How Royalty Exchange Works For Artists

  in Financing Guides

Oct 07, 2020


Welcome to Royalty Exchange. 

Most artists visiting Royalty Exchange want to know more about how our platform works. This article explains how, and hopefully will answer a lot of the questions you might have. 

Who We Are

Royalty Exchange is a marketplace that unlocks the full, even hidden, value of your music catalog. 

You’ve probably heard about big investment funds like Hipgnosis buying music catalogs and artists making millions of dollars off these sales. But these big funds tend to focus only on big catalogs. Luckily, they're not the only ones buying. 

There are literally thousands of individual investors and investment companies with millions of dollars to spend who want to invest in music royalties too. They’re not limited to multimillion dollar catalogs like the big funds are. That means there’s an investor out there for nearly any artist with royalties to offer. It’s just a matter of matching the two together. 

That where Royalty Exchange comes in. We match you with the right investor.

So let’s talk about exactly what they’re investing in. 


They’re investing in your royalty revenue only. They’re not buying your rights. 

For instance, you probably get a check every quarter from your PRO, or maybe your record label, for your share of the royalties to the music you’ve made. 

If you work with us, we’ll let investors review how much your royalties have made in the last few years, and allow them to make you an offer to buy the right to collect all or just some of those royalties going forward. 

This doesn’t include the rights to your music. Just the royalties it collects. It only applies to the music you’ve already made, not any music you release in the future. And it doesn’t give them the right to control the music you make or how your music is used. 

This means you can sell the royalties to just a few songs in your catalog, or even just one. Or you can sell just a percentage of your royalties, like 20%, and keep the rest. Or you can offer just one royalty stream, like your PRO royalties, while keeping others, like sound recording and publishing.

All you’re doing is redirecting some of your future royalty payments to someone who’s paying you for those royalties in advance. 


How It Works

Here’s a quick overview before we get into it step by step—You make all the decisions, and we do all the work. 

So you decide how much money you want to raise. Then we’ll help you figure out how much or how little of your royalties you’ll need to offer, and for how long, to reach that goal. 

Once you set those guidelines, we’ll create a listing  on our marketplace with all the relevant details, promote it to our database of over 27,000 investors, and then manage the bids and offers as they come in. 

We also handle all the investment paperwork, and manager the transfer of funds into your bank account, as well as the transfer of royalties to the investor. All you need to do is cash the check.

Here’s a quick step-by-step preview of the process. 

STEP 1: SET YOUR GOALS

Maybe you want to see how much you can raise for your entire catalog. Or maybe you have a specific goal in mind. Either way, determine your goals before you get started so we can present you with the best options.

STEP 2: CONNECT AN ACCOUNT


Next, as part of the process of setting up a Royalty Exchange account, we asked you to connect your PRO or publishing account to our system. 

Basically, this is the easiest and most automated way to collect the data needed for investors to make you offers, and for us to provide you with a catalog analysis. With your account connected, we can determine what songs you own, when they were released, and analyze their earnings history… all without requiring you to provide any paperwork or additional documentation. 

If you don’t have PRO account or if you would like a catalog valuation for more than just your public performance royalties (ie: publishing royalties, sound recording royalties, etc.), we can compile a custom valuation for you. Just be aware that this will take a bit longer than the automated process. 

STEP 3: REVIEW INSTANT OFFERS


Once you connect your account, you may be presented with an instant offer from one of our investors. These are blind offers that investors place in the marketplace in hopes that an incoming catalog like yours might meet their requirements. If there’s a match, you’ll see the offer, which you can accept right then and there and get paid in a matter of days.

Or you can reject it, and create a listing.

LISTINGS

If you decide to create a listing, you’ll present your catalog to the largest community of music investors in the world, who compete to see which of them will offer you the best deal.

You options will include: 

  • Which songs and percentage of royalties to offer to investors

  • Which royalties to offer and which to retain

  • Permanent or Temporary investment terms

And there are 2 types of listings you can choose. 


STEP 4: COLLECT YOUR PROCEEDS

Finally, once the auction ends, or you accept an offer on your Direct Listing, we’ll handle all the paperwork and transfer the proceeds to your account. We’ll also manage the process of redirecting future royalty payments to the investor. You don’t have do to anything different… just collect your check. 

In the case of a temporary investment, we’ll also ensure your royalties will revert back to you at the end of the term. 

Benefits

Now let’s quickly review why we do it this way. 

YEARS OF ROYALTY PAYMENTS IN A DAY

First off is what’s called the “present value of money” 

Simply put, money today is more valuable than money expected tomorrow because you can put it to use immediately. 

  • Fund your next release without taking an advance

  • Replace lost touring income

  • Pay off your house

  • Retire!

NO RECOUPMENT. NO REPAYMENT

Second, this is not an advance or a loan. You’re not on the hook to repay a certain amount. It’s just based on time. If an investor pays you more than what your royalties earn in the future, you don’t owe a thing. 

And, investors are only collecting your existing royalties. That means any royalties you earn from new music are all yours. It’s not subject to recoupment like an advance is. 

KEEP COPYRIGHTS. KEEP CONTROL

Unlike labels and publishers who take your copyrights when they give you and advance, investing in royalties don’t include rights ownership. Our investors don’t own any of your music. They can’t tell you what music to make, when to release it, or have any say in how you music is used. They’re what’s called passive investors, and that means you keep total creative control. 

CREATE COMPETITION

One of the most powerful aspects of our marketplace is that it pits investors against each other, competing to offer you the best deal. More competition equals higher prices, and gives you control over the terms of the deal. 

Compare that to labels and publishers, who dictate their terms under which they’ll give you money. Our model takes the power away from them, and gives it to you.

WE WORK FOR YOU

We operate like a manager, where our success is tied to yours, so our incentive is to get you the best deal possible, not just the best deal for ourselves. 

Other companies offering you advance are paying you out of their pocket, so they’re trying to get the best deal for themselves. We’re not buying your royalties. We just operate a marketplace that connect buyers and sellers. So our incentive is to make everybody happy. The happier you are, the happier we are. 

NO ARTIST LEFT BEHIND

Big funds only know how to write big checks to big artists. If you’re not big enough for them, they’ll ignore you. We don’t. 

Because we have investors of all sizes in our marketplace, it means there’s an investor for any artist, any catalog. 

That makes us the only company serving the 99% of artists the traditional music business ignores. 


So that’s it. Thanks again for visiting Royalty Exchange. We hope we can be of service. 

If you have any other questions, feel free to drop us an email: artists [at] royaltyexchange [dot] com. 

Good Luck!