Veteran Music Acts Auction Their Royalties To Alternative Investors
Veteran musicians, legacy or heritage acts, whatever you call them, established musicians have a back catalog and related work that offers unique methods of monetization. Recently Loud And Proud Records partnered with Royalty Exchange to provide represented artists and rights holders with the option of packaging their royalties and putting them up for auction as alternative investments. Rather than gambling on future earnings of emerging artists, investors get the opportunity to invest in artists with an established history.
Royalty Exchange Creates A Market For Music Royalties
Royalty Exchange creates a market for royalties from not only entertainment but science and biotechnology patents as well as other forms of intellectual property.
Here's how it works:
"Royalty streams are qualified, packaged and placed at auction"
"Investors bid on the piece of the royalty stream"
"Sellers receive payment, Investors receive the royalty revenue"
Royalty Exchange helps sellers figure out the best way to package specific royalties, including what percentage to sell, and then conducts the auction online. They say that once they have "all of the previous years royalty statements" they can "usually do an auction as soon as 30 days."
Loud And Proud Records Partners With Royalty Exchange
In the announcement of the deal between parent company Lipsky Music LLC and Royalty Exchange, founder Tom Lipsky is quoted:
"Loud & Proud offers artists true and transparent global partnerships, along with the opportunity to enjoy ownership of the music that they create…We want to provide the creative community with innovative and flexible ways to maximize the value of their assets. This alliance with Royalty Exchange does exactly that, and it is a perfect extension of our artist-label business model."
Such deals often give legacy artists a chunk of money that they can put to use now to establish additional revenue streams. For example, Coolio's auction was intended to provide funds to take his cooking show to the next level.
TweelX recently launched a "music stock exchange" but it's a more complicated endeavor with less-established artists. It's an interesting effort but the straightforward proposition of Royalty Exchange combined with legacy artists appears to be the strongest play at this stage of the game.
- Royalty Exchange Helps Musicians Sell Shares of Royalties
- Music Publishing Company TweelX Creates Music Stock Exchange
- TuneRights: A Stock Market For Future Hit Songs
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.