Chapter 8: Why Buy Royalties on Royalty Exchange?
Buying and selling music royalties is now easier than ever. Royalty Exchange has changed the way that investors and intellectual property holders come together to exchange music royalties.
For decades, the bulk of transactions took places between “in the know” established music industry professionals. These back-office deals made it very difficult for the rights holder to obtain a fair market value of their assets.
In many cases, the buyer has been able to purchase assets far below market value. But a public market brings many buyers to the sale.
This creates an environment where investors can determine the true value of the assets. Auctions ensure that the market values the asset – with different participants setting the price based on their own expectations for the asset’s performance and their own risk tolerance.
Royalty Exchange also ensures that everyone can participate.
There was a recent change to Tennessee law that allowed Nashville Royalty to sell stakes in their music catalog, but investors have to be residents of the state. It is an attractive crowdfunding investment given that the portfolio includes hit songs by Conway Twitty, Reba McEntire, George Strait and Martina McBride. Nashville Royalty’s founder Jeff Tweel has said that investors can expect an annual yield from 12% to 15%.
However, Royalty Exchange is both a primary and secondary market, depending on the who the interested parties are and their “network” within the music industry at large. This is open to investors all around the world.
The Royalty Exchange platform opens up the “back-room” nature of these deals to investors who wouldn’t otherwise be privy to their availability, including both non-music industry and music industry professionals.
The key difference: Royalty Exchange hosts single unit auctions between one seller and many potential buyers.
A single-unit auction is an auction where only one investment asset is made available. This starts when the seller sets a reserve price. This is a minimum selling price that is the lowest amount that the seller is willing to accept for an item.
If no bids meet reserve price when an auction ends, the seller is not required to sell the item. If there is a reserve price for an auction it will be noted on the listing.
Buyers can place bids only for the whole asset in its entirety, and there can be only one auction winner. Winning bids are binding legal contracts with the seller of the royalty stream. That means that if you win the asset, the seller must transfer you the asset. There is no second guessing. The asset is yours as the winner.
How to Get Started
You can begin by scanning the list of available auctions, right here.
The first step to participating in our auctions is to fill out our registration forms available at https://auctions.royaltyexchange.com/accounts/signup/.
You may individually register for each auction. Once registered for an auction, you can place a bid simply by entering the amount a bid amount and clicking “Bid Now.”
Our unique auction widget 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.
If you wish to place a bid through a medium other than the website, please contact us at firstname.lastname@example.org to discuss alternatives.