Investing in music royalties has emerged as a compelling avenue for those seeking passive income and portfolio diversification. Platforms like Royalty Exchange have democratized access to this asset class, allowing investors to acquire rights to earnings from various music catalogs. In November 2024, Royalty Exchange facilitated several notable music catalog sales, each presenting unique opportunities and considerations for investors. Below is an analysis of eight such sales from the past month, detailing their financials, bidding histories, and potential risks and rewards.
1. Boosie Badazz, Deebaby, and More Publishing Royalties
- Final Sale Price: $40,050
- Last 12 Months (LTM) Earnings: $6,135
- Earnings Multiple: 6.53x
- Dollar Age: 6.76 years
Pros:
- Diverse Artist Portfolio: Includes multiple artists, potentially reducing risk through diversification.
- Moderate Earnings Multiple: A multiple of 6.53x suggests a reasonable valuation relative to earnings.
Cons:
- Moderate Dollar Age: At 6.76 years, the catalog may face challenges in sustaining long-term earnings.
2. Shrek Film Score Performance Royalties
- Final Sale Price: $512,000
- LTM Earnings: $38,757
- Earnings Multiple: 13.21x
- Dollar Age: 22.08 years
Pros:
- Association with Popular Franchise: The Shrek series has enduring popularity, potentially ensuring consistent royalty streams.
- Stable Earnings: Historical data indicates reliable income generation.
Cons:
- Higher Earnings Multiple: A multiple of 13.21x reflects a premium valuation, which may impact ROI.
3. "Never Forget" by Future - Songwriter Royalties
- Final Sale Price: $11,500
- LTM Earnings: $1,488
- Earnings Multiple: 7.73x
- Dollar Age: 8.71 years
Pros:
- Single Hit Song: Investing in a specific track can offer targeted exposure.
- Reasonable Earnings Multiple: A multiple of 7.73x suggests a fair valuation.
Cons:
- Dependence on One Song: Earnings are tied to the performance of a single track, increasing risk.
4. Travis Scott, 50 Cent, ILOVEMAKONNEN ft. Drake - Songwriter Royalties
- Final Sale Price: $945,000
- LTM Earnings: $104,645
- Earnings Multiple: 9.03x
- Dollar Age: 8.42 years
Pros:
- High-Profile Artists: Involvement of renowned artists may lead to sustained earnings.
- Strong Earnings: Significant LTM earnings indicate robust income potential.
Cons:
- Higher Investment Threshold: The substantial sale price may limit accessibility for some investors.
5. Rod Wave, Chris Brown, and More - Publishing Rights
- Final Sale Price: $40,050
- LTM Earnings: $6,135
- Earnings Multiple: 6.53x
- Dollar Age: 6.76 years
Pros:
- Diverse Artist Portfolio: Includes multiple artists, potentially reducing risk through diversification.
- Moderate Earnings Multiple: A multiple of 6.53x suggests a reasonable valuation relative to earnings.
Cons:
- Moderate Dollar Age: At 6.76 years, the catalog may face challenges in sustaining long-term earnings.
6. Duran Duran Songwriting Royalties
- Final Sale Price: $800,000
- LTM Earnings: $72,299
- Earnings Multiple: 11.07x
- Dollar Age: 42.27 years
Pros:
- Classic Hits: Timeless songs with enduring appeal can provide stable income.
- High Dollar Age: Indicates long-term earning potential.
Cons:
- Higher Earnings Multiple: A multiple of 11.07x reflects a premium valuation.
7. K-POP Songwriter Royalties - MiSaMo, EXO, Billie, Super Junior + more
- Final Sale Price: $78,000
- LTM Earnings: $21,610
- Earnings Multiple: 3.61x
- Dollar Age: 2.87 years
Pros:
- Growing Genre: K-POP's increasing global popularity may enhance earnings.
- Low Earnings Multiple: A multiple of 3.61x suggests a potentially undervalued asset.
Cons:
- Shorter Track Record: Lower dollar age may indicate less established earnings history.
8. The Notorious B.I.G., Jay-Z, Beanie Sigel, + more - Publishing Royalties
- Final Sale Price: $83,999
- LTM Earnings: $5,755
- Earnings Multiple: 14.60x
- Dollar Age: 25.44 years
Pros:
- Legendary Artists: Association with iconic musicians can lead to sustained interest and earnings.
- Established Catalog: Higher dollar age suggests a proven track record.
Cons:
- High Earnings Multiple: A multiple of 14.60x indicates a premium price, which may affect ROI.
Getting Started with Royalty Exchange
For those interested in exploring music royalty investments, Royalty Exchange provides a user-friendly platform to browse and bid on various music catalogs. 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 valued at more than $170 million, underscoring its role in connecting investors with music royalty opportunities.
Conclusion
The music catalog sales on Royalty Exchange in November 2024 exemplify the diverse opportunities available in music royalty investments. While offering the potential for passive income and portfolio diversification, it's crucial for investors to conduct thorough due diligence, considering factors like historical earnings, income consistency, and associated risks. Platforms like Royalty Exchange simplify the process, making it accessible for both novice and seasoned investors to participate in this unique asset class.
