We get this question a lot, and it all depends on your industry and your royalty stream. We encourage all potential sellers to contact us for a free royalty consultation.
Royalty Exchange can facilitate sales of all types of royalty streams. Royalties from industries including music (public performance, sync, mechanical, digital, etc.), book publishing, television, film, pharmacy, intellectual property and energy can all be listed on Royalty Exchange.
No. We can work with you to sell just the portion of a track/catalog that you own. We often sell tracks/catalogs with multiple rightsholders.
Yes, you can sell any percentage of your royalty stream and keep the rest as you prefer. Royalty Exchange will work with you to determine your funding needs, and help you create the right plan for your situation.
No, this is a sale of a percentage of your royalty income in return for upfront payment of future earnings. It’s better than an advance because it allows you to continue earning royalties on the percent that you don’t sell, and doesn’t involve predatory or confusing payback terms or interest rates.
From initial consultation to transfer of funds, the entire process takes about a month on average.
You will need to provide us with basic information like the details of your royalty stream, what organization distributes your royalties, and a history of royalty statements.
You do! You have complete control of your listing.
The transfer process varies, but most sellers receive their funds a month after we finalize an agreement.
There is no charge to list an auction on our platform. We only collect a commission after your auction ends, at a rate determined prior to listing.
It's simple -- our process begins with a short consultation call to understand your fundraising goals. We'll then help you put together a plan to raise the money you want.
You can request your free consultation call by clicking here and filling out the short form. We'll be in touch after.
Selling a portion of your royalty stream to private investors allows you to raise many years worth of royalty payments upfront without giving up control over your future earnings or going into debt. It allows you to diversify both your risk (protecting you against potential royalty shortfalls in the future) and your income stream (by allowing you to use the money to invest in new revenue streams).
No. In fact, most of the artists working with Royalty Exchange don’t sell their copyright. They just sell a passive interest in their royalty revenue stream, while keeping all control. You also will remain credited as the songwriter on the composition.
We’ve worked with songwriters, recording artists, and producers of all kinds and across all genres. They include writers behind such chart-topping hits as Cage the Elephant’s "In One Ear," Barry White’s "You’re The First, The Last, My Everything," Kanye’s "Mercy," and many many more.
They are typically high net worth individuals interested in acquiring royalty income. They’re mostly just interested in passive income. Think of them as silent partners who invest in your career, but don’t interfere.
Not unless you’re selling the copyright. You can sell just a portion of your royalty revenue stream, but still retain control over how your music is used.
No. You just tell us what you want to make available to investors, and we’ll take it from there. You make the decisions. We do the work.
Royalties are payments made from one party (sometimes referred to as the "licensee") to another (the" licensor") for the right to make use of an asset. The asset can be virtually anything -- from music, to tangible assets like minerals and oil, to intellectual property like copyrights, trademarks and patents. Royalty payments are often calculated as a percentage of the revenue generated by the asset's use.
Royalty Exchange offers the opportunity to purchase future royalty revenue generated by an asset. Details about the royalty stream you are purchasing and the asset that generates it will be available in the Financials tab of the auction listing you are viewing.
Yes, royalty revenue history will be made available on each auction's listing page. Only earnings relevant to the asset for sale will be presented. For example, if an auction is for 25% of the seller’s royalty stream, all financials presented will reflect 25% of the historical earnings. A spreadsheet with raw royalty data will be provided for your review and analysis.
Investment terms vary depending upon several factors, including the type of royalty-generating asset and the share of the royalty stream being sold. Each listing will state the investment term for the royalty stream at auction.
Royalties are generally paid on a quarterly or biannual basis. Payments will either come directly from the royalty paying entity or from Royalty Exchange, if we administer the payments on your behalf. You will receive your first royalty payment in the first distribution period after the reassignment of the stream.
The first step to participating in our auctions is to create an account, which can be done by filling out our registration form. You may then individually register for each auction that you're interested in. If it’s your first time registering for an auction, a member of the Royalty Exchange team will call to verify you as an investor.
Once verified, you can place a bid simply by entering a bid amount and clicking "Place Bid." Our auction system will keep track of all bids in real time and notify you if you have been outbid. Unverified bidders are not allowed to bid during the last hour of an auction, so please make sure you are verified early!
A starting price is the lowest price the seller will accept in an auction. 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 run for less than one week.
Yes, you may enter a bid higher than the minimum bid amount (a “proxy” bid) by entering that amount in the bidding field. As other bidders place bids the system will automatically bid on your behalf, one bidding increment at a time, until your proxy bid is reached. If your proxy bid is the same as another bidder’s, the earlier-placed bid wins. You may change your proxy bid amount at any time by entering a new amount in the bidding field.
Royalty Exchange uses a five-minute rule for auctions, where if a bid is placed in the final five minutes of an auction, the clock will automatically reset to five minutes. There is no limit to the number of times the clock can be reset, so we recommend that bidders check back often as an auction nears closing time. When the auction has officially come to a close, the listing will indicate that the auction is closed.
Royalty Exchange makes every effort to ensure system availability, but is not responsible for incomplete, failed, garbled, scrambled, delayed or misdirected computer transmissions due to technical computer hardware or software failures or other errors of any kind.
If you are the winning bidder, Royalty Exchange will send you an invoice for the closing funds. Buyers are obligated to send closing funds via either ACH or bank wire transfer to Royalty Exchange within two business days of winning an auction, and we’ll hold the funds in escrow until the royalty distributor confirms the transfer.
That depends on the asset purchased. Investors who buy only the rights to the royalty revenue generated by the asset, but not the underlying copyright, does not have a right to license the asset elsewhere.
However, full ownership of an asset will occasionally be posted for auction, in which case an investor may license the asset as desired.
Royalty Exchange does not give tax advice, but we expect that the income generated by royalty payments will be considered ordinary income for federal income tax purposes.
Tax and amortization matters are quite complex, so investors should consult with their tax advisors.
While we don’t provide investment or tax advice, we believe music royalties can be amortized as a depreciable asset over time.
But you should consult a tax attorney for details on calculating an amortization schedule.
Amortization of intangibles is governed primarily by sections 197 or 167 of the Internal Revenue Code of 1986, as amended (the “Code”).
Royalty Exchange verifies the ownership of each asset with both the current owner and the organization responsible for collecting and dispersing the royalties it generates before it is listed on our site.
No, in order to bid on an auction you just need to be independently verified by Royalty Exchange. Once verified, you may bid freely on any of the auctions listed in the marketplace.
Yes, non-U.S. citizens may invest in royalty streams listed on Royalty Exchange. However, please consult your financial or tax advisor to determine the tax implications of receiving U.S.-based income.
Yes. You can hold royalties in your own IRA if it is managed by a "self-directed IRA custodian” and fully funded in advance. If you don’t have one already, you can choose to open a self-directed IRA with our partner Alto IRA, which specializes in alternative investments. For more information, read the article here.
PROs do not set rates, but lobby the organizations that do. PRO's historically lobby for higher rates in order to issue larger payments to members, as well as collect a higher fee per their commission.
PROs typically deeply oppose anything that would cut rates or create rate wars between the PRO's.
In music industry, royalties rates are determined differently depending on the type of royalty involved.
Sound recording royalties are typically negotiated with the record label involved.
Composition royalties are set either by a negotiation with publishers, or for compulsory licenses by the Copyright Royalty Board.
Services like Apple or Spotify will always try to negotiate lower rates. But labels and publishers will only agree to lower rates if doing so is a net benefit financially.
Royalty rates are a fluid situation. While services ask for lower rates, there are both legislative and regulatory efforts underway to increase the rates paid to songwriters, and to add new payments to artists for radio airplay.
That depends on the type of royalty, the type of use, and the negotiated rate.
For a comprehensive overview of these factors, please download our Ultimate Guide to Buying Music Royalties.
In general, music is relatively uncorrelated from the economy and interest rates.
No one entity has total control over music pricing. It’s an ongoing negotiation between labels/publishers and music retailers/services.
If the entities collecting and distributing royalties are based in the US, they will pay in US Dollars, including royalties collected from international sources and licenses in foreign denominations.
There are several factors to consider when evaluating music royalties for investment. They include age of the asset, average yearly income, historical earnings, usage, location, and connections to evergreen artists and/or labels and publishers.
Like with any investment, it is important to conduct your own research that meets your criteria and concerns.
Because there are so many different types of royalties, and different organizations tracking them (not to mention differences in international royalty rules) it’s difficult to find just one source for all their yearly collections. So here’s a few places to get a general indication.