Limited Time Invitation
Royalty Exchange is the premier marketplace for income-generating music royalties.
In fact, in the last 20 months, we’ve added 16,000 new investor members, with dozens more joining daily.
Why? Because our marketplace remains one of the few places where investors can secure double-digit yields without taking on disproportionate risk.
- Music royalties can offer yields of well above 10%.
- Royalty income is not subject to the fluctuations of broader financial markets.
- The music industry is in the early stages of a massive bull market driven by streaming services (like Spotify, Apple Music, and Amazon’s Prime Music) causing royalty income to soar.
Today, I want to talk to you about a brand new way investors like you can get access to some of the best music royalties investments we see. We’re talking about cash-generating catalogs of world-class artists, managed by the best in the business. In addition, I’m excited to announce the launch of a special membership program called All Access Investor which will give members ‘first-in-line’ access to these remarkable assets and at lower prices than other investors must pay.
First off, to give investors an easier way to invest in world-class music royalty catalogs, we’re setting up a series of Private Syndicates which allow accredited investors the opportunity to buy an equity interest in each individual catalog. The first of these will become available on a limited basis this Friday, June 1.
Through these Private Syndicates, you’ll be able to buy equity interests directly in multi-million dollar, top-tier, income producing catalogs. The first of these syndicates involves a catalog with a target IRR of 12-15%. (More on that first syndicate below).
And, unlike our auctions, Private Syndicates give investors the flexibility to take a position size in each catalog that best suits them.
With a forecasted 12-15% IRR, we believe our Private Syndicates can meet the income-generating needs of both individual investors with $10,000 to invest and hedge funds with a minimum position size of $1,000,000 - subject to availability.
I say “subject to availability” because the single biggest challenge royalty investors face is the lack of deal flow. There simply isn’t enough supply to meet investor demand.
We’ve conducted over 275 auctions in the last two years, attracting nearly 8,000 individual bids. And some investors are even starting to resell their assets after realizing their initial gains.
For instance, one investor who acquired a catalog in December of 2016 for $39,000 sold it earlier this month for $60,500. That’s a 55% return in just over a year. When you factor in the $15,000 in royalties the catalog earned while he owned it, that return is closer to 92%.
And the word is getting out. Investor appetite for music royalties is growing as more learn about the incredible income benefit they offer to your portfolio. As a result… auction closing prices are increasing. Average closing multiples have increased from 5.4x at the end of 2016 to 6.8x to date this year.
With over 22,500 investors registered on Royalty Exchange, competition for royalty auctions is getting fierce. For every investor who wins an auction, an average of seven others get beat. Demand simply outpaces the supply.
We're working hard on our end to increase the supply of auctions in the marketplace. If you're one of our registered investors you probably noticed. In the month May of 2018, we've conducted more than twice as many auctions as we did six months ago.
But still, we recognize there is a lot more demand for these music royalties than there is supply. That's why we’re introducing Private Syndicates and our new, premium membership program: All Access Investor.
In a moment I’ll outline the benefits of this new membership program. But first, let me tell you about the very first Private Syndicate Investment opportunity members will have access to. As you’ll see, it’s an investment that perfectly illustrates the broader investment thesis for music royalties:
Our First Private Syndicate
Our first Private Syndicate offers investors the chance to buy an equity interest in the composition copyright, and associated royalty income, of a music catalog spanning four studio album releases from a Grammy-winning American rock band. This includes Mechanical, Public Performance, Sync, and Print royalty streams, administered by the largest music publisher in the world by market share—Sony/ATV. It opened to a limited group of investors on June 1 and is filling up fast.
Investment Thesis #1: We leave the speculation to others. Instead, we invest in catalogs with a track record.
The catalog for our first Private Syndicate earned $314,685 in 2017. That’s up 15.1% from 2016. And the 5-year compound annual growth rate is 14%.*
(*Past performance doesn't indicate future success)
Investment Thesis #2: It’s a bull market in music; a rising tide that lifts all boats. But, remarkable assets - like this catalog - will receive a disproportionate share of the benefits.
The cash produced by this catalog is growing… to the tune of 15% in 2017 over 2016. That outperforms the 10% growth the three major music publishers combined reported last year. Streaming royalties, which are driving the overall music business growth, boast a 5-year Compound Annual Growth Rate (CAGR) of 51%. Adding to the bullish case for this catalog is the fact that some federal mandated royalty rates are set to increase. One of the royalty streams included in this catalog (archaically named “Mechanical Royalties”) just won a federal mandate that will increase payout rates by 44% over the next five years.
Investment Thesis #3: Partnering with extraordinary managers. Outsized returns are possible only when remarkable artists/catalogs have great managers.
The catalog includes royalties spanning four studio albums by a Grammy-winning band in the prime of their career. With 5+ million monthly Spotify listeners and 201+ million YouTube views, this band is represented by the management company responsible for some of the top-selling acts of all time. When the band’s label suggested a greatest hits album, the lead singer replied, “We feel like we’re just getting started.”
Investors in our Private Syndicate will get paid twice a year. We’re forecasting an average 12-15% return over 10 years, starting at just over 9% the first year and growing to 18% by year 10. These figures include the proceeds of an anticipated sale of the catalog and return of capital to shareholders after 10 years.
We’re proud to make this remarkable catalog available to accredited investors as our first Private Syndicate. And more of this caliber will soon follow.
It's important to understand that Private Syndicates work differently than the auctions you've seen on Royalty Exchange to date. Here are a few key differences:
- First off, Private Syndicates aren't auctions. Rather than engaging in a bidding war to secure music royalty assets, the cost of the units in the Private Syndicate are known in advance.
- The organizational structure of all of this is through the use of an SPV — special purpose vehicle. Essentially, we create an LLC that holds the music royalties in question. No other royalties will be owned by this LLC. It is specifically set up to hold this single catalog and direct royalty income to its shareholders.
- Investors participate by purchasing units in that LLC. Unit-holders or shareholders are then entitled to their proportional share of income generated by the LLC.
- Only accredited investors can participate in Private Syndicates. Accredited investors include anyone with over $1 million of investable assets outside of a primary residence. OR investors with an annual income of $200,000, or $300,000 for joint income, for the last two years. Accredited investors include individuals, banks, insurance companies, brokers, and trusts.
Not all music catalogs are created equal. And, I can say without hesitation that among the top tier catalogs we’ve seen, this catalog offers investors the best income potential. Combined with the great management team behind these artists, we expect this investment can offer real appreciation as well.
Introducing All Access Investor
As with all the royalties we’ve made available to investors, we expect the demand to outstrip supply. That's why we're rolling out our new All Access Investor Membership.
Subscribers to All Access Investor have the opportunity to invest in this and any future Private Syndicates before they’re made available to the 22,500+ (and growing) investors registered with Royalty Exchange.
Early Access is important when supply of great deals is scarce. But, All Access Investors get more than just Access…
As a member of All Access Investor, you’ll be able to buy units in the Private Syndicates at a substantial discount to what non-members pay.
For instance: In our first Private Syndicate there are up to 950 units available. As an All Access Investor, you’ll pay $3,635/unit. Non-members (assuming there are still units available after members participate) will pay $3,835/unit.
So, as an All Access Investor, if you buy 10 units, you’ll save $2,000. If you buy 100 units, you’ll save $20,000 compared to the price that non-members would pay.
If you participate in even a single Private Syndicate, it’s easy to offset the costs of joining All Access Investor.
Additional Membership Benefits
Waived Fees: No transaction fees for assets purchased on the exchange. This means savings of $500 per auction won.
Reduced Listing Fees (NEW): A 20% discount off our fees for any asset you resell on our platform. This means greater returns when you sell an asset previously purchased on the exchange.
Valuation Tools: Early access to valuation tools we use to understand music royalties including beta access to the proprietary model we’ve developed for valuing any assets listed on the exchange.
Valuable Insights: Monthly insights on music royalties, related news, and valuation strategies.
If you’re serious about investing in cash-generating music royalties there’s no better way to do so than as an All Access Investor. You’ll get the first opportunity to invest in all Private Syndicates, pay no buyer fees on auctions you win, and you’ll have the opportunity to beta test the tools and insights we invented to understand and value music royalties.
The annual membership fee is $2,999 and pays for itself with the very first Private Syndicate offering available. It only gets better from there.
Of course, you’ll also be able to invest in these Private Syndicates before non-members. And based on our early response, our members may buy out this entire deal… meaning the general public won’t even have the opportunity to invest. Of course, there may be some units left after our members buy in, but we can’t guarantee it.
As a member of All Access Investor you get all these benefits for the next year.
Simply click the link below to secure your All Access Investor Membership today. Once your order is received, we’ll share the confidential details — including the name of the band — for our first Private Syndicate, along with details on how you can participate.
Just select the button below, and you’ll be on your way.
— Matthew Smith
CEO @ Royalty Exchange
When will the first Private Syndicate be open for investment? The investment window will open for All Access Investors only starting on Friday June 1, 2018. If units are still available on June 22, 2018, they will be made available to non-members.
Can I invest in the Private Syndicate even if I’m not an All Access Investor? Yes, provided units are still available after June 22, 2018.
Do All Access Investors get the opportunity to invest for a lower share price in all Private Syndicates? Yes. A key benefit of All Access Membership is discounted pricing of Private Syndicate deals. In the first Syndicate, All Access members would pay $3,635/unit. Non-members (assuming there are still units available after members participate) will pay $3,835/unit.
What is the refund policy for All Access Investor subscriptions? If you wish to cancel your All Access Investor membership within 30 days after you sign up, we will refund your annual membership fee in full, provided that you have not subscribed to a Private Syndicate at the All Access Investor member price, or received a waiver of an auction transaction fee on the Royalty Exchange marketplace. After 30 days, your membership fee is non-refundable.
How does Royalty Exchange Make Money on the Private Syndicates? Royalty Exchange facilitates Private Syndicates for the benefit of creators and investors. The only form of compensation received by Royalty Exchange for this service comes in the form of a carried interest in the offering. This results in Royalty Exchange owning a small portion (typically between 5-10%) of the SPV used to facilitate the investment. (For more details relating to any particular Private Syndicate, please refer to the private placement memorandum covering the terms of that particular Private Syndicate.)