist royalties and payments to other publishers) every time a song is played on radio, television -- even in the elevator. These royalties are monitored and collected for pass-through by three major songwriters' organizations, including Broadcast Music Inc. (BMD, the nation's largest. Last year, royalties collected by BMI increased 5.6 percent, to $547 million.

Then there are the "synchronization" fees generated when a song is used in a movie or a television show.

Movie studios will pay up to $1 million or more (plus a buyout fee for home video distribution) based on how the song is used. It could be for background music in a restaurant scene or as the opening theme for a movie -- such as when the Lovin' Spoonful hit "Summer in the City," was used in the Bruce Willis action flick "Die Hard: With a Vengeance."

Karaoke, ring tones

Such fees have become among the biggest revenue streams for the catalog operator, usually 25 percent of annual revenues versus 10 percent or less a decade ago.

Besides movies, there are synch fees generated from video games and television advertisers that are more willing to pay $100,000 or more for a pop hit than spend less creating their own jingles.

General Motors Corp. reportedly paid $10 million to the former members of Led Zeppelin to use one of their songs, "Rock and Roll," in Cadillac commercials.

Other sources being pioneered include novelty items like dancing Elvis dolls, ring tones on cell phones, and Karaoke machines. There's also satellite radio networks such as XM and Sirius.

But the major music firms will have to search harder.

Thanks to the buying spree, there are fewer valuable catalogs available. While some owners are more than happy to part with their songs, others have continued to resist the entreaties either because they see the lucrative opportunities themselves or like Jim David and his father, because of family concerns.

"We have my father's writer's income to consider if we ever sold. It's dependent on how well the catalog is maintained and we've worked hard to build it up," Jim David said.

Among the dwindling trove the labels would love to add to their own include those owned by Richmond-based world music outfit Peer Music and Hollywood firm Criterion Music.

Another is Warner/Chappell Music, the publishing unit of debt-laden media conglomerate AOL Time Warner Inc., whose collection is being pursued by bidders such as brokerage powerhouse Goldman Sachs Group.

Then there are those smaller collections still in the hand of L.A.-based songwriters such as Bacharach, David and Diane Warren (who wrote "How Do I Live"), and savvy rock stars such as Neil Young, who has kept strict control over the commercial use of his songs.

"Some things are more important than just cash," Jim David said.

Hit Parade

Old standards top the list of songs most performed over the years on
radio and television.

Song                                Author

"You've Lost That Lovin' Feelin"'   Barry Mann/Phil Spector/Cynthia Wei
"Never My Love"                     Donald Addrisi/Richard Addrisi
"Stand By Me"                       Jerry Leiber/Mike Stoller
"Yesterday"                         Paul McCartney
"Baby, I Need Your Loving"          Holland/Dozier/Holland
'Can't Take My Eyes Off of You"     Bob Crew/Bob Gaudio
"(Sittin' On) The Dock of the Bay"  Steve Cropper/Otis Redding
"When A Man Loves A Woman"          Calvin Lewis/Andrew J. Wright
"Mrs. Robinson"                     Paul Simon
"Rhythm of the Rain"                John Gummoe

Song                                Hours of airplay

"You've Lost That Lovin' Feelin"'    450,000+
"Never My Love"                      400,000+
"Stand By Me"                        400,000+
"Yesterday"                          350,000+
"Baby, I Need Your Loving"           350,000+
'Can't Take My Eyes Off of You"      350,000+
"(Sittin' On) The Dock of the Bay"   350,000+
"When A Man Loves A Woman"           350,000+
"Mrs. Robinson"                      350,000+
"Rhythm of the Rain"                 350,000+

Source: Broadcast Music Inc. (BMI)