"Flying Nun has consulted with artists about the project, which has been important to its success so far.
"We're committed to protecting all the artists' rights inherent in the material.
"And, once the masters have been preserved and digitised, we're really looking forward to working with Flying Nun on future reissues of the music, exhibitions, and other opportunities.
"We expect this collection will significantly enhance research into New Zealand music."
Shepherd said the Alexander Turnbull Library was the best place to hold their collection.
"The Turnbull Library was the natural choice, because it has first-class preservation and research facilities, and was also willing to work with our artists to make their amazing and well-loved music accessible and still preserve their rights."
Internal Affairs Minister Tracey Martin said the donation was a suitable way to mark the library's centenary, as this year is 100 years since the original Alexander Turnbull collection was donated.
"The music of Flying Nun is a huge part of our culture and was significant in forging important music connections internationally.
"It's important for New Zealand that these tapes will be preserved, both physically and digitally, and adds to the Flying Nun collection already in the library."
The Alexander Turnbull Library started its New Zealand music archive in 1974, and contains the largest collection of archival material relating to New Zealand music and musicians.