Music Investment Marketplaces – Part 4: JKBX – the Game Changer?

JKBX, pronounced like ‘jukebox’, could be a game changer for the music investment markets. Rather than offering low-yield music catalogues from second-tier artists, JKBX sells profit participation rights to royalty streams from valuable catalogues, such as that housing the songs of OneRepublic frontman Ryan Tedder. By doing this, JKBX links the billion-dollar music rights market with the concept of fragmented music rights on investment marketplaces. Only time will tell whether this concept will ultimately succeed in the long term. In this part of the blog series, we examine JKBX’s business model and corporate structure in more detail.

Music Investment Marketplaces – Part 4: JKBX – the Game Changer?*

The Foundation of JKBX

Jukebox Technology LLC was founded by the music industry veteran Scott Cohen as well as Sam Hendel and John Chapman of UK-private equity firm Dundee Partners in 2023 headquartered in Culver City/California. In September 2023, Jukebox Technology launched the fractionalised music royalty platform http://www.jkbx.com on the Internet. Scott Cohen co-founded with Richard Gottehrer the digital music distributor The Orchard in New York City in 1997, which was acquired by Sony Music Entertainment in two tranches in 2012 and 2015 for a total of US $300 million. In 2019, Cohen left The Orchard to become Chief Innovation Officer at Warner Music Group, before  joining Sam Hendel and John Chapman to form Jukebox Technology.

Dundee Partners collaborates with Chord Music Partners, owned by the PE company Kohlberg Kravis Robert & Co. (KKR), to buy the KMR Music Royalties II fund for US $1.1 billion as well as the song catalogue of the One Republic frontman and songwriter Ryan Tedder. Dundee is also a partner of the PE company Francisco Partners and MUSIC, which purchased the Swedish Kobalt Music Group for US $750 million. Therefore, Dundee Partners was involved in the acquisition of three large music catalogues.

The Structure and Functioning of JKBX

JKBX is not the innovator of fractional music royalty marketplaces but is nevertheless a game changer. Unlike most of the music investment marketplaces that sell participation rights in artists royalty revenue streams, JKBX targets large music rights owners that want to monetize their catalogues. Rightsholders can offer parts of their song catalogues (publishing and master rights) as royalty shares on the JKBX platform. Therefore, Jukebox Technology founded the Delaware registered company Jukebox Hits Vol. 1 LLC on 3 April 2023, which secured US Securities and Exchange Commission (SEC) approval as a Regulation A offering in March 2024. The Offering Circular describes Jukebox Hits Vol. 1 LLC as “(…) limited liability company established to facilitate and manage investors’ economic exposure to the Company’s contractual right to receive a portion of the royalties, fees, and other income streams (“Income Interests”) related to or derived from musical songs, compositions, sound recordings, portfolios or catalogs (“Music Assets”).” Therefore, Jukebox Hits Vol. 1 enters into purchase agreements with so-called income interest owners, a synonym for music catalogue owners. The music assets are split up into so-called Royalty Shares that are issued in series, related to a specific music asset such as a composition, a sound recording or a portfolio of songs. As Jukebox Hits Vol. 1 is a SEC registered company, the music assets are sold like shares. The buyers of the Royalty Shares are entitled to receive a portion of the royalty revenue generated by the underlying licenses. However, the Offering Circular clarifies that the issued Royalty Shares “are unsecured limited obligations”, which “do not confer any voting rights on the holders thereof.” This makes it clear that the purchase of royalty shares does not establish ownership of the investors in the company Jukebox Hits Vol. 1 nor in the underlying music assets. Investors in JKBX royalty shares only acquire contractual rights to earned royalty streams. The contractual rights are purchased as Royalty Shares on the web-based platform http://www.jkbx.com, which is owned by Jukebox Technology LLC. Whereas Jukebox Hits Vol 1 LLC is managed and administered by the Delaware registered company Double Platinum Management LLC.

Figure 1: The JKBX conglomerate

Source: After Jukebox Hits Vol. 1 LLC, “Offering Circular”, March 1, 2024, p. 19.

Currently the only catalogue owner that has entered a purchase agreement with Jukebox Hits Vol. 1 LLC on 5 November 2023 is the Coda Songs LLC, which is a 100 per cent affiliate of Inkling Capital LLC. The sole owner of Inkling Capital, however, is John Chapman, who is a co-founder of JKBX. Therefore all the underlying publishing and master rights for the Royalty Shares are owned by a senior executive of JKBX. The records highlight that Jukebox Hits Vol. 1 LLC paid US $43 million in cash to Coda Songs LLC to acquire the income interests in the music assets. The purchase price should be refunded by the sale of the Royalty Shares, which are offered to so-called “qualified purchasers”.

The Economic Potential of JKBX

Figure 2: The top 10 performing Royalty Shares by yield

Source: JKBX, “All Listings”, n.d., accessed: 2025-03-27.

Figure 3: The 10 worst performing Royalty Shares by yield

Source: JKBX, “All Listings”, n.d., accessed: 2025-03-27.

The SEC Regulation A offering of Jukebox Hits Vol. 1 LLC stipulates that only “accredited investors” can buy Royalty Shares. These are natural persons with an income of more than US $200,000 in each of the two recent years and so-called High Net Worth Individuals (HNWIs) with a net wealth higher than US $1 million. Therefore, only relatively wealthy investors can buy JKBX Royalty Shares. Hence, JKBX has the right to review and accept but also reject a subscription to buy Royalty Shares. The JKBX music investment marketplace, therefore, only allows limited access to its products. The initial offering price of the Royalty Shares are determined by Double Platinum Management on an arbitrary basis. JKBX points to the risk, that the actual value of the investment, therefore, may be less than what investors pay. The Royalty Shares are sold on the www.jkbx.com platform on the Internet to “qualified investors” and the proceeds from the offering are used to fund the acquisition costs of the Royalty Rights and to pay overhead, employee costs, utilities and technology costs, which incur by the management company.

Although JKBX plans to launch a secondary marketplace to trade Royalty Shares, there is no intention to trade Royalty Shares on a stock exchange. Currently, however, no alternative trading system is available on the JKBX webpage. This is because Royalty Shares are unsecured limited obligations of Jukebox Hits Vol. 1 LLC, whose trade is associated with a high risk. Jukebox Hits Vol. 1 LLC has issued 97 Royalty Shares with different underlying composition and recording rights.

Despite its potential for innovation, JKBX is currently a sales platform for contractual rights to earned royalty streams and limited to wealthy investors. It is neither a trading platform for music rights nor a stock exchange for music shares. Furthermore, JKBX only has a single music catalogue, acquired from Coda Songs for around US $43 million. This investment must first be recouped by the sale of Royalty Shares. It remains to be seen whether further music catalogues will be available for the sale of Royalty Shares in the future.

Endnotes

Billboard, “Want to Invest In Your Favorite Song? JKBX Bets Fans Will Bring Billions to Market”, August 25, 2023, accessed: 2025-03-25.

Billboard, “Sony’s Orchard Acquisition, By the Numbers and Behind the Scenes”, March 19, 2015, accessed: 2025-03-25.

Music Business Worldwide, “Official: Warner hires Scott Cohen, co-founder of The Orchard, as Chief Innovation Officer, Recorded Music”, March 6, 2019, accessed: 2025-03-25.

Music Business Worldwide, “Confirmed: Kobalt sells catalog to new KKR venture, Chord, for $1.1 billion”, October 19, 2021, accessed 2025-01-15.

Music Business Worldwide, “KKR buys majority stake in Ryan Tedder catalog, marking investment giant’s return to music rights ownership“, January 11, 2021, accessed: 2024-12-11.

Music Business Worldwide, “Kobalt Music Group sold to US-based private equity firm Francisco Partners”, September 7, 2022, accessed: 2024-12-11.

In September 2023, JKBX also launched its Creator Program for artists, who want to sell a share in their royalty revenue streams; see: Music Business Worldwide, “JKBX, launching this week, confirms it will pay songwriters and artists direct via ‘Creator Program’ – even if they don’t own their rights”, September 11, 2023, accessed: 2025-03-25.

A Regulation A offering is a kind of mini Initial Public Offering (IPO), which allows to offer and sell securities to the public through a process that is similar to, but less extensive than, a registered offering; see: US Securities and Exchange Commission (SEC), “Regulation A”, November 14, 2024, accessed: 2025-03-25.

Music Business Worldwide, “Music royalties trading platform JKBX launches – with regulatory approval from the SEC”, March 6, 2024, accessed: 2025-03-25.

Jukebox Hits Vol. 1 LLC, “Offering Circular”, March 1, 2024, p. 1.

Ibid.

Ibid., p. 2.

Ibid., p. 1.

Ibid., p. 16.

Ibid., p. 45.

Ibid., p. 61.

Ibid., p. 13.

Ibid., p. 49.

Ibid.

Ibid., p. 25.

Ibid., p. 34.

Ibid., p. 14.

Ibid., p. 2.

Ibid., p. 34.

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).