How Auctions Work

Overview

Royalty Exchange is an online marketplace that connects investors with sellers of royalty assets. We don’t conduct backroom deals or broker private transactions. Our commitment to open markets ensures all investors know they’re getting the value the market can support.

Each Royalty Exchange auction consists of a single asset made available to multiple bidders. All bids are public, and bids are accepted for the entire asset only. Each auction has only one winner, and the winning bid is a binding, legal contract with the seller to acquire the entire asset.

For each auction:

  1. We identify, qualify, and package royalty assets to make available at auction through our online platform.

  2. Interested investors bid on the royalty asset for the duration of the auction.

  3. Our team of experts make the closing process quick and easy for both parties.

  4. Sellers receive payment; investors receive the royalty revenue.

Here’s a more detailed breakdown of the process…

Registering

The first step to participating in our auctions is to create a Royalty Exchange account, which can be done by filling out our registration form. You may then individually view the listings available and register for any auction that you're interested in. Registered members of Royalty Exchange can opt in to receive updates about new listings, auction activity, and more.

Listings

Each Listing on Royalty Exchange goes through a rigorous evaluation process to ensure the seller has the rights to place the asset for auction and verify its financial history.

This consists of:

  • Overview: A short summary of the asset, its starting price, bidding increment, investment term, last 12 months of earnings, and payment/fee details.

  • Financials: A compilation of all relevant financial details about the royalty stream. 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 review and analysis.

  • Documents: downloadable financial spreadsheets and/or lists of all the assets included in the auction, and other relevant documents.

  • Media: Streaming music, photos, video, or other relevant context surrounding the asset for sale.

Watching or Bidding on Auctions

Once registered, you may participate in any auction you are interested in by clicking the 'Watch or Bid' button on the auction listing. You will be asked to confirm the phone number associated with your account. It will default to the phone number you registered with, but you may change it at this time by selecting your country from the dropdown menu and entering your mobile number. We'll send you a confirmation code as a text message (SMS). Enter this code into the space provided and you can then watch the auction. You will also get an email asking you to call us to go through our one-time verification process before you can start bidding.

The verification process is simple: please give us a call at +1 720-593–6472, Ext. 2, and our member services team will guide you through the process. It only takes a few minutes. We’ll ask you about your investing interests and give you a chance to ask questions about the auction and Royalty Exchange in general.

Each listing has a starting price, which 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 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."

Post-Auction Process

When you win an auction, a dedicated Royalty Exchange Account Manager will to guide you through every step of the closing process to ensure a smooth and speedy transfer. While the post auction process can vary depending on the auction, the general steps are:

  1. We send buyers a purchase agreement and invoice reflecting the closing bid amount immediately after the auction closes.

  2. The buyer signs the purchase agreement and has two business days to wire the closing funds. (All funds are held by Royalty Exchange in escrow until the closing process is complete.)

  3. The buyer has three business days for listing inspection, if desired.

  4. The buyer approves the transfer.

  5. The transfer process begins. The specific steps involved and the length of time needed to complete the process will vary for each auction.

  6. Once the transfer is complete, Royalty Exchange releases the funds to the seller.

  7. The buyer collects royalties!

Now that you understand how the auction process works, create a free account to view all of the music royalty assets we have up for auction on the site. You can create your free account in less than two minutes by clicking the button below.

Create a Free Account