Investing in records
Investing in records can be an effective way of profiting from rare and collectible musical recordings, particularly vinyl records. Record collecting has grown significantly in size over the last 50 years; the classification of record collecting as an investment is a relatively recent development.
Rare and collectible records can now realise significant sums of money when sold at auction or through private channels. As such, dependent on the record, its condition and other factors, they can be considered a form of alternative investment.
Investing in rare records is not only a potentially lucrative financial move, but an excellent way of preserving some of the most iconic, surviving musical landmarks.
Vinyl is particularly sought after due to its nostalgic value, its unique, ‘warm’ sound and often striking cover art and design.
Records from a variety of genres, including rock, pop, classical, blues and country, are collected across the world.
Recent years have seen a seismic shift in music sales away from hard-copy recordings such as CD towards digital formats like MP3.Increase in values
Although this applies to the general music retail market, it arguably impacts upon collectible records. It highlights the increasing rarity of hard-copy records and heightens the sense of nostalgia associated with older formats, particularly vinyl.
The vinyl market has experienced renewed growth in recent years; in 2009, the Official UK Charts Company reported that vinyl sales had risen by more than 5%. American sales of vinyl rose 1 million over the same period. This boom appears to have affected the rare and collectible records market too.
A copy of ‘Double Fantasy’ by John Lennon and Yoko Ono (signed by Lennon for his killer, Mark Chapman, just hours before the Beatle's death) was sold in 1999 for $150,000. By 2003, its value was estimate to be $525,000, making it one of the most valuable records in the world.
In 2004, Record Collector magazine rated the 1958 acetate of “That’ll be the Day” by the Quarrymen (the precursor to the Beatles) as the number one most valuable record in the world, priced at £100,000. It is now considered to be worth £116,700.
The second most expensive in the list was a 1981 reissue of the same record, valued at £10,000; several records have surpassed this figure in the last 5 years.
A First State copy of the Beatles’ ‘Yesterday and Today’ album, featuring its infamous ‘Butcher Cover’, sold for $21,510 at Heritage Auction Galleries in 2008. In February 2011, a factory-sealed copy realised $26,290.
Most valuable investments
Records can derive their value from various factors – the artist, limited pressing, unique features such as colour and shape, the label or genre, and so on.
The most valuable records which are currently traded on the rare records market relate to the Beatles. As was noted earlier, the two most valuable are the signed ‘Double Fantasy’ record and the 1958 Quarrymen acetate.
These are highly unique records; neither relate to the Beatles directly (i.e. they are not actually connected to the band itself), but indirectly represent iconic and significant events affecting the most famous band in the world.
The ‘Double Fantasy’ album was signed by John Lennon for Mark Chapman only five hours before he the latter shot him in New York. The record had itself only been released a few weeks prior; this is therefore not only one of Lennon’s last signatures (which remarkably was captured on camera) but one of the first copies of the album released to the public.
The record also represents the definitive ‘end’ of the Beatles. The band existed for a comparatively short period and many fans hoped for an eventual reunion; however, with Lennon’s death the band would be unable to reform with its most famous line up, essentially ending the Beatles’ career.
The Quarrymen acetate is equally important, symbolising the recording debut of Lennon, McCartney and Harrison – effectively, the beginning of the band’s career. In addition, only one copy was made, making it utterly unique.
Records relating to the Beatles as a band are also very valuable. The ‘Yesterday and Today’ record with ‘Butcher Cover’ is a prime example, as is a copy of ‘Please, Please Me’ (signed by all four members of the group), sold in 2010 for $33,460.
Other iconic musicians have attracted high prices. A first-batch pressing of ‘The Freewheelin’ Bob Dylan’ - featuring four tracks which were swiftly ‘deleted’ for further issues of the record – is valued at $35,000 for the rare stereo version.
In 2010, Elvis Presley’s ex-guitarist Scotty Moore sold the singer’s collection of 78rpm records for $75,000 – in this case, the owner gave the records there collectability, rather than the stature of the artists featured.
Extremely rare and obscure records can be worth investing in, particularly vintage blues records. American record collector Joe Bussard was offered $30,000 for his copy of the 1927 blues record “Original Stack O’Lee Blues" by Long Cleve Reed & Little Harvey Hull.
There are many other rare and collectible records with exceptional value, which are likely to appreciate over time dependant on factors such as the artist, condition, age, etc.
Like other alternative investments, they can potentially result in good returns if maintained properly and floated at the correct time.
Researching the market
As with any financial decision, anyone investing in rare records should thoroughly understand the market of interest before making any financial commitment.
An investor should ensure that they have a good understanding of current prices, appreciation in recent years and predictions for the market, the reasons for appreciation in value, how to preserve tangible investments like records, and the potential risks involved.
There are a variety of good sources of information. Professional dealers such as specialist record shops or collectible record companies may be able to provide advice on what rare records collectors should be investing in. Publications, such as Record Collector magazine, provide advice and price guides for rare and collectible records.
Record collecting clubs and societies may be a good way of meeting people who can aid an investor in identifying records to purchase, current market trends, or good dealers to approach.
In addition, as with any financial investment, professional advice should be sought about the benefits diversification can provide, risks involved and the likelihood of reasonable returns.