Buying Music Rights Safely: Due Diligence Checklist After Recent Catalog Deals and Allegations

Buying Music Rights Safely: A Practical Due-Diligence Checklist for 2026

Hook: If you're considering buying a music catalog, your biggest risks aren't just numbers on a royalty statement — they're hidden ownership claims, contract traps, and reputational liabilities that can erase value overnight. After a wave of high-profile catalog deals and public allegations in late 2025 and early 2026, buyers must treat diligence as a full-scale risk-management exercise.

Why this matters now (short version)

The market for catalog acquisition remained hot through 2025 and into 2026: private equity and strategic buyers continued to pay premium multiples, investors doubled-down on live-experience plays, and AI-driven music companies raised fresh capital. At the same time, allegations involving legacy artists and emerging civil and criminal claims (reported in early 2026) have shown how reputational issues can trigger licensing freezes, royalty disputes, and public backlash.

Recent deals and allegations highlight one truth: catalog value is as much about clean title and reputation as it is about past receipts.

Inverted-pyramid summary: Top actions today

• Stop if chain-of-title is incomplete — walk away or heavily discount.
• Obtain a full set of royalty statements and commission an independent royalty audit.
• Run an aggressive reputational screening—litigation, allegations, and social risk.
• Secure copyright title insurance and negotiate escrow/holdbacks for new claims.
• Insist on narrow knowledge qualifiers and long survival for reps & warranties.

Full due-diligence checklist — legal, reputational, revenue, contract

1) Documents to demand (start here)

Ask for originals or certified copies where possible. Create a shared virtual data room and tag documents by category.

• Complete chain-of-title for each work (assignments, grants, deeds, work-for-hire confirmations)
• All recording contracts, publishing agreements, co-publishing or administration agreements
• Split sheets, co-writer consents, mechanical licenses, sample clearances
• PRO registrations (ASCAP/BMI/SESAC, PRS, SOCAN etc.) and publisher IPI numbers
• SoundExchange and neighboring rights registrations
• Third-party license agreements (sync, master use, sub-licenses)
• Historical royalty statements (minimum 3–5 years; preferably all available)
• Sales/streaming analytics (raw CSVs from DSPs, aggregator reports)
• Pending litigation, demand letters, employment complaints, or regulatory investigations
• Tax returns and 1099/US/IRS filings for related entities (as applicable)

2) Revenue and accounting checks (audit the money)

Revenue drives valuation. Verify amounts, sources, and durability.

• Independent royalty audit: hire a specialist to reconcile reported royalties to DSP payor data, mechanical collection societies, and sync licensing databases.
• Request raw transaction-level data from DSPs and distributors; verify metadata accuracy (WRITER/ISWC/ISRC/UPC) — bad metadata = lost money.
• Analyze revenue mix: streaming (ad vs. subscription), downloads, sync, performance, neighboring rights, mechanicals, physical, and sync pipeline.
• Check historical volatility and cohort trends — are earnings concentrated in one hit song or diversified across works?
• Identify one-time payments (e.g., up-front buyouts, settlement proceeds) and normalize revenue.
• Model tail risk from platform policy changes, DSP rate adjustments, and AI-content takedowns.

3) Copyright & title clearance (who truly owns it?)

Title problems are the single most catastrophic risk. If the chain-of-title is broken, insurance and indemnities can be limited.

• Verify assignor had authority to sell — examine prior transfers and effective dates. Watch for missing signatures or oral assignments.
• Confirm work-for-hire status where asserted. If doubtful, reclassify as transferred and secure written releases from contributors.
• Confirm co-writer splits and ensure all co-owners have executed necessary consents for the sale.
• Search for unlicensed samples or uncleared interpolations; request documentation of sample clearances, and if missing, assume litigation risk.
• Confirm registrations at the Copyright Office where relevant; evaluate termination rights under 17 U.S.C. §§ 203 and 304 — termination windows can materially change value.

4) Contract-level checks (what obligations survive the sale)

Understand obligations that run with the IP — label commitments, producer backend liens, performance-based payouts.

• Review recording contracts for reversion rights, outstanding advances, recoupment balances, royalty cross-collateralization, and minimum delivery obligations.
• Identify side letters, royalty participation agreements, and legacy producer statements that might create payables or carve-outs.
• Check admin agreements for transferability; some administration contracts include change-of-control clauses or termination penalties.
• Verify sync licenses and exclusive deals — exclusivities can limit future exploitation.

5) Reputational and litigation screening (new priority in 2026)

High-profile allegations can stop sync deals, prompt brand pullouts, and depress catalogue value overnight. In light of the Julio Iglesias allegations reported in early 2026 and similar stories, reputational diligence is now core diligence.

• Run litigation and public records searches across jurisdictions for civil, criminal, employment, and human-rights claims.
• Conduct OSINT/social-media screening for sustained negative narratives, influencer-led campaigns, and trending complaints.
• Speak with major sync and brand licensing partners to surface any policy concerns or informal blacklists.
• Assess contractual clauses for moral-clauses or termination rights that could be triggered by reputational events.
• Model potential revenue loss from brand and sync pullbacks (scenario analysis: 10/30/50% revenue declines).

6) Insurance, warranties, and risk allocation

Contractual protections should reflect material risks discovered in diligence.

• Copyright title insurance: obtain a policy tailored to music IP. Consider policy limits at or above the purchase price; discuss coverage for pre-existing claims, chain-of-title gaps, and statutory termination claims.
• Negotiate escrow/holdbacks tied to potential undisclosed liabilities — typical holdback periods range from 12 to 36 months depending on risk.
• Insist on strong reps & warranties (ownership, no known litigation, full authority) and keep the seller’s knowledge qualifiers narrow.
• Set indemnity caps and survival periods proportional to risk — for title defects, buyers often insist on longer survival or uncapped indemnities.
• Consider specialized policies for reputational or contingent liabilities where available, and evaluate D&O coverage if acquisition involves a corporate target.

7) Negotiation levers (how to price risk)

Use diligence findings to structure protections — lower price, escrow, enhanced reps, or walk-away rights.

• Price adjustment: tie purchase price tranches to absence of specific defects (clear title certification, absence of pending claims).
• Escrow percentages: 10–25% depending on the severity of unverified items; larger for catalogs with high co-ownership complexity.
• Survival windows: demand longer survival for title and tax reps (often 3–7 years for title; tax often survives until statute expiry).
• Seller escrow obligations to cure metadata or PRO registrations post-closing within set deadlines, with clawbacks for failures.

8) Post-close integration & monitoring (don’t stop at signing)

Capture full value and close operational gaps immediately after closing.

• Transfer PRO and collection society registrations and verify receipt confirmations.
• Update metadata across DSPs and aggregator feeds promptly to prevent future underpayment.
• Implement ongoing royalty audits (annual or biannual) for at least the agreed survival period.
• Monitor brand and social sentiment; set escalation triggers for negative press and contractual termination risks.
• Centralize rights management and provide a clear contact map for licensees to minimize missed income — consider outsourcing day-to-day ops to a team experienced with compact home studio and creator workflows if your deal includes active artist services.

9) Team you should assemble

Assemble a cross-functional team early — this is not just legal work.

• Entertainment / IP counsel experienced in catalog transactions
• Forensic royalty auditor and data analyst
• IP title insurance broker
• Reputational investigator or OSINT specialist
• Tax advisor familiar with intangible asset acquisition accounting
• Catalog operations manager to handle post-close metadata repair

Red flags that should pause or kill a deal

• Missing or inconsistent chain-of-title documents for any high-earning work.
• Large portions of revenue derived from unverified or one-off sync deals without documentation.
• Evidence of undisclosed side letters or producer backend obligations that exceed typical ranges.
• Active litigation or credible allegations that could trigger brand or DSP takedowns.
• PRO registrations showing multiple conflicting publishers or unallocated writer shares.

2026 trends buyers must factor into valuation and strategy

Here are the industry movements shaping how you should underwrite catalogs in 2026.

• Reputational risk pricing: Post-2025, buyers increasingly price reputational exposure into purchase terms or demand stronger indemnities.
• AI and content moderation: Platforms and rights holders are still settling policies on AI-generated works and training datasets. Expect takedown risks and new licensing models that could alter royalty pools.
• Consolidation of collection societies: Cross-border payment efficiencies are improving, but registration mismatches remain costly; buyers must invest in metadata remediation.
• Growth of title insurance: More buyers are purchasing specialized music copyright policies as standard practice rather than an optional add-on.
• Increased regulatory scrutiny: Buyers should expect more thorough background checks and due diligence, especially for high-value legacy catalogs tied to complex personal or estate issues.

Quick-play checklist (printable)

1. Obtain all royalty statements + raw DSP/aggregator data.
2. Commission independent royalty audit.
3. Collect full chain-of-title and check for termination windows.
4. Review contracts: recording, publishing, admin, sync, producer deals.
5. Run litigation and reputation searches across jurisdictions.
6. Secure title insurance and negotiate escrow/holdbacks.
7. Negotiate reps & warranties with narrow knowledge qualifiers.
8. Post-close: transfer registrations, fix metadata, schedule audits.

Practical sample language to request in a LOI / APA

Below are negotiation starters — always run final language by counsel.

• Title representation: "Seller represents and warrants that it holds good and marketable title to the Copyrights free and clear of all liens, encumbrances, and third-party claims, and has full right and authority to transfer such rights to Buyer."
• Escrow clause: "20% of the Purchase Price shall be deposited into escrow for a period of 24 months to secure indemnity obligations arising from title defects and unreported liabilities."
• Audit right: "Buyer shall have the right to conduct up to two third-party royalty audits annually for 36 months post-closing."
• Moral clause carve-out: "Seller shall be liable for pre-closing facts known to Seller that result in termination or material loss of revenue from third-party licensees."

Final practical takeaways

• Treat reputational checks like legal checks. A credible allegation can be as costly as a title defect.
• Demand transactional transparency. Raw DSP and publisher-level data are non-negotiable.
• Use insurance and escrow proactively. These are not signs of mistrust — they’re industry-standard risk allocation tools in 2026.
• Build a post-close ops plan. Metadata cleanup, PRO transfers, and audit schedules capture revenue immediately after acquisition.

Where to go next

If you’re preparing a bid or drafting an LOI, start with a scoped diligence plan that maps documents to risk buckets (title, revenue, reputational, contract). Bring in specialists early — the amount you spend on advisors is often a small fraction of the difference between a clean deal and a litigated asset.

Call to action: Download our free printable buyer checklist and a sample LOI clause set at moneys.website/checklists, or book a 30-minute call with our catalog transaction team to size insurance, escrow, and audit scope for the deal you’re considering.

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