Investing in music catalogs has emerged as a compelling avenue for generating passive income, offering diversification beyond traditional assets. Platforms like Royalty Exchange facilitate this by connecting investors with royalty-generating music assets. For those new to this investment class, exploring music catalogs priced under $50,000 can be an accessible starting point. Below, we examine five notable music catalog investments available on Royalty Exchange as of December 2024, analyzing their financials, historical earnings, and potential risks.
1) Boosie Badazz, Deebaby, and More Publishing Royalties
- List Price: $33,000
- Highest Open Offer: $28,500
- Last 12 Months (LTM) Earnings: $6,696
- Earnings Multiple: 4.93x
- Dollar Age: 7.75 years
- Number of Offers: 35 offers by 5 investors
- Term Length: 10-Year
Overview: This catalog features songs from prominent Southern hip-hop artists, including Boosie Badazz, Deebaby, and Slim Thug. Notably, 74% of the catalog’s earnings over the past 12 months were generated from streaming sources, with streaming mechanicals contributing 67% of these earnings. The catalog has sustained a positive Compound Annual Growth Rate (CAGR) of 4.36%, indicating consistent growth.
Pros:
- Diverse Artist Portfolio: Inclusion of multiple artists may reduce risk through diversification.
- Reasonable Earnings Multiple: A multiple of 4.93x suggests a fair valuation relative to earnings for a 10-year term length for this age of songs.
- Positive Earnings Growth: A 4.36% CAGR indicates steady income growth.
Cons:
- Moderate Dollar Age: At 7.75 years, the catalog may face challenges in sustaining long-term earnings although the last 12 months earnings have outpaced the 3-year average by 4.8% indicating consistent and even growing earnings in recent pay periods.
2) E-40's "Choices (Yup)" & More – Songwriter Royalties
- List Price: $50,000
- Highest Open Offer: N/A
- Last 12 Months (LTM) Earnings: $3,769
- Earnings Multiple: 13.26x
- Dollar Age: 10.53 years
- Number of Offers: N/A
- Term Length: 30-Year ending August 5th, 2052
Overview: This catalog features songwriter royalties from E-40's classic tracks, including the hit "Choices (Yup)." E-40 is a renowned figure in the hip-hop industry, a bay area rap legend, and his music continues to resonate with audiences globally. This catalog has been sold twice already on Royalty Exchange demonstrating to investors the power of the secondary market and liquidity potential of holding music catalogs, earning royalties from them monthly / quarterly, and ability to resell them to others on the platform at any time. The earnings from this catalog continue to increase, with the last 12 months earnings being 30.7% greater than the 3-year average.
Pros:
- Established Artist: E-40's longstanding career suggests a stable fan base and consistent streaming numbers.
- Cultural Relevance: Tracks like "Choices (Yup)" have become cultural staples, potentially leading to sustained earnings.
Cons:
- High Earnings Multiple: At 13.26x, the investment is priced at a premium, which may impact return on investment.
3) Pop Hits by Enrique Iglesias, Rihanna, Jay Sean & Ciara – Songwriter Royalties
- List Price: $49,900
- Highest Open Offer: $46,000
- Last 12 Months (LTM) Earnings: $11,858
- Earnings Multiple: 4.21x
- Dollar Age: 14.56 years
- Number of Offers: 13 offers by 9 investors
- Term Length: 10-Year ending September 2nd, 2030
Overview: This catalog listing includes songwriter royalties from pop hits performed by artists like Enrique Iglesias, Rihanna, Jay Sean, and Ciara. The catalog has shown consistent earnings, with a 3-year average of $10,747. The catalog is currently demonstrating reasonable growth in the past year with earnings 9.8% greater than the previous 3-year average. The current list price multiple of 4.21x is fair value given the 10-year license deal and it already being 4 years into the term of the deal.
Pros:
- Diverse Artist Portfolio: Involvement of multiple high-profile artists reduces risk through diversification.
- Consistent Earnings: A steady 3-year average indicates reliable income especially considering continued growth in earnings of the past 12 months alone.
- Reasonable Earnings Multiple: At 4.21x, the investment is fairly valued relative to its earnings and term length.
Cons:
- Term Length: With only 6 years remaining in the deal, an investor may not want to bid on this type of catalog with such a short term length, and instead focus on longer term deals where they can earn from the catalog for longer periods of time.
Getting Started with Royalty Exchange
For those interested in earning passive income through royalty investing, Royalty Exchange offers a user-friendly platform to explore and invest in music catalogs. By signing up for a free account, investors can access detailed information on available listings, historical earnings data, and make informed investment decisions. By signing up, investors can access detailed information on available assets, including historical earnings and associated rights. The platform has facilitated over 2,000 transactions and $170M+ in volume.
On Royalty Exchange you can sign up as an investor and search through thousands of music catalog listings that include producer and songwriter royalties to some of the biggest songs of the past few decades. Discover why song royalties are one of the best investments to grow your wealth in 2024 and download the free Ultimate Guide To Music Royalties to learn everything you need to know about investing in royalties.
Steps to Get Started:
- Create an Account: Visit Royalty Exchange and sign up for a free investor account.
- Browse Listings: Explore available music catalogs, including those from artists like Jay-Z, Jimi Hendrix, Dire Straits, and Ariana Grande.
- Analyze Opportunities: Review financials, historical earnings, and artist information to assess potential investments.
- Place Offers: Submit offers on desired catalogs or participate in auctions to acquire royalty rights.
