About The Auction House

About Auction House listings, bidding, and more.
June 13, 2018

The Auction House is the original, flagship component of the Royalty Exchange marketplace.

This is where we list assets with a starting price set by the seller. Once a listing gets a bid, the auction begins, and typically lasts for about three business days. Once the auction ends, the highest bidder wins the auction.

Listings

Each listing contains the same information, which any registered investor can see.

Up top, you’ll see the current price, the time left on the auction and the number of total bids.

Next is the Overview, which consists of:

  • Starting Price: The minimum acceptable opening bid to kick off the auction.
  • Bidding Increment: The minimum acceptable amount for each subsequent bid.
  • End Date: When the auction is scheduled to end, barring the implementation of the Five Minute Rule.
  • Dollar Age: How long the royalties earned in the last 12 months have been earning royalties.
  • Earnings History: Typically the last 12 months earnings, unless the catalog is less than a year old, in which case the months available will be listed.
  • Investment Term: How long the royalty stream purchased will remain with the investor post-auction. Either Life of Rights or 10-Year Term.
  • Distributors: The organizations responsible for collecting and distributing the royalties in question.
  • Rights Included: Which royalty types generate the earnings being sold.
  • Interests Included: Which entity’s share of royalties is being sold (typically Songwriter or Publisher).
  • Track List: A link to all the songs included in the catalog
  • First Distribution: The next scheduled payment date for the royalty stream being sold.
  • Distribution Frequency: The schedule for future payments.
  • Buyer Fees: The one-time cost to the buyer for catalog administration or other fees unique to each catalog.

It’s followed by a chart outlining exactly what royalties are included in the listing. Because there are many different types of royalties a song or catalog could earn, any of which might be available to investors, it’s important to quickly understand exactly which royalty type is included in any given listing.

This chart standardizes that information in an at-a-glance chart. Just one look will immediately tell you which Musical Composition or Sound Recording rights are involved, which specific use of those rights generates royalties, and their sources of income. It also notes the organization responsible for collecting and distributing the royalties included.

With this most pertinent information about each listing up top, investors get a quick snapshot of each listing and determine whether they want to read further.

Description

What follows is a more in-depth description of the listing in question, highlighting the unique characteristics of each listing. This includes details on the top-earning songs, the key drivers of earnings (such as formats and artist-specific activity), factors to consider, and examples of similar closed listings for comparative purposes.

Financials

The financials tab presents the key highlights of the listing’s history in visual form, along with a link to the complete Raw Data should investors choose to download and analyze the earnings history using their own valuation method.

While we’ve standardized as much information as possible, not all listings contain the same information, depending on the asset listed. For instance, a listing for a single song will have slight, as all the information available will refer just to that individual song. Sound Recording royalties will be listed differently than Composition Royalties, because they earn royalties in fundamentally different ways.

But listings with similar characteristics will have standardized data presented.

This includes:

Royalties by Quarter: Royalty investors look for a history of earnings. We present the last three years’ history of earnings of the catalog listed, presented by quarter. Only catalogs younger than three years show less. This bar chart lets investors quickly get a sense of a catalog’s stability, and identify any outliers on a quarter-to-quarter basis. The full earnings history is available in the Raw Data file.

Royalties By Source: Overall royalties are helpful, but so is more information about the source of those royalties. Which sources are growing vs which are in decline. This graph shows the last 12 months of earnings by source, compared to the 12 months prior, with the growth rate clearly noted at the end. There’s also a pie chart that lists the last 12 months earnings by source compared to the earnings by source for the lifetime of the catalog.

Royalties by Song: Most catalogs include multiple songs, so knowing which tracks are responsible for the lion’s share of earnings is an important metric to track. Comparing the song-by-song earnings across the last 12 months, the 12 months prior to that, and for the lifetime of a catalog allows investors to analyze the key drivers and trends of the catalog listed.

Theoretical IRR

The Theoretical IRR is designed to convey multiple points of analysis into a single figure for evaluation purposes. It is not a prediction nor an estimate. As the bidding price increases, the Theoretical IRR figure will fall. , as the more you pay, the lower the expected return.

If no IRR is listed, it’s likely due to a lack of sufficient data to calculate (usually for younger catalogs) or because the data is based on a single factor that could dramatically alter the outcome if it should change at any time.

The Bidding Process

Once registered, you may participate in any auction you are interested in by clicking the 'Watch or Bid' button on the auction listing.

Initially, an auction will be listed in “Awaiting Opening Bid” status until a verified bidder places a bid at or above the starting price. Once the starting price is met, the auction clock will begin. Most auctions will run for less than one week.

You can place a bid simply by entering a bid amount in the specified increment and clicking "Place Bid." If you have not yet called us to complete the one-time verification process, you will receive a prompt to contact a member of the Royalty Exchange team to complete this necessary step.

Our auction system will keep track of all bids in real time and notify you of other investors' bids on the auction. All bids are binding and must be placed before an auction closes.

Proxy Bidding

A proxy bid is the amount that you set as your maximum bid for an auction. To place a proxy bid, simply enter your maximum bid in the bid field. Royalty Exchange's auction system monitors the auction bidding for the current high bid and will use your proxy amount to place incremental bids on your behalf to ensure that you remain the highest bidder. The automatic bidding will continue up to the maximum amount of your proxy bid, but will never go higher than the next highest bidding increment. That means that you could win an auction for less than what you were willing to pay.

Once the bid for your maximum amount has been placed, you will be notified if and when another bidder places a higher bid. You can then choose to continue bidding at a higher amount to remain in the auction.

Please note: if two or more bidders enter proxy bids for amounts at or above the minimum bidding increment, the bid that was entered first will win a tiebreaker. So, it may be to your benefit to place a proxy bid earlier in the auction countdown.

Five-Minute Rule

Royalty Exchange uses the “Five-Minute Rule” for auctions. If a bid is placed in the final five minutes of an auction, the auction clock will reset to five minutes and begin counting down again. There is no limit to the number of times the auction clock can be reset, so we recommend that you check back often as an auction nears closing time. When the auction has officially come to a close, the listing will indicate "Auction Closed."

Royalty Exchange remains committed to continually improving all aspects of our marketplace. We’ll update this guide and new features and changes are made to listings over time. If you ever have any questions or suggestions, please don’t hesitate to reach out.

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