TweelX, a combined publishing company and "music stock exchange," is using the JOBS Act's loosened marketing restrictions to offer the opportunity to invest in songs based on royalties. Investors receive a return of royalties or can resell stock. While the new rules do make it easier to market to potential investors, you still must be accredited which means if you're reading this, rather than having your assistant handle such mundane matters, then it might be out of your league.
On Monday TweelX announced the launch of their music stock exchange:
"TweelX, a Nashville-based publishing company, acquires songs through digital publishing and co-publishing arrangements with labels and other publishers. Then, through its patent-pending platform, TweelX issues stock in these songs to accredited investors. Investors may receive royalty distributions through online accounts on a quarterly basis or sell their shares."
TweelX Explained on TweelX TV
TuneRights, a company that is relaunching, attempted to start a song-based stock market a couple of years back basing value on sales and licensing. Based in Sweden, they were working under different regulations and I assume faced challenges attracting participants to an offering that seemed difficult to evaluate.
TweelX launches their exchange with what seems like a much stronger focus on music for which they serve as publisher and for which they track and collect royalties. Their focus on royalties as the basis for valuing individual songs seems a bit clearer since they're the ones collecting that data.
The basic idea is that songwriters and rights holders can get up-front capital rather than waiting for royalties to trickle in while investors can benefit from long-term returns or shorter term speculation. However, the focus on single songs is kind of problematic in that one never knows beforehand which songs are going to take off and the real return is likely to come from a group of songs from a particular artist or label.
The JOBS act led to Monday's lifting of the general solicitation ban, allowing TweelX to publicize their alternative investment offering to folks that would otherwise be much more expensive to reach.
However it does not remove the requirement that the offering is only available to Accredited Investors. Though I think these requirements are also less restrictive than previously, to invest on TweelX an Accredited Investor is one who (or whose spouse) has a net worth of $1 million or more excluding primary residence, has an individual income over $200,000 or has a joint income over $300,000.
Nevertheless this is a much more open situation than before and provides a ready opportunity for TweelX to develop their music stock exchange.
Hypebot Senior Contributor Clyde Smith (@fluxresearch/@crowdfundingm) also blogs at Flux Research and Crowdfunding For Musicians. To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.