Music royalties are becoming a popular investment, offering steady returns and diversification. If you're looking to buy or sell, here are the 5 key factors that influence resale value:
- Revenue Track Record: Consistent income streams and older, proven songs command higher multiples (5× to 15× Net Publisher's Share). Short-term revenue spikes should be normalized for accuracy.
- Music Genre Performance: Mainstream genres like hip-hop and pop dominate, but niche or emerging genres can offer higher returns for savvy investors.
- Copyright Length: Longer copyright durations ensure extended earning potential, making them more valuable.
- Artist Recognition: Popular, award-winning artists with global appeal and consistent performance drive higher valuations.
- Market Conditions: Interest rates, streaming trends, and economic factors can impact catalog pricing. Music royalties often resist recessions, making them a reliable asset.
Quick Overview
Music royalties are a growing market, with catalogs delivering average annualized returns of 13% or more. Whether you're an investor or a creator, understanding these factors can help you make informed decisions.
1. Revenue Track Record
A royalty asset's resale value heavily depends on its historical earnings. Reviewing 3–5 years of revenue data can help identify steady trends and provide insight into its performance.
Investors often evaluate the Net Publisher's Share (NPS), with catalog deals typically closing at multiples ranging from 5× to 15× NPS. On Royalty Exchange, each listing includes verified financials, ensuring investors have full transparency into the historical earnings and risk factors of a catalog before making a bid. Investors can also see projected cash flows based on past performance, making it easier to assess potential returns with confidence.
The age of the songs in a catalog also plays a big role in valuation. Older songs with proven revenue histories often command higher multiples, while newer songs (less than 5 years old) tend to have lower multiples due to their less predictable income streams.
For example, Royalty Exchange highlighted a catalog featuring songs from Jay-Z released between 2001 and 2009. This catalog demonstrated stability with annual cash flows of around $30,000, while its streaming income grew by 33% in the 12 months leading up to its sale.
It's crucial to differentiate between temporary revenue boosts (like those from viral moments or TV appearances) and long-term, sustainable income. Normalizing these short-term spikes ensures a more accurate assessment of future earnings. Once you've evaluated revenue trends, the next step is to examine how music genre performance can influence resale value.
2. Music Genre Performance
The type of music plays a big role in determining the resale value of royalties since some genres attract more listeners and generate higher revenue. Hip-hop and pop are particularly strong performers, dominating streaming platforms and shaping cultural trends.
Genres differ in terms of stability and growth. While popular genres often have higher starting valuations, more specialized ones can be undervalued, presenting opportunities for investors who recognize their loyal fan bases.
Emerging genres like lo-fi beats and ambient music can see rapid growth thanks to algorithms and social media trends.
Collaborations across genres can expand audience reach and improve performance metrics.
When deciding where to invest, it’s important to weigh current trends against long-term viability. Mainstream catalogs may provide steady income, but niche genres often bring in extra revenue through licensing deals for film, TV, and video games. On Royalty Exchange, investors can browse a wide range of catalogs from chart-topping pop songs to overlooked niche genres with high growth potential. The platform allows buyers to compare streaming trends, revenue history, and licensing potential—all in one place—giving them an edge in identifying high-value investment opportunities.
Next, we’ll explore how copyright duration impacts resale value.
3. Copyright Length
The length of a copyright plays a key role in determining the long-term earning potential of music royalties. In the United States, for music created after 1978, copyrights last for 70 years beyond the death of the creator. This means that for living creators, the copyright can extend well over a century.
Much like fixed-income investments, longer copyright durations tend to command higher premiums. Data from platforms like Royalty Exchange, which has facilitated over 2,300 transactions and handled more than $190 million in royalty trades, highlights this trend.
When assessing copyright length, investors should focus on two main aspects:
- Original Term: This defines how long the asset can generate earnings. For collaborative works, the term depends on the lifespans of all contributors.
- Remaining Term: This directly impacts the asset's current value. Once the copyright expires, the asset no longer generates royalty income and loses its resale value.
Shorter terms typically require a higher yield to attract buyers. However, the market generally favors assets with longer copyright durations, as they promise a more reliable and extended income stream. Royalty Exchange takes the guesswork out of evaluating copyrights, providing buyers with clear legal documentation and expiration timelines. Investors can easily see whether a catalog includes rights that extend for decades or if the earnings window is limited—allowing them to structure deals accordingly.
4. Artist Recognition
An artist's public image and standing in the industry play a major role in determining the resale value of their music royalties. Gregory Walfish, Co-founder of Xposure Music, puts it simply: "An artist's popularity can be one of the most significant drivers of a catalog's value".
Global Reach and Audience Appeal
The more widely an artist is known, the higher the potential value of their royalty catalog. Global fame can ensure steady income from diverse markets and platforms. Investors tend to favor artists who demonstrate:
- Long-term appeal
- An engaged fanbase
- Strong cultural connections
- Consistent market performance
In addition to broad appeal, formal recognition can further boost the worth of a catalog.
Awards and Industry Recognition
Awards and critical acclaim act as trusted markers of quality. They not only help increase a catalog's value early on but also provide reassurance to investors about its ongoing appeal.
Factors for Long-Term Value
When assessing an artist's recognition, investors often evaluate these key elements that influence royalty values over time:
- Cultural Impact: How well the artist connects with their audience on a deeper level.
- Relevance Over Time: The ability of the artist to stay current and resonate across generations.
- Revenue Consistency: Stable earnings from different income sources.
Artist recognition goes far beyond simple popularity numbers. It reflects the artist's overall career influence and their capacity to stay relevant in a constantly changing industry. These factors are essential when analyzing market trends and future opportunities.
5. Market Conditions
Royalty resale values aren't just shaped by revenue, genre, copyright duration, and artist recognition - market conditions play a big role too. Economic trends and shifts in the music industry can significantly impact valuations.
Economic Impact on Valuations
Higher interest rates have put pressure on music catalog prices. Music royalties continue to stand out as a solid investment option, even with economic pressures like rising interest rates. Unlike stocks or real estate, music royalties generate passive income that isn’t directly tied to market fluctuations—making them a unique hedge against inflation. On Royalty Exchange, investors gain access to catalogs that offer regular payouts, ensuring a consistent cash flow regardless of economic cycles. The platform’s auction system also lets buyers secure assets at competitive prices, maximizing their long-term yield.
Investment Performance Metrics
- Deals involving major artists surpassed $5 billion in 2021, marking a 180% increase from 2020.
- Non-DSP streaming revenue - driven by platforms like TikTok and Peloton - jumped over 50% in 2021, reaching $1.5 billion.
- Catalogs sold on Royalty Exchange have historically delivered average annualized returns above 13%.
Recession Resistance
Music royalties also offer a strong hedge against economic downturns.
This reliability makes royalties a standout choice for diversifying portfolios during uncertain times.
Regulatory Changes
In 2022, France became the first major country to enforce minimum streaming royalty rates by law Moves like this highlight the growing influence of regulation on the industry. Timing transactions around such changes can be critical.
Strategic Timing Considerations
Several factors influence the best moments to buy or sell:
- Interest Rates: Higher rates can reduce catalog valuations.
- Technology Trends: Shifts in consumer habits can affect long-term value.
- Market Maturity: Balancing peak earnings with potential future devaluation is key.
Keeping a close eye on these elements can help investors pinpoint the ideal time to act.
Conclusion
The music royalty market is evolving, influenced by digital trends and shifting investor behavior. Resale values for music royalties are shaped by several factors that impact investment decisions and outcomes.
In 2023, the value of music copyrights hit USD $45.5 billion, marking an 11% increase. This growth places the music industry 38% ahead of the global movie industry in terms of value. These figures highlight the growing appeal of music royalties as an investment option.
Timing and careful analysis are proving crucial. For example, a Misfits catalog purchased for USD $52,117 generated USD $11,425 over two years, resulting in a 58.4% ROI after just under 2 years. Similarly, a Kendrick Lamar catalog bought for USD $162,000 in 2019 delivered a 114% return in passive income, with offers now exceeding USD $500,000.
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 2025 and download the free Ultimate Guide To Music Royalties to learn everything you need to know about investing in royalties.
Market Evolution and Investment Considerations
The rise of streaming and digital consumption continues to reshape how royalties are valued. Institutional investors remain key players, driving both market growth and its increasing complexity.
Future Outlook
Emerging trends like the rise of local music and the growing contribution of developing markets to global music revenue are shaping the future. These shifts, combined with existing market dynamics, create a challenging yet potentially rewarding environment for investors.
Navigating this market requires in-depth analysis and well-timed decisions. The interconnected factors at play emphasize the importance of understanding these trends to make informed investment choices. Royalty Exchange simplifies this process by providing a fully transparent marketplace, complete with financial reports, historical earnings, and an intuitive bidding system—so you can invest in music royalties with confidence.
Sign up today to browse live royalty listings and start building a passive income portfolio in 2025 and beyond.
