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As a songwriting musician who has earned income from composing, custom songs, jingles and scoring … I haven’t felt the love too much lately. Despite groundbreaking changes in seemingly every aspect of the music business, I often feel like the monetizing-creator’s-works aspect is growing worse, with piracy, declining wages and seemingly endless competition. So, it comes as a pleasant surprise when modern advances in technology actually begin to earn musicians more income and control of their futures … case in point, Royalty Exchange.
Formed in 2013, but hitting full stride in 2016, Royalty Exchange aims to connect musical creators with investors, who compete via auction to win whatever portion of royalty-earning rights the artist has for sale up on the block. Says RE’s Director of Communications Antony Bruno, “While many of the offers in our marketplace are for the songwriter’s share of performance royalties, it’s not limited to just that. We’ve done full publishing catalogs, sound recording royalties, sync royalties, neighboring rights, and so on. We can work with any type of music royalty.”▼ Article continues below ▼
Investors purchase portions of these song’s rights in perpetuity … A-list artist or not, many of these songs are truly and deeply popular, have been that way for a long time and are going to stay that way … the royalties generated by these gems may not seem like “big money” at first glance, but they remain steady performers year in and year out, through thick and thin … so (believe it or not) music can actually make for quite a predictable, steady and “sure thing” investment!
The word is out and investors are snatching up musical opportunity at some pretty healthy rates. We measure this by comparing last year’s royalty earnings to the final selling price, finding “the multiple.”
“Over the last year, the average multiple for commercial music was 6x, but in the last few months that average has gotten closer to 8x. We’ve seen some auctions close for over 10x,” continues Bruno. Sounds like fertile ground for both investors and musicians to me.
Battle-worn musicians may naturally bring a little skepticism to the table, but the terms seem more than reasonable and non-exploitive. There are no upfront fees, fees aren’t due until payments have cleared, rates are pre-determined prior to auction and the investors are indeed “silent partners” (there are no artistic ties or hidden influences). It appears that any genre whatsoever is viable and any artist earning about $2500 per year or higher from their work has enough juice to get in the game, but obviously longer (and particularly stable) track records will earn top dollar.
RE, in addition to having a post-modern concept, with the transparency and ease of involvement that modern consumers demand, is also enabling investments with rare value … a cool factor. Say you had some extra funds to work with; do you want to buy into boring pork bellies, some sleazy Wells Fargo stock, or half the performance royalties from your all-time-favorite rock anthem! Considering that the epic song may be more likely to survive the next downturn than some market-dependent financial instrument and you can see why this is an idea whose time has come. David Bowie may have pioneered the concept with his bonds, but RE seems to have the egalitarian, everyman’s response to the ever-inventive and innovative Bowie.
If you’re curious, go to royaltyexchange.com and check out the action. It’s interesting to see which artists have current auctions, what their rights are going for and what price past auctions finished at. Interesting no doubt, but it doesn’t have to be a spectator sport … if you’ve got winners in your catalog and need some cash, then this is an opportunity to earn exactly (and learn exactly) what the value of your material is on the open market, with no strings attached and you calling the shots.