A Cash-Boosting Asset For Every Investor

  in Investing Updates / Analysis

Jun 03, 2016

This alternative asset offers a huge boost and much-needed diversification to your portfolio.

Looking for the perfect cash-boosting asset to add to your portfolio?

If you’re watching CNBC or reading the Wall Street Journal, you won't hear about this.

Instead, you're hearing a lot about OPEC today.

Following news that an accord among the global oil cartel failed on Thursday, oil volatility is back in focus.

But the financial media is doing you a disservice.

That’s because a number of savvy investors have ignored the oil debate and focused instead on a cash-boosting asset that can generate eye-popping returns for decades.

We’re talking about intellectual property — and this asset class is slipping under the radar of major media outlets.

Royalties tied to intellectual property offer steady cash streams and strong diversification away from a market fueled by increased geopolitical volatility and Federal Reserve chatter. The assets can also grow significantly more valuable as unstoppable trends are set to unlock billions of dollars in new wealth.

You can start generating cash in a fun and exciting way if you just take a few minutes to understand one industry that is about to take off in a big way.

A Sweet Song for Investors

Think back.

You might remember that a lot of people thought Apple founder Steve Jobs was crazy when he invented the iPod.

It was the precursor to the digital phone that you’re either reading this on or is rattling on your desk.

Thousands of songs in your pocket… any time… anywhere.

Customers benefited from this generational technology.

It helped produce a renaissance of new applications that promoted music streaming and digital downloads.

No longer would you need to carry around scratched compact discs or stuff Double-A batteries into a CD player.

But digitalization of music disrupted the music industry's profits. Billions of dollars were lost each year to piracy.

After the demise of Napster as a source of digital piracy, streaming became an ad-based business model allowing fans to listen to music on a variety of devices for free.

That digitalization of music dramatically changed the way that music was purchased and how musicians, writers, and others were compensated through royalties tied to their underlying intellectual property.

While music consumption exploded at the onset of the 21st century, the industry saw its revenues decline steadily.

Industry revenues fell steadily from the late 1990s through last year.

But, things are about to change in a big way for the industry and the owners of intellectual property.

Get Ready for the Streaming Renaissance

In April, investment bank Credit Suisse said that they expected an inflection point in the revenues of the global music industry this year.

While physical revenues from vinyl, CDs, and other sources will continue to decline, paid-streaming services will fuel a rapid recovery through the end of the decade.

The last seven years has favored the consumption of free music, but now the elimination of advertisements and greater music selection is making premium services both cost-effective and a better experience for the consumer.

You can now effortless stream countless songs on Amazon Prime, Spotify, Apple Music, and other services.

Credit Suisse projects that paid streaming will generate immense revenues for the music industry in the future.

As Credit Suisse explains, revenues will revert back to 2008 levels by mid-2017 and surge toward the end of the decade.

To bolster these revenues, musicians and their publishing houses are exploring ways to embargo content from free streaming services — a decision that would accelerate traffic to paid-streaming subscriptions or to digital download stores.

Musicians will also benefit from better arrangements with streaming companies that rely on the best music available to sell subscriptions. Remember Steve Jobs? Credit Suisse projects that Apple will control a whopping 45% of the paid music streaming industry.

Sony Music CEO Doug Morris has praised Apple in the past as a company that will bring streaming to the mainstream and offer big revenues to the industry.

“What does Apple bring to this?” Morris said in 2015. “Well, they’ve got $178 billion dollars in the bank. And they have 800 million credit cards in iTunes. Spotify has never really advertised because it’s never been profitable. My guess is that Apple will promote this like crazy and I think that will have a halo effect on the streaming business.

A rising tide will lift all boats. It’s the beginning of an amazing moment for our industry.”

But the biggest boost could come when they're able to overhaul the decade-long free streaming of YouTube channels that has undermined their profitability. As the New York Times explains, a lobbying battle could change the future of copyright laws in a way that would dramatically favor artists and production houses.

With these unstoppable trends comes big revenue opportunities for musicians, writers, and those individuals who own the underlying intellectual property.

Remember, these royalty assets pay investors cash every single time that a song is played, streamed, downloaded, or purchased. Better yet — some of these assets that are available for purchase could pay you annual fees for decades. For anyone who gets out in front of this tidal wave of profit, royalty ownership could be a game changing investment.