Introducing Royalty Investing on the Order Book
Thanks for joining Gary and PJ as they introduce a new way to invest on Royalty Exchange. Watch the full replay from the webinar below. if you want to skip ahead to a particular part of the webinar, find the timestamps below.
- Recent Investment Results: 1:15
- Music Industry Overview: 2:20
- Royalty Investment Thesis: 10:10
- Order Book Demo: 18:30
- Live Q&A: 28:40
Responses to the Live Q&A Session
Vidrik: How do we collect royalties if something happens to your company?
If something happens, we are required by all of our accounting agreements to find you a substitute administrator or get the royalties assigned directly to you.
Anonymous: Are further detail available on earnings sources - eg on the Hip Hop catalogue listing at $23k, 67% comes from TV and Film which could of course come from 1 large synch deal - ie one exceptional item. Can that historical data be provided to inform a purchase?
We’ll be adding and improving the asset details pages in the coming weeks with vastly more information so that you have what you need to make an informed purchase decision.
Anonymous: Do you have to be an accredited investor for both Book Orders or Syndications?
You don’t have to be an accredited investor to participate in the Order Book. However, you do need to be an accredited investor to participate in future private syndicates.
Anonymous: Is the average yield your company has provided. Is that 14.68% based off of what you have collected and paid out in the last year or based off of the trailing 12 months of the end auction price?
The 14.68% yield is based off of what we have collected and paid out in the last year.
Anonymous: Are there any special privileges for joining All access investors and do you get first come to orders before others who aren't? And what are other specials you get for joining?
On the Order Book, if the seller is an All Access Investor member, the marketplace fee is reduced by 20% to 12% of the final value. All Access Investors also have the $500 transaction fee waived when purchasing assets. All Access Investors receive our monthly newsletter with original research and insight as well.
Anonymous asked: can we see offers made by others with the order book?
Yes, current offers and expired offers will appear below the Buy Now price on the offer page.
Ettore: I like the idea of diversifying through royalty assets, and I appreciate the liquidity of this marketplace. I would like to diversify further by investing in a variety of royalty assets rather than a single one. Are there ways to invest in a collective, similar to REITs?
There are no plans to collectivize assets and sell shares in that collection.
Anton: Will you make historical transaction data available for those who want to see what type of multiples/ IRR trades were done at?
Yes, we will be adding historical transaction data as soon as possible.
Randy: So, the order book is for investors liquidating their assets. the regular site is for the origination of assets by artists?
For the time being, that is how it’s structured. Once the capabilities of the Order Book are improved, we will consider originating catalogs on it.
Robert: Will the Order Book only have term assets or will there be any Life of Artist listings?
We will add Life of Rights listings in the future.
Anonymous: Is there an initial offer allowed or a reserve price?
There is no reserve price for offers. At the moment, you are free to enter any price you’d like as an offer. That may change in the future.
Anonymous: If I needed to liquidate only a piece of the royalties I bought, am I able to do that?
We are treating assets as unique, single units from the point of origination. So, if you purchased a catalog with 10 works, you could not break up those 10 works.
However, if you purchased 3 catalogs in different transactions, you could liquidate just one of those catalogs.
Anonymous: Time frame for Live of Rights build out?
Tentatively - Q4 2019.
Bradley: Long-term, will you keep doing regular auctions as well as this order book?
Yes, the Auction House will remain open. In the near future, the Order Book will be used as a secondary market for assets generated on the Auction House, we may originate catalogs in the Order Book in the future.
Kwasi: Will this platform have an asset valuation tool for sellers?
We don’t have a tool available for asset holders that will give a valuation range.
Anonymous: Can Canadians buy these royalties from the exchange? Any complexities? Do you settle via wire? How will the cash flows be transmitted back?
Yes, non-US residents can buy these assets. The closing process is handled via wire transfers and we distribute future royalty income using a service called Payment Hub.
Randy: are these the same assets that are being auctioned on the regular site?
Currently, these are assets that originated on the auction house. There are no simultaneous listing between the auction house and the order book.
Marco: I'm Italian. Is the contract of sale of royalties a USA contract ruled by USA law?
Yes. All Royalty Exchange contracts are based on U.S. law.
Micah: Since the remaining terms on these listings vary, can you please add some metric like (time left x LTM) to standardize the listings?
We’re experimenting with ways to display comparable data for assets with different terms remaining. This is great feedback and we’ll work to include something like this for you.
Marc: Who actually pays the royalties? Do you guys receive it and send it on, or is it paid directly from a central royalty clearing house?
We administer royalty payments for catalogs sold on our platform for free.
Anonymous: If an asset is purchased, and there is a lawsuit with the songwriter/publisher, I there any liability on my end?
There is no liability for the buyer. In our purchase agreement the seller indemnifies the buyer against third party suits.
Royalty1967: 14.68% yield. So after covering the actual purchase price, the investment makes 14.68% per year; is that correct?
This yield is a cash yield - it does not account for the return of principal on term advance deals.
Anonymous: Is there going to be a move in the future to bidding on a universal library of songs?
There are no plans to do this as of today.
Anonymous: do you charge an admin fee for collecting and paying out the royalties?
There is no admin fee or commission for collecting and paying out the royalties. 100% of what is collected gets paid to the owner.
Rod: Are the royalties shared by the number of investors who bid on the catalog being auctioned or just one investor keeps all of the royalty?
Just one investor (who’s bid/offer was accepted or purchased at the buy now price) will own and get paid the royalties.
Anonymous: Is the make an offer option binding, or the beginning of a negotiation?
Offers made are binding, meaning if the seller accepts the offer, you are required to complete the purchase at that price.
Currently, there is not an interface to have seller and buyers make “counteroffers” against each other. However, the seller may decline your offer and you can increase the amount with a new offer.
Jeff: How does one become an accredited investor?
Accreditation is a designation by the U.S. SEC. You can find more information about it here: https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/updated-investor-bulletin-accredited-investors
Kwasi: What is the fee for each completed sale to Royalty exchange on this platform?
There is a 15% marketplace fee paid by the seller on the final sale price and a $500 transaction fee paid by the buyer.
If the seller is an All Access Investor member, the marketplace fee is reduced to 12% of the final value. All Access Investors also have the $500 transaction fee waived when purchasing assets.
Micah: Could we export the Order Book to CSV?
Not at the moment.