At Royalty Exchange, we make the process easier by giving buyers and sellers a clear marketplace where they can do business on an equal level.
This guide will show you how to buy music royalties on Royalty Exchange, from setting up an account to making an offer. This way, you'll know how to make the most of this unique investment opportunity.
Creating An Account
Before anything else, you have to create a free account to:
- Be the first to know when new royalty investment opportunities are available (usually three/week)
- Bid on auctions or make offers to other investors for royalty assets as they appear on the marketplace.
- Access in-depth educational resources on royalty types, royalty investing, royalty news, and more.
Creating an account is easy.
- Visit the Royalty Exchange Website: Go to the Royalty Exchange homepage.
- Sign Up: Click on "Create an Account" to begin the registration process.
- Provide Your Information: Fill out the necessary details, including your name, email address, and other required information.
- Verify Your Email: After submitting your details, you will receive a verification email. Click the link in the email to verify your account.
Browsing Listings
Now that you’ve created an account, it’s time to use your newly created account credentials to log in to the Royalty Exchange platform. Once you’ve logged in, you can navigate the listing section with no hiccups.
Use the eXchange to view available music catalogs. The Exchange is your home for purchasing music royalty assets. Here, you can make an offer directly to the asset owner.
Listings can have a List Price, which is the seller's minimum acceptable price, or be open to Best Offers. The listings come from:
- Direct Listings: Catalogs added by the original rightsholder, such as artists, labels, and publishers.
- Secondary Market: Assets previously acquired by other investors who are now reselling them.
Each listing provides detailed information, including earnings history, dollar age, investment term, distributors, rights included, and tracklist.
Listings also contain information like the number and size of offers made since listed (depicted below). All listings are single-seller, single-buyer transactions, so there are no fractional share sales. Finally, all bids and offers are binding, meaning that if your offer is accepted, the seller must transfer the asset, and you must pay the agreed-upon price. You can learn more about The Exchange at this link.
You can use the filtering tools to sort assets by factors and refine listings based on criteria such as earnings or song age.
Investment Structures
If you are interested in buying music royalties directly on Royalty Exchange, it is important to understand the three different kinds of investment structures offered on the platform and how the Royalty Exchange marketplace (“The Exchange”) works. So, let’s cover each of these topics.
At Royalty Exchange, we make acquiring music royalty assets easy. We do this by creating music royalty listings available in three types of investment options. We categorize these options by their investment horizon (i.e., how long an investor will receive cash flows from the IP):
Life of Rights
In a Life of Rights deal, investors collect royalty income for the lifetime of the underlying copyright. Purchasing a Life of Rights asset gives you the right to collect royalties for the duration of the copyright while you continue to own it. For copyrights created after 1977, that duration is the lifetime of the last living creator plus 70 years. Because there are fewer opportunities to acquire Life of Rights assets, competition is often fierce. Life of Rights auctions, on average, attract twice as many bidders and three times as many bids as Term Based auctions.
Fixed Term (typically 10 or 30 years)
Fixed Term assets allow investors to collect royalty income for a fixed period of time. Royalty income then reverts to the original seller after the end of the term. Some sellers prefer this structure compared to selling their royalties for the Life of Rights. Of course, the trade-off is that these transactions typically command a lower valuation multiple than Life of Rights deals.
Fixed Return
With a Fixed Return asset, investors collect a fixed dollar amount. This amount will differ from asset to asset and the time it takes to collect that total is variable. Once collected, royalty income then reverts to the original seller. These investments are quite similar to advances. The rate of return will depend both on the amount paid and the time it takes to receive the fixed dollar amount.
Making an Offer
There are several ways to make offers on the eXchange:
Accept List Price
Immediate Purchase: Accepting the List Price allows for an immediate transaction. The seller has committed to selling at this price, and you commit to buying.
Make a Manual Offer
Custom Offer: You can propose a price below the List Price to see if the owner will accept. These offers expire in 72 hours. To do this:
- Select the asset and click "Make Offer."
- Enter your offer preferences in the popup.
- The owner has 72 hours to accept or reject your offer. If accepted, the offer is binding.
Standing Orders
Automated Offers: Place a Standing Order to automatically match your criteria with available assets. To set up:
- Go to the Standing Orders tab and click "Place New Standing Order."
- Enter criteria such as minimum dollar age, earnings multiple, and total allocation.
- The platform will match your order to suitable assets.
Next Steps & Getting Started
We hope that this guide has provided you with all the information you need to get started on your journey in the world of music royalties. For individuals and institutions looking to invest directly in music royalties, Royalty Exchange offers the best solution for sourcing, acquiring, and administering these assets.
Getting started using Royalty Exchange to purchase music royalties isn’t just easy. It’s free.
Anyone can create a free account on Royalty Exchange to view any listing. You don’t need to be an accredited investor, and there are no fees to join.
For more active investors, our All Access premium membership program offers:
- Monthly Insights about the state of the Royalty Exchange marketplace and the broader music industry
- The ability to access our proprietary analyst benchmark valuations or ask our financial analysts questions about specific catalogs
- Significant discounts on marketplace fees
- Priority access to private syndicates
STILL HAVE QUESTIONS?
Register to attend one of our monthly Investor Office Hours sessions — an open Q&A where our staff answer all your questions. You can submit a question in advance or ask one live. Invest in music today and reap the benefits of earning passive income from music rights whose value is independent of macroeconomic markets.
We’ve prepared this guide on Royalty Investing Made Easy to help you get started with investing in music royalty catalogs. This is the best guide for understanding why music royalties are one of the best passive income ideas of 2024 and sign up now to begin your journey into music royalty investing. Discover why so many investors today are using Royalty Exchange to buy royalties to expand and diversify their portfolio. Get your hands on your favorite music catalog today!
