Selling Royalties 101

Owning royalties and owning property has a lot of similarities. 

Both generate regular income to the owner. And because of that both attract investors interested in a piece of that income. 

Selling or renting a royalty stream to an investor can be part of a smart financial plan that gives you money today without giving up control of what you own. Here's how one artist we worked with described it: 

"I look at all my songs as little houses. Some are mansions, some are apartments. It's like selling real estate. It's like selling a house. And the beautiful thing about being a creator is you can always build more houses."

At Royalty Exchange, our job is to act much like a real estate broker for your royalties. We strive to attract and encourage competition among investors, with the ultimate goal of getting you the best result possible.

We do this in three ways: Pricing, Presentation, and Promotion.

PRICING

Setting a smart starting price for your auction is a critical first step. To do so, it’s better to focus on a price that will attract the most participation and engagement among bidders than to focus on how much you hope to earn from the sale.

That’s because the value of an auction is in the number of bidders participating. Setting a starting price too high can actually drive down the final price.

For starters, high starting prices take longer to attract an opening bid. The longer a listing sits without an opening bid, the lower its perceived value becomes among potential buyers. Also, higher prices attract fewer bidders. Typically that results in less bidding “action” in the auction, because the competition is less fierce, which in turn results in lower returns.

Ultimately, you set the price you’re most comfortable with. Our job is to provide you with recommendations and insights using the results of similar auctions as a guide (like a real estate agent providing neighborhood comparisons).

[Learn More About Auction Pricing Strategies]

PRESENTATION

In real estate it’s called “curb appeal.” The idea is to highlight the most interesting and attractive elements of whatever it is you’re trying to sell in a way that will attract potential buyers.

Just like every song is unique, every listing on Royalty Exchange has a different story. With royalties, there is a nearly infinite number of different factors at play that combine into the picture or story of what you’re trying to sell. Single track vs catalog. Songwriter share vs publishing share vs. master recording. Historical earnings vs average yearly income. Hit commercial song vs large production music library.

Our job is to create listings that are informative and attractive to buyers and drive bidding interest. What’s most interesting to investors is track record of income, so we conduct extensive research about each royalty for sale and how they make money.

But you can help us tell the broader story behind the financial component with such details as:

  • Uses of the song or catalog in movies, TV shows, advertisements, or other placements
  • Details of notable artists who have recorded or performed the song(s) included
  • Charting history, award nominations/wins, and other notable achievements
  • Any personal awards or achievements relevant to songwriting or performing
  • Quality images, audio files, video and other media

While investors look for income potential first, they’re also interested in owning compelling assets that they can talk about with family, friends, and colleagues. The better we tell that story, the more interest we can generate, and the more competition is directed to the sale of your royalties.

[Learn More About How Investors Value Royalties]

PROMOTION

The more people that know about your auction, the more bidders it can attract. At Royalty Exchange, we actively promote all auctions across all channels available to us, telling the unique story of each.

This includes sending notification of the initial listing to our community of over 17,000 investors via direct email, detailing the highlights of the royalties for sale and a link to the listing itself. We also promote new listings across all our social channels: Twitter, Facebook, and LinkedIn.

As auctions progress, we also email our investors updates if an auction is closing soon, extended, and any other important news. Registered bidders to each auction receive ongoing communication of new bids.

On occasion, we’ll even involve the press if there’s a relevant news hook or particularly interesting angle involved.

You can help by sharing and promoting your auction within your social channels. This can be as easy as sharing our social posts with your followers, or as involved as creating your own post. We’d also appreciate any suggestions on any media outlets or websites you think might be interested.

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Those are the three main components of planning for a successful auction. We do the rest, from ensuring all bidders are qualified, to managing the ownership transfer paperwork, to ensuring the funds are received.

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