Royalties as an asset class are relatively new to retail and institutional investors.
That’s because these yield-generating assets are so valuable that industry insiders restricted access to them for decades. Buying and selling royalty rights were limited to private backroom deals, with little competition and no transparency.
With Royalty Exchange, you can not only access these lucrative assets, but you can seamlessly add them to your portfolio with confidence.
Simply put, we make royalty investing easy.
There are two types of assets available on the Royalty Exchange marketplace.
Investor collects royalty income for the lifetime of the underlying copyright (Life of the creator PLUS 70 years).
Purchasing a Life of Rights asset gives you the right to collect royalties for the duration of the copyright while you continue to own it. For copyrights created after 1977, that duration is the lifetime of the last living creator plus 70 years.
Because there are fewer opportunities to acquire Life of Rights assets, competition is often fierce. Life of Rights auctions on average attract twice as many bidders and three times as many bids as Term Based auctions.
Investor collects royalty income for a fixed period of time (typically 10 years). Royalty income then reverts to the original seller after the end of the term.
The fixed timeframe of term-based assets is the preferred option for sellers who otherwise resist selling royalties permanently. As a result, you as an investor gain access to both a broader range of royalty investment opportunities, as well as more diverse and higher quality catalogs (and at lower costs).
The process of reverting royalty payments back to the original owner at the end of the term is managed at the point of sale, so there’s no action required on your part as an investor. Learn More About Fixed Terms >
In nearly every case, the underlying copyright is not included in your purchase. You are buying the right to collect income only. This means you don’t need to “work” the catalog to ensure continued revenues.
You are simply buying a percentage of the income earned from an asset shared with multiple others. This includes the artist, other songwriters, producers, and publishers. They’re financially motivated to ensure the asset continues to earn income. That’s their job, not yours.
Familiar Investment Vehicles
There are multiple ways to invest in royalties on the Royalty Exchange marketplace designed for any investor regardless of strategy or position size.
The best way to build a successful portfolio over time is to familiarize yourself with them all.
The Auction House
Our online Auction House allows investors like you to find quality royalty investment opportunities and buy directly from the owners themselves. We don’t conduct backroom deals or broker private transactions. Instead, we facilitate public auctions on a level playing field where everyone has access to the same information and opportunities.
Each listing includes the details necessary to help investors understand the income stream listed for sale:
- Historical earnings of the catalog
- Relevant rights and catalog information
- Links to contextual research, news, and other information
We recommend taking the time to “Watch” an auction to better understand bidding activity and how values can escalate for the different types of assets. You can do this by going to the Listings tab, selecting one of the open Auction House listings, and clicking the “Watch or Bid” button.
The eXchange is a public listing of music catalogs that you can make offers on at any time. There’s no auction… just a List Price set by the seller that you can either meet or counteroffer to see if they’ll accept.
The listings in the eXchange come from multiple sources. Some are catalogs listed by artists themselves. These are called Direct Listings. Others are assets previously acquired on the Royalty Exchange marketplace by other investors. These are called Secondary Market Listings.
In either case, you can either accept the List Price to automatically initiate the sale, or make an offer below the List Price to see if the owner will accept. You can also choose to use our automated Standing Order feature, which allows you to place an order for catalogs with specific parameters that we then match.
Each listing contains in-depth earning information about the catalog, including:
- Lifetime royalty payments
- Recent earning trends
- Top-earning sources
You’ll also find a full list of tracks included in each catalog listed.
All information is updated regularly with our proprietary analysis software, ensuring each data point is always up to date. At any given time, there are millions of dollars worth of royalties available to acquire. Click below to see what’s available.
Our Standing Orders feature offers automated investing and first access to new catalogues as they enter the marketplace. This allows you to predefine your criteria for acquiring royalties through parameters such as asset age, earnings multiple.
As creators submit their catalogs into our system for evaluation, we automatically match any that meet your criteria and present the owner with your standing offer. If they accept, your order is filled immediately.
On rare occasions, we will offer Private Syndicates to accredited investors in our All Access program. Private Syndicate participants can acquire an equity interest in multi-million dollar, top-tier catalogs. Unlike auctions, there is no bidding. The cost of Private Syndicate units are known in advance, proving the flexibility to take a position size in each catalog that best suits your strategy and risk profile.
Though these deals are much less frequent (Royalty Exchange has a stringent criteria for what would be offered in a Private Syndicate structure), they can be a unique investment opportunity when available.
As with any asset class, you want to understand the key risks associated before investing. The following are the most common, and how Royalty Exchange acts to minimize them in advance.
Risk: Asset Transfer
All transactions carry risk associated with transferring ownership of assets. Will one party walk away? Can the investor pay in a timely manner?
All deals on the Royalty Exchange marketplace are legally binding. Agreements with sellers are finalized well before the assets are posted for auction. All investors are verified prior to placing bids and are legally bound to pay if an auction is won or an offer accepted. This verification process ensures that all funds can transfer within 48 hours of deal acceptance and offers the fairest, safest way to transact on the open market.
Risk: Liens & Disputes
Disputes in the world of royalty assets are not uncommon, especially early in the life of the asset. Similarly, royalty assets are occasionally subject to tax or other liens for various reasons that could result in the garnering of proceeds.
On Royalty Exchange, all assets on our marketplace undergo a rigorous due diligence process, checking for encumbrances, liens, or disputes prior to listing. Whether you have invested in royalties for years or you are buying your first asset, you can rest assured that royalties purchased on our site are vetted and free of issues.
Risk: Collecting Payment
Collecting proceeds from royalties is complex. Government regulated entities aggregate payment in an antiquated, disconnected way which can prove complicated when buying various royalty assets from different distributors over time.
This is why Royalty Exchange acts as the administrator for all assets sold on our platform. This provides you with a “one stop shop” for your royalty payments, royalty auditing and tracking of your returns, and other support/service benefits.
One of the limitations to royalty investment in the past was a lack of liquidity. Just as royalty investments were once difficult to get into, getting out was equally challenging.
The eXchange allows investors to set a “List Price” to resell assets on the open market whenever they choose.
While some aspects of royalty income are consistent, with easy to follow trends, others are not. In particular, international income, outlier payments, and one-off legal settlements can distort earnings.
Royalty Exchange excludes or normalizes these payments when calculating list prices. This creates a more accurate valuation for the earning potential of any catalog, while still allowing for the upside of those unpredictable payments.
Recognizing the key characteristics of royalties is critical to selecting the appropriate assets and determining the right position size for your investing strategy.
Across the marketplace, you will find standardized data for all assets that provide easy and accurate comparisons across not only other royalty assets, but the more “traditional” assets already in your portfolio.
We blend common investment metrics like earnings history, price multiple, and internal rate of return, with metrics specific to royalty investing like Dollar Age and streaming performance. Together, this data will allow you to properly analyze and value assets with confidence.
Finally, we provide news and analysis on industry-wide trends affecting your royalty investments so you have the context needed to buy, hold, or sell.
Our library of Investor Guides explain how royalties earn, how payment is distributed, and what factors affect their performance. We also identify and analyze key metrics to help you build a valuation methodology that makes sense for your strategy and level of risk tolerance.
While royalty assets may vary, we ensure you can evaluate them all the same way. Listings in both the Auction House and The eXchange contain standard data critical to your decision making process.
Each listing will clearly state the type of royalty right involved, sources of income, and the entity responsible for collecting and distributing earnings.
Listings will include not only standard metrics like last 12 months earnings (as well as 3-year trends), but also proprietary metrics like Dollar Age unique to royalty investing. (What is Dollar Age?)
Market Trends and Analysis
The rise of streaming entertainment, music in particular, is transforming the way content is consumed worldwide. This is having major implications on the way royalties from that content is earned… in the best way possible.
Royalty Exchange closely monitors industry developments and shares relevant news, insights, and research reports with members through online blog posts, monthly newsletters, webinars, and more.
Become a Member
Taking advantage of these benefits unique to Royalty Exchange isn’t just easy. It’s free.
Simply click the “Get Started” button below to create a free account, and get immediate access to our listings, analysis, and new investment opportunity notifications.
Serious royalty investors can upgrade to our exclusive All Access membership program to enjoy in-depth analysis and insights, elevated access to exclusive assets and discounts, and other features. (Learn more).
You can start adding high-yield, uncorrelated royalty income to your portfolio today.