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Jan 18

Buying Music Royalties – An Interview with Sean Peace of The Royalty Exchange

Whether you’re looking to diversify your portfolio or investing for the first time, few people think of buying music royalties, but could music royalties be a perfect contemporary investment?

Owning music royalties is no longer the exclusive club it used to be. Buying and selling music royalties is now easier than ever with the help of TheRoyaltyExchange.com. Recently I had the pleasure of interviewing founder and director, Sean Peace. Known for being a technology entrepreneur, Sean is also the founder of SongVest.com.

 

 

Media royalties are perhaps not on as many people’s radar as they should be. Can you explain to me what royalties are and why they can be a good investment?

 

Basically every time a song is sold or played on the radio, tv, or internet, royalties are generated for the songwriter and most of the time the artist.  These royalties are true alternative investments because they are not tied to the fluctuations in the market.  Additionally these royalties have incredibly long life spans of 70 years after the death of the writer.

Most of the songs we sell are over 10 years old, so the royalties are usually flat or in a very slow decline.  We usually don’t see big drops in income, only spikes when something good happens.  The royalties can definitely bounce around a bit, but mostly they are pretty predictable.  Of course this depends on the type of royalty.

We sell any type of royalties around music.  This can range from performance income, to digital or CD income from songwriters, artists or producers.  Also we plan on selling complete publishing catalogs, like the one Michael Jackson bought of the Beatles.

 

 

TheRoyaltyExchange.com offers everyday users access to previously hard to find royalty investments. Can you please tell me how The Royalty Exchange came to be and how it works?

 

I am a technology entrepreneur at heart and fell into music through a conversation with a good friend of mine in the music business.  After she explained to me how music royalties are bought and sold, I immediately saw a lot of inefficiencies that we could fix. I initially started with SongVest in 2007, selling individual song royalties as the ultimate memorabilia to fans.  This never really took off, so like all good entrepreneurs we pivoted and started a new company focused on the bigger picture of all royalties as an investment instead of memorabilia.

Our basic premise is to make it super easy for the investor, by taking care of everything for you.  We package the investments into easy to understand language and financials and then auction them off to the highest bidder.  For the winner we do all of the legal paperwork for the transfers and then manage the royalty streams.  They can then see all of their investments in our dashboard and just get one check from use for the payments.

This consolidation is key for our next phase which is a secondary market where a buyer can split his royalties into hundreds of shares to sell at smaller price points to our investors.  That is going to be very cool and a lot of fun for the investment community.

 

 

Does investing in royalties require people to have large sums of money to get started?

Right now it does, meaning $25K and up.  In the future the secondary market will allow you to buy in at $100 units.

 

 

Your partner site songvest.com also offers auctions of music to everyday users. How is The Royalty Exchange different from SongVest?

SongVest is not for investment, it is for memorabilia, where it might take 20 to 30 years or more to see a return.  At SongVest you get a cool gold record to hang on the wall and it is usually on a song by song basis.

 

 

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How often does your site hold auctions?

Depending on how much content we have, we usually try to do one auction a month, or if we don’t have an item that sells immediately we will put it in our “store” where people can RSVP.  Once enough people RSVP for an item, then we can put it up for auction or people can always make an offer on any of our items.

 

 

Can anyone get an account or are there minimum requirements to bid?

There are no requirements at all to bid.

 

 

With the ever growing demand for digital content, the future looks bright for those investing in music and video.  Would it be fair to say the 21st century makes royalties the perfect contemporary investment?

I believe so.  The music business is going through a lot of changes, and the good news is there will always be music and people who want to listen.  For the first time digital and CD sales have increased, so I see things definitely getting better.

 

 

What can people expect from The Royalty Exchange in the future and how do you see media royalties looking ahead?

The next big thing is the secondary market with additional royalty streams coming on board.  We are currently looking at Pharma royalties and I bet you will see some patent and trademark royalties hit soon.

 

 

If you would like to know more, check out www.theroyaltyexchange.com

 

 

ThinrtySomething.

 

 

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