What Are Royalties?
When you hear a song on a TV show or stream your favorite song, you are witnessing a process by which money is passed
down to artists, songwriters, record companies, and more. And if you’re brave enough to invest your money in this
exciting world of royalties, you’d be able to help out your favorite artists earn money to produce music, while
earning some income along the way. Royalties are the money that a person or group earns when somebody
purchases their work. But a cut of that money can go to investors like you!
As with any investments, there are inherent
risks. Song decay, is a prevalent risk when
investing in royalties. Upon releasing a song,
revenue and streaming are at its highest. Over time as
streaming lessens, royalties do
as well. However, compared to investing in
just one song, artists are capable of releasing
multiple songs throughout the year to
maintain a steady royalty stream. Moreover,
adding royalties to your portfolio is a
great way to diversify amongst other
investments. Royalties attractive nature
comes from their reoccurring income,
attractive relative yields and lack of
correlation to the broader market.
The Future of Royalties
- By 2030, music sales (live music, recorded music, and music publishing) are set to double from $77 billion to $142 billion
- 21% of smartphone users are projected to be streaming music by 2030, thus increasing the need for streaming companies to pay for music
- Prices for standard music streaming subscriptions are expected to rise, thus increasing the money given to artists and songwriters.