Music Investment Marketplaces – Part 1: The Pioneers

The five-part blog series “Follow the Money! Music as a Speculative Commodity” (part 1, part 2, part 3, part 4 and part 5), examined the boom in the music rights market, fuelled primarily by large financial corporations. While billion-dollar investments in large music catalogues are only accessible to institutional investors, such as pension funds and insurance companies, or wealthy individuals, music investment marketplaces (MIMs) allow smaller investors to participate in the growing value of music rights. The concept of selling songs, or even fractions of songs, emerged in the mid-2010s, predating the boom in billion-dollar music rights sales. This five-part series traces the emergence and development of MIMs, presenting the most important platforms. This first part focuses on the pioneers of music investment marketplaces: SongVest and Royalty Exchange. They developed this new business model in the United States around 2010.

Music Investment Markets – Part 1: The Pioneers*

The pioneer music investment marketplace (MIM) is SongVest, which officially was launched by Sean Peace and David Prohaska in Raleigh/North Carolina in October 2008. Peace and Prohaska had the idea that music fans could invest in songs of their favourite artists and earn a potential income from the royalties they generate. In 2007 they organised the first test auction for a one-quarter interest in two songs by the band Stryper for US $25,000. In October 2008, SongVest started to auction fractions of royalties from 18 songs,  recorded by superstar artists such as Cher, Garth Brooks and Aerosmith. SongVest’s business model is to collect commissions from buyers and sellers at the point of sale, and then SongVest handles the royalty payments for the buyers.

In 2011, however, Peace founded Royalty Exchange with the singer/songwriter Reggie Calloway and the former band manager Wilson Owens. They revived the idea of the Bowie bonds but transferred it to the digital age. Initially, the business model was to auction entire music catalogues, and the first auction was in July 2011. This was when the royalties of the film composer and songwriter, Frank Churchill, who wrote the music for Walt Disney classics such as “Snow White and the Seven Dwarfs”, “Dumbo”, “Bambi”, and “Peter Pan” were sold. The iconic song “Someday My Prince Will Come” from “Snow White and the Seven Dwarfs”was put up for an auction price of US $20,000 promising an annual revenue stream of US $2,361.

In August 2014, however, Royalty Exchange started to securitize the assets by dividing them in multiple units. These could be sold to numerous buyers, who bid on a smaller or larger amount of the asset, which could be a catalogue or single song. In 2015, however, its founders sold Royalty Exchange to a group of private investors, who relocated the company to Denver, Colorado.

In 2020, Peace re-launched SongVest with a new business model. Rightsholders could submit their music catalogues to SongVest, which then conducts due diligence and a financial analysis of the future music royalty stream. Depending on the assessed value of the catalogue, SongVest set up the entire catalogue for auction or offered fractions of the song rights as so-called SongShares to the broader public. The SongShares have been approved by the US Securities and Exchange Commission (SEC) as regulation A+ securities offerings, making SongShare a relatively transparent music investment tool.

On its webpage, SongVest highlights 182 past sales, 10 current sales and 2 special auctions. The current sales include for example a mix of the artist and producer rights of David Richards, who worked with the British cult rock band Queen and died in 2013. The offer includes the public performance, streaming, and mechanical revenue of Richard’s producer share of several songs by Queen collected and distributed by Universal Music Group and the neighbouring rights for the same songs collected by the British collecting society PPL.

Figure 1: Revenue streams of Queen’s songs, 2021-2023 in US $

Source: SongVest, “On Sale Now”, n.d., accessed: 2025-03-10.

The analysis of the royalty streams for each Queen song now allows us to estimate the return on the investment in the song shares. If we take the 2023 revenue for “I Want It All”, which totals US $4,046, and divide it by the 1,515 shares offered, we get a revenue of US $2.67 per share. Subtracting the 5 per cent administration fee charged by SongVest from the value of the royalty payment, we would receive US $2.54 for one share of ‘I Want It All’. This would be an annual return of approximately 2.6 per cent. As song shares cannot be resold or returned to SongVest, buyers have no choice but to hold on to the rights they have purchased and hope for increasing revenues.

A different business model was pursued by the new management team that took over Royalty Exchange from its founders in 2015. In September 2017, Royalty Exchange created the company Royalty Flow, which bought the producer revenue stream from Mark and Jeff Bass, who helped to develop the career of the rap superstar Eminem. They produced Eminem’s albums from 1999-2013 and got songwriting credits for some of the songs. It was planned to sell Royalty Flow in an IPO at the New York Stock Exchange, offering fans a slice of Eminem royalties. However, the IPO failed and, therefore, the management team, decided to focus again on building a marketplace for sellers and buyers of royalty streams.

Their business model currently works as follows; An artist can put up for auction for example her/his music catalogue by defining the sales price of a share in the catalogue. Investors then can buy a portion of that rights portfolio in a public auction and will receive a monthly royalty revenue for a defined period. Since its launch in 2011, Royalty Exchange has completed more than 2,300 transactions, worth more than US $190 million.

Figure 2: Royalty Exchange transaction data, 2011-2025

* The right’s ownership of fixed return royalties expires once a pre-defined royalty quota is hit.

The analysis shows that almost half of the transactions achieved a price between US $10,000 and $50,000, and a further 31.7 per cent between US $50,000 and 250,000 and 13.9 per cent not more than US $10,000. Thus, the sales price for the catalogues are relatively high. The auction price for a catalogue is measured in terms of popularity (charting and award-winning songs and artists) and of the earnings of the catalogue in the last 12 months. 47 per cent of the transactions generate an annual revenue of less than US $5,000. A further 48 per cent of the catalogue transactions could earn up to US $50,000 of royalties in the past 12 months. Thus, a very small proportion of transactions generate considerable annual revenues of more than US $50,000.

An example of a music catalogue that generated more than US $50,000 in the last 12 months before the sale, are the US-royalty streams from 28 songs of the British pop band Duran Duran, which had several international hits in the 1980s such as “A View to A Kill”, “The Reflex”, “Wild Boys” and “Hungry Like a Wolf”. The catalogue was first put up for auction on 11 November 2024 for US $360,000 and reached a sales price of US $800,000 two weeks later. The catalogue earned US $72,299 in the 12 months preceding the sale and almost US $480,000 since 2009. Over a five-year period, “Hungry Like a Wolf”earned the highest average annual royalty of US $22,256, which accounted for 40 per cent of the overall earnings. Second was “Rio” with US $7,614 (11 per cent) and third “The Reflex” with US $5,255 (7 per cent). The remaining 25 songs generated US $30,237 on average annually. These earnings, which include only public performance rights, were distributed by the US collecting society ASCAP. A third of the US $72,299, earned in the 12 months before the sale came from live performances during the Duran Duran international concert tour. A further US $16,633 included revenue from music streaming with Spotify (US $3,483) as the most important music service provider, followed by Apple Music (US $2,886) and Amazon Unlimited (US $2,281). Radio airplay generated US $14,453 and satellite radio US $6,720.

The Duran Duran catalogue was granted for full copyright term, which means that the buyer is entitled to royalties for the duration of copyright. Almost one third of all transactions on Royalty Exchange were granted for life of copyright. 8.3 per cent of the transactions had a limited term of use of 30 years and further 22.2 per cent of 10 years. 3.8 per cent of the catalogue transactions were fixed return royalties, which expire once a pre-defined royalty quota is hit.

The analysis of SongVest and Royalty Exchange shows that only a few songs, even if they come from such well-known artists as Queen or Duran Duran, are actually cash cows that generate a large share of a music catalogue’s income. Conversely, this means that most songs in which small investors can invest only yield modest returns. Due to this unequal distribution of income, investing in music rights involves considerable risk, which should also be taken into account when considering other music investment marketplaces discussed in the following parts of this series.

Endnotes

The Wall Street Journal, “Dream On: Own Part of a Hit Song”, September 10, 2008, accessed: 2025-03-10.

Ibid.

USA Today, “Website turns music royalties into investments”, June 9, 2014, accessed: 2025-03-06.

Huffington Post, “‘Snow White,’ ‘Cinderella,’ Other Disney Song Royalty Rights Up For Auction”; June 23, 2011, accessed: 2025-03-06.

Ibid.

Billboard, “Royalty Exchange Raises $6.4 Million In Funding”, June 19, 2017, accessed: 2025-03-06.

Music Business Worldwide, “The SEC just green-lit the sale of shares in a hit song – and fans can buy them for $16”, October 14, 2021, accessed: 2025-03-06.

Rolling Stone, “Former Eminem Producers Selling Portion of Rapper’s Royalties”,

September 25, 2017, accessed: 2025-03-06.

Royalty Exchange, “How we overcame an embarrassing and costly public failure to grow our business by 276% in a year”, April 9, 2019, accessed: 2025-03-06.

Royalty Exchange, “Past Deals”, n.d., accessed: 2025-03-06.

Ibid.

Ibid.

* This blog post is based on the report IP Finance in the Music Industry, which was commissioned by the World Intellectual Property Rights Organization (WIPO).