WHAT ARE ROYALTIES?
Royalties are payments made from one party (the licensee) to another (the licensor) for the right to the use of an asset. The asset can be virtually anything — from tangible assets like minerals and oil to intellectual property like songs, brands and patents. Royalties are usually paid as a percentage of revenues, gross or net, yielded from the use of the asset.
For more information on royalties, please visit our Royalty Resources section.
WHAT AM I BUYING?
You are buying the future income of a royalty asset. Each auction will clearly state which type of royalty asset are buying and all background information associated with the royalty asset.
For Music Royalty purchases, click here for an overview of what comprises a song and the different types of royalty rights.
DO YOU PROVIDE HISTORICAL REVENUE DATA FOR EACH ROYALTY STREAM?
Yes. Each listing will show at least 2-3 years of historical royalty revenue.
HOW LONG DO I OWN A ROYALTY STREAM?
The length of ownership varies depending on the type of royalty asset. Each listing will explicitly state the length of each investment.
WHEN DO I RECEIVE ROYALTY PAYMENTS FOR MY ASSETS?
Royalties are paid to you on a quarterly or biannual basis. The next quarter (after the reassignment of your purchased royalty stream) will be your first royalty payment.
To ease royalty distribution for you, Royalty Exchange also acts as the clearinghouse for all payments. This ensures that you will receive every dollar your item earns, and our royalty management system keeps you from having to manage all the intricacies of the respective industry or royalty payer.
HOW DOES BIDDING WORK?
Once you validate your accredited investor status, you can register for each individual auction. To place a bid, simply enter the amount of shares you want to bid on and at what price. Our unique auction widget will calculate the total cost to you (based on the current share price times the designated amount of shares) and your bid will be placed.
All bids are binding and must be placed online before the auction closes. If you wish to place a bid through another medium, please contact us at firstname.lastname@example.org for more bidding alternatives.
WHAT IS THE 5 MINUTE RULE?
The 5 Minute Rule makes online auctions as fair as possible to all bidders by allowing everyone an equal opportunity to place their best bid.
Here’s how it works: If a bid is placed in the final 5 minutes of an auction, the listing will stay open for an additional 5 minutes. This process will continue until no bids are placed within a 5 minute time span on the listing. The auction will officially end when the listing indicates the Auction is Closed.
- There is no limit to the number of times an auction can be extended. Therefore, we recommend you check back often before an auction nears closing time.
- Royalty Exchange makes every effort to ensure system availability. However (in rare cases), we reserve the right to close an auction prior to, or extend it beyond, the posted closing time. This may be done at our discretion and without warning.
- Royalty Exchange is not responsible for incomplete, failed, garbled, scrambled, delayed or misdirected computer transmissions due to technical computer hardware or software failures or other errors of any kind.
ARE THERE FEES ASSOCIATED WITH BUYING ROYALTIES?
Yes. We charge 2.5% buyer premium from the final sale price, and a 2.5% management premium on each quarterly royalty payment for the life of the asset.
For certain types of royalty streams, a management fee may be waived if applicable.
HOW DO I PAY?
All winning bids must be paid within 5 days after the close of the auction. All major credit cards, PayPal, money orders, and cashier’s checks are accepted. For high value items, special banking arrangements can be made.
WHAT IS A RESERVE PRICE AND WHO SETS IT?
A reserve price is a hidden minimum price—essentially, the lowest price that the seller is willing to accept for the item. If the listing ends without any bids that meet the reserve price, the seller is not required to sell the item.
Some listings on our platform will have a reserve price set by the royalty owner and Royalty Exchange. If there is a reserve price on an auction, it will be noted on the listing.
MAY I LICENSE THE ITEM PROVIDING THE ROYALTY STREAM ONCE I BUY IT?
This depends on the asset you purchase. If you are only buying the royalty rights, you can’t license the asset for further use.
In some cases, listings will have a copyright or full ownership up for auction. If you purchase these type of rights, you are allowed to use the asset any way you like.
HOW WILL I BE ASSURED OF WHAT I’M BUYING AND THE LEGALITY OF THE TRANSACTION?
Royalty Exchange conducts an extensive background check of each royalty asset up for auction and its ownership. In addition to background information provided by the current owner, we also verify each asset with the organization(s) paying the royalties.
For further information, please refer to the terms and conditions of the website and the associated detailed information posted in each listing.
WHAT ARE “CLOSING COSTS”?
We have invested a lot of time in creating a standard set of documents to use for each transaction. Unfortunately there many organizations that we deal with that pay royalties and each one has its own sets of ever changing forms and rules and regulations on making these types of assignments. The “Minimum Document Fee” covers all of the basic legal forms as well as our time to process and confirm that each assignment is completed correctly. The Fee scales based on the size of the deal so that we can spread the costs across all transactions, but more importantly, usually the bigger the deal the more complex the transaction.
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WHICH TYPE OF ROYALTIES CAN I SELL AT ROYALTY EXCHANGE?
All types of royalty streams are accepted at Royalty Exchange! While not limited to these industries, royalty streams from music (publishing, producer and/or writer’s share), books, TV shows, films, pharmaceuticals, patents, trademarks, solar energy and oil/gas can all be listed on Royalty Exchange.
WHAT EXACTLY CAN I SELL IN RELATION TO MY ROYALTY STREAM?
This is totally up to you! You can sell any percentage of your royalty stream. The combinations are almost limitless! Royalty Exchange will work with you on your ideal auction and how best to present your royalties.
HOW QUICKLY CAN I SELL MY ROYALTIES?
Once we have all of the previous years royalty statements, we can usually do an auction as soon as 30 days.
WHAT KIND OF BACKGROUND CHECK DOES THE ROYALTY EXCHANGE CONDUCT REGARDING MY ROYALTY STREAM?
Royalty Exchange has a very easy and simple process for anybody wanting to post items. There are no credit checks, and we only require the past 2-3 years of your item’s royalty statements including the last statement available to ensure there is no encumbrance on the payments.
WHAT DO YOU NEED TO PROVIDE US TO LIST YOUR ROYALTY STREAM?
To have your item listed on Royalty Exchange, you will need to provide us with the following information (items with an asterisk (*) refer only to entertainment royalties):
- What are you looking to sell?
- *For music, writer’s share (performance and/or mechanical royalties), producer royalties or publishing rights
- Who is currently paying your royalties?
- AT LEAST three years of royalty statements
- If you are able to access your statements online and download them in a CSV/Excel format, Royalty Exchange would prefer this method to provide a more extensive valuation of your royalties.
After we review your data and verify your royalty stream, we will discuss:
- What percentage of your royalty stream do you want to sell?
- *Which songs in your catalog do you want to sell and what percentage?
- What is your reserve price? A reserve price is the minimum price you would accept for a sale on our marketplace. If the price isn’t met, there is no sale.
- How we can best promote the auction? The Royalty Exchange will handle most of the promotion but any outlets that you can provide us will increase the possibility of your item selling. Here are a couple of examples:
- Social Media
- Personal Industry Network
WHEN WILL I RECEIVE PAYMENT FOR MY SALE?
If your listing sells, you will receive your payment after the final signed paperwork and payments are received by Royalty Exchange. This process can take about 5-7 days.
WHO SETS THE MINIMUM BID AND RESERVE PRICE?
The reserve price/minimum price will be mutually determined by you and Royalty Exchange management. We want to give you complete control of your items, as well as, provide you with the best scenario for your royalty stream to sell.
WHAT CHARGES CAN I EXPECT IF I SELL MY ROYALTIES THROUGH ROYALTY EXCHANGE?
The great thing about Royalty Exchange is there are no charges to list your items! Royalty Exchange is completely free to post your items, and we only collect 12.5% if your item sells.
*Items over $100K are eligible for reduced fee.
CAN I PRIVATELY SELL MY ROYALTY STREAM?
Yes. We value your confidentiality and can list your royalty stream privately on our website. Your royalties up for sale will only be advertised to our investor community.
WHAT HAPPENS IF MY ITEM FAILS TO SELL?
If your item fails to reach the reserve price, you have the option to have Royalty Exchange negotiate on your behalf with the highest bidders to strike a deal. Otherwise, there is no sale or cost to you.
IF I CHOOSE NOT TO SELL MY ROYALTIES, ARE THERE OTHER OPTIONS?
Yes. Our Royalty Advance Program allows you to receive an advance on your royalties for up to 3 years. To qualify for this program, you must make an average of AT LEAST $10,000 in royalty revenue over the past 3 years. To learn more about this program, please click here.
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