Investing In Music Royalties

[Art Munson]

Interesting article in USA Today’s business section about a company called Royalty Exchange. It’s created a marketplace to buy and sell royalties. USA Today article is here.

Set up as an auction site where intellectual rights holders can auction off their royalties. The article talks about songwriters but taken a step further I can imagine composers, music libraries, etc. dipping their toe in. Endless possibilities.

[Art Munson]

Bumpy, bump. 🙂

[Vizzahh]

I’ve been following that site for a year or so now. indeed there are composers auctioning rights to production music catalogs there as well. I’m not sure, though, how someone would go about doing their due diligence before making that kind of investment… any thoughts from anyone?

I would think that listings end up there because either the rights holders really need the immediate cash, or because they feel that the earnings potential for their catalog is on the downswing. If there’s anyone out there investing in this stuff I’d love to hear how you make your valuations…

[Tbone]

Imagine the fallout if you buy the rights to something that then gets a lawsuit filed against it…

[Mark_Petrie]

I wonder what kind of reassurance the new owners would have that the music will keep generating royalties?

For a well known song, it makes sense – radio will always play it, TV and films will continue to license it. But for library music? Someone has to be pushing it, marketing it to potential broadcasters.

I suppose for this reason, an investor might prefer to just buy the writer’s share, and let the publisher continue to market the music.

I just glanced through some of the auctions – it looks like that’s what is being offered on most of them (but not all – some are offering the publishing and copyright).

I see composer John Fulford offered 50% of his writer’s share on music written for reality TV… I wonder how that went for him! If he’s lurking about, it would be awesome to hear from him.

And this one, which seems really LOW:

Bid on 100% of the ASCAP performance royalties generated by a collection of 270 works of production music by Judge and Jury Music, Inc.
Auction Type: Single-Unit
Sale Price: $37,000
Number of Bidders: 26

[huge]

I contacted them about auctioning a theme song I wrote. They value it by taking 6 X your last 3 years royalty statements. In my case, this meant they valued it at between 80k – 90k.

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