This Unique Annuity-Like Asset Pays $16,000 A Year

Apr 07, 2016

Volatility has become the norm this year when it comes to investment performance.

Oil prices remain anemic, selling for less than $40 a barrel — or about as much as it cost to fill car just a couple of years ago.

Emerging markets — led by China — continue to make major markets nervous.

The New York Stock Exchange average is down by more than 8 percent over the last 12 months.

And the United States is facing its wildest election season in 50 years, which does little to allay the fears of most investors.

Despite this growing shadow of market volatility — or maybe because of it — alternative investments have come into their own over the last several years. Although even they aren’t immune. Fears of another housing bubble, or at least a painful correction, still haunt investors.

But the nascent market for royalty investors is clearly on the rise. This is driven, in part, by the growing popularity of online marketplace, Royalty Exchange, which specializes music royalties and similar assets that have a history spinning off regular income payments. Music royalty investments, for example, offer the average investor an opportunity to secure full or partial rights to songwriter and producer royalties, which can be valuable revenue streams with long life spans and even potential upside. Think of it as an annuity on steroids, without the nasty side effects.

Songwriter royalties can make for particularly interesting investments, since the latest figures show that digital sales — and royalty generation — make up half of U.S. record companies’ revenue.

Globally, it’s a market that’s only getting bigger. In 2013, according to the International Confederation of Societies of Authors and Composers, royalties totaled 7.8 billion Euros for rights holders worldwide. Performance royalties actually hit an all-time high, breaking the 6 billion Euro mark. And digital royalties alone grew 25 percent, even though they still only account for roughly 5 percent of global royalty generation.

One such offering that’s just hit the auction block is the Arnakata Music song catalog [click here to see the auction listing], which boasts publishing royalties from the Eurythmics, the Bee Gees, Judas Priest, The Tourists, the Flamin Groovies and others. These Universal publishing royalties include mechanical, performance and digital rights.

Over the last four years, this catalog has paid out, on average, more than $16,000 annually and had been paying out consistently for 17 years now. The track record of consistent income makes this catalog particularly interesting to investors looking for income opportunities.

This catalog may have upside too given the fast growing digital market. Every time any one of these tracks gets streamed, downloaded or played in public, the rights holder gets paid.

Digging deeper into this catalog, potential investors can see that the top five songs generate 80 percent of the total revenue. Those songs are:

  1. “Love is a Stranger” – The Eurythmics

Originally released in the United States in 1983, this was the second U.S. single off the band’s breakout album, “Sweet Dream (Are Made of This).” It would go on to peak at No. 6 in the United Kingdom and No. 23 in the States. It would eventually chart in more than a dozen countries worldwide. The band re-released the single as part of their greatest hits album in 1991.

  1. “Beyond the Realms of Death” – Judas Priest

Released in 1978 off of the heavy metal giant’s “Stained Class,” the nearly seven-minute song is widely considered one of the album’s highlights. The song would go on to be featured on at least half a dozen other Judas Priest albums.

  1. “Just Want to be Myself” – The Drones

At the vanguard of the British punk movement, The Drones featured this song on their debut album in 1977. It was re-issued in 1993.

  1. “So Good to be Back Home” – The Tourists

This song broke the top 10 in the United Kingdom for this British rock band in 1980. This short-lived group featured both Annie Lennox and Dave Stewart, who would go to international superstardom later in the 1980s as The Eurythmics.

  1. “Songbird” – The Bee Gees

This country-infused ballad appeared on the band’s 13th studio album in 1975, which was also the group’s last before diving head first into the dish movement.

Overall, this catalog features more than 330 songs spanning decades and genres, churning out steady royalty payouts twice a year for nearly 20 years. The listing can be found here.

It’s a unique opportunity to not only own a solid investment, but an impressive bit of music history.