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Music Royalty Funds
Music Royalty Funds invest in revenue-producing intellectual property related to music – principally the copyright to musical compositions, but also the copyright in master recordings. They invest in the revenue-generating potential of popular songs across multiple genres of music, and this investment model has been used by some of the world’s largest pension funds and private equity firms. Fund managers acquire these rights directly from songwriters, artists, independent publishers, other third party rights holders including lawyers, managers, record companies, A&R professionals and estate trustees. Such investment vehicles aim to capitalize on the music industry’s growth by investing in royalty-paying music catalogs.
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Music Royalty Funds will typically acquire classic, older copyrights. These high-quality songs have generally reached a steady state of earning and are not subject to the natural decline in earnings that typically occurs within the first four to six years of a song’s life. In addition, the Fund will seek to acquire songs that have gained notable popularity on the radio and in movies, television, plays and shows. By virtue of their enduring cultural relevance, these songs should earn a steady level of royalties regardless of future placement and licensing.
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Royalties are generated when a song is played:
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on the radio;
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through a streaming service;
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live at a concert, club, live broadcast or other venue;
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as part of a video game, movie, TV commercial or television show, and
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in many other ways, such as downloads, CDs, vinyl, DVDs, ringtones and so on.
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It’s important to note that older songs have seen an upswing in revenue generation as streaming allows listeners to immediately play whatever music they like. As the global music industry continues to evolve, digital music streaming in particular has been driving growth and breathing new life into the entire music industry.