Katy Perry’s $225 million payday began in 1908.

Last month, Katy Perry sold the rights to most of her music for $225 million to Litmus Music. This is the latest in a series of high-profile payouts. Lured by eye-popping offers from investment firms such as Hipgnosis and Shamrock Capital, Paul Simon, Dr. Dre and other artists sold out—literally.

While the scale of these transactions may be unprecedented, they have been happening for a long time. These deals cap a revolution that began more than a century ago, when music copyright first began its incredible metamorphosis from a limited legal claim into something that can be monetized on a mass scale.

Although Congress passed the first copyright laws in 1790, they did not extend this protection to musical compositions until 1831.

But the new copyrights covered something very specific: the publication of texts and music as sheet music.

Anyone who bought the sheet music effectively purchased the right to perform that music, with royalties going back to the composer. But this was a one-time deal: a single copy of the sheet music gave the buyer the right to perform the music an infinite number of times, from the comfort of his own home or in front of a paying audience.

This baffles composers. In the 1890s, Paul Dresser released “On the Banks of the Wabash Away,” a sentimental ditty about lost love in Indiana. The sheet music sold 500,000 copies, earning approximately $100,000—one of the most profitable songs of its time. But Dresser never received a penny from the numerous performances of his play.

Nor did he make any money from the recordings. New ways of reproducing musical sounds – the phonograph, which played music from wax cylinders; a gramophone that operated on discs; and so-called pianos that “read” rolls of paper—this undermines generally accepted copyright law. They created a situation in which, as historian Alex Cummings wrote, “nothing was sacred.”

Firms promoting these new technologies argued that, from a legal perspective, they were performances, not recordings. Thus, when a phonograph or piano company wanted the rights to produce records or records, it would simply buy one copy of the sheet music before selling mechanical versions to the mass audience. Enraged composers, artists and performers filed lawsuits against the usurpers. , making what now seems a perfectly reasonable claim: the mechanical reproduction of music was not a performance, but a pirated copy. However, when the Supreme Court heard a key case involving a piano company in 1908, it ruled against the artists. While a pirated paper copy of a song listing is still a copyright infringement, a gramophone record based on the song is not.

To be fair, the court made this decision out of respect for the original wording of the 1831 law, which did not provide for new technological advances. Consequently, Justice Oliver Wendell Holmes noted in his decision that Congress might want to revise the law to recognize that “anything that mechanically reproduces (a) combination of sounds must be considered a copy.”

Congress, which responded by passing the Copyright Act of 1909, may have muddied the waters further. It gave the copyright holder (usually the composer and music publisher) the right to choose who would make the first mechanical reproduction of the work. However, after this, anyone could record or make copies of the song by paying the copyright holder a mandatory fee of two cents for each copy made.

Members of Congress could not accept the idea that a recording of a song deserved the same protection as its lyrics and score. Instead, they attempted to frame the issue entirely from the perspective of the original composer and publisher. This effectively legalized the sale of counterfeit copies of recordings.

By the 1960s, the widespread availability of magnetic tape made large-scale piracy even easier, and when criminals began releasing illegal copies of albums by artists such as Bob Dylan and the Beatles, it prompted record companies to take action. They began by lobbying New York State to pass anti-piracy laws, which other states quickly followed.

Although they did not provide copyrights, these laws paved the way for Congress to pass the Sound Recordings Act of 1971, which allowed companies to copyright their recordings. A subsequent law passed in 1976 provided additional protection by giving corporations a 75-year claim to any records they created.

Through this process, records became something that could be bought and sold like any other investment, and their value was determined by the belief that a popular song would remain so for the foreseeable future. The rise of digital audio, with the cost of copying and distributing music falling to zero, has made copyright ownership—of the music and lyrics on the one hand, and the recording on the other—an increasingly attractive proposition.

In Katy Perry’s song “If You Can Afford Me,” she sings, “Don’t bet if you can’t write a check… ‘Cause I can be bought, but you pay the cost.”

Thanks to the decade-long evolution of music copyrights, investors have concluded that this is definitely a bet worth making, no matter how high the value.

More from Bloomberg:

• What the music industry should do with artificial intelligence: H. Drew Blackburn

• AI Music brings scam sounds to Spotify: Lionel Laurent

• Creative AI raises some vexing problems: Parmy Olson

This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

Stephen Meem, a history professor at the University of Georgia, is co-author of Crisis Economics: A Crash Course in the Future of Finance.

For more stories like this, visit bloomberg.com/opinion.

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