3 Reasons to Buy Music Royalty Assets in 2016

  in Investing Updates / Analysis

Dec 31, 2015
With 2016 here, Royalty Investor is focusing this article on providing our investor audience with royalty news that relates to the A trends in investing: Alternatives and Absolute Return. As you review your investment performance for 2015 and think about changes to your allocations for 2016, you may want to consider the unique attributes of music royalty streams as an investment vehicle. Here are 3 reasons to buy music royalties as a tool for diversifying your portfolio in 2016:
  1. Music Royalties are alternative assets that produce income streams

To illustrate this point, songwriter Jessie J. paid her rent for 3 years with just one song that she penned. Imagine owning that income stream, and receiving the monthly royalty check.

Or, go one step further! Imagine owning the royalty income from songs that have become icons in our culture. Think: Sinatra tunes, Christmas favorites, Jazz Standards, Pop, and Rock Classics. These are songs that continue to create income and even enjoy occasional income spikes from placements in TV Shows, Movies, and Video games.

These types of investments were not widely available to investors until recently with the appearance of companies like Royalty Exchange. Now investors can more easily gain access to these asset-backed, music royalty income streams for their portfolios. Watch this Yahoo! Finance Video: Jennifer Lopez: How to Invest in her Assets to learn about music royalty auctions.

Royalty Exchange did a total of $2.8M in auction sales of royalties in 2014. That number is five times what they sold in 2013. And the royalty auction marketplace is enjoying a strong launch into 2015. In addition to the auction marketplace, Royalty Exchange also offers pre-auction access to key music royalty assets to its registered accredited investors list €“ or Royalty Mogul program participants €“ allowing them an option to purchase before the opening of the auction in the public marketplace.

For more information on music royalty investment topics read these Royalty Review articles from contributing author, and investment analyst, Jonathan Hoenig. Royalty Review is an exclusive feature of Royalty Insider.

 Courtesy of Royalty Exchange: Photo Collage of Music royalties sold at auction in 2014. 
  1. Music Royalties produce Absolute Return

Just as growth stock investing dominated the 1990s and commodities and emerging markets ruled the 2000s, strategies with consistent, absolute returns will dominate investor attention today.

Music royalties can offer steady income that is uncorrelated with market fluctuations. Learn more about how royalties produce absolute return. Read Royalty Review: This is the Age of Absolutism.

  1. The Music Ecosystem is growing!  This benefits Music Royalties.

There has never been a wider music ecosystem than we have today in the entire history of music. Joe Belliotti music industry analyst for Coca Cola's Unbottled Blog tells us, More people than ever are engaging with music in more ways than ever before. Joe believes this ecosystem provides more opportunities for music professionals that ever before.

Every day in the music industry news there are reports of new businesses that are focusing on helping artists promote their music and collect their royalties. Business creating better tools and processes for distributing music like CD Baby, or the new royalty data visualization tools, called ARIA, from Royalty Exchange. There are also a number of royalty management companies -- like The Music Royalty Co. (MRC) backed by Cooking Vinyl, and Frank Liwall and folks at The Royalty Network -- that focus on helping artists by improving royalty collection, and by finding new placements for songs. Cooking Vinyl's Ray Bush confirms these efforts to focus on data saying, "The explosion of data analysis caused by streaming means there's never been a more important time for companies to get their royalty processes straight.  We believe there's a real gap in the market for a company like MRC, which truly understands how those (processes) work..."

All of these additions to the music ecosystem bode well for royalty owners and royalty investors.


New Data Analysis Tools + Improved Processes


Growth of Royalties and Improved Royalty Collection

  Lastly, and just for fun -- if you invested wisely last year, and diversified your portfolio with music royalties you might just find yourself in the position to enjoy a luxurious getaway in the New Year to the hangouts frequented by other royalty owners.  Places like a Songwriter's Island paradise! Check out the article in NEKST, and be sure to click on the link for the live WebCam of the beach scene. While relaxing there on the beach, rubbing elbows with music celebs and royalty owners, you can get the inside scoop on what's is on the horizon to be hot in music for 2016.