How to Make Money Buying Music Royalties

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How to Make Money Buying Music Royalties

The thought of retiring early is a dream for almost everyone. That is why a lot of people work multiple jobs and invest their money into financial vehicles that grow interest. However, some people don’t have enough time to work another job and are very risk-averse. If you are like this, don’t worry. There is a myriad of ways to earn passive income

One way of acquiring passive income is by investing in music royalties. Yes, you can invest and grow money from the created content of other people.  All you have to do is to put in money into a song or album and wait for your royalties.  It’s true that there is some risk associated with this, but the potential rewards are stellar in comparison.

So, is your interest piqued by the possibility of earning through music royalties? Don’t worry, because in the following paragraphs, we will explore in detail the basics of getting money from royalties. 

What are Royalties?

royalty investment

Every Christmas season, shops and restaurants blast Mariah Carey’s “All I want for Christmas is you” through their speakers. This song is so popular that even if its release was back in 1994, it is still raking millions of dollars. How is this possible? How can a song that is more than two decades old still generate income? For each time that this song is played in the stores or performed in concerts, it earns money through royalties. 

Royalties are payments given to groups or individuals for the use of their created content. Any content – books, songs, artworks, slogans – can be granted royalties wherein the creator receives the proceeds. You might not be aware of it but you have paid royalties for all the content you have bought. For instance, the book you got for $12 probably includes 7.5% royalties with it. 

In the music industry, royalties are given to the singers or composers every time someone performs or plays a song. It is a common misconception that songs only earn money when people buy their CDs, but that is not true. Just playing a song in a bar or in a concert will translate to earnings on the singer-producer’s end. 

Buying Music Royalties

Purchasing royalties is actually a form of investment, and the benefits of this will excite you. This is, after all, a promising alternative to the conventional investment options. For stocks, exchange-traded funds, and other financial vehicles, you are buying shares from a company, hoping they appreciate over time. In buying music royalties, on the other hand, you are taking hold of something else. You are buying a portion of the future income of a particular song.

Investing in royalties can be done before the release of a song or an album. The producer will sell royalties to investors for a certain amount. The money collected will then be used for promoting the song, or preparing for a phenomenal concert. Finally, once people start streaming the song, a portion of the royalties will be sent to the investors. This shows an easy way of earning passive income – the investors will earn as long as people continue to stream their songs. 

Note that investing in royalties is not exclusive to songs that haven’t been released yet. People can actually buy royalties for songs which have been running for some time. You just have to look for producers allowing this opportunity. And for that purpose, several music royalty trading platforms exist. 

Royalty Exchange is one of the leading royalty trading companies in the US. A lot of people prefer using their platform because it is fully online, giving convenience to those who are busy.  Royalty Exchange, in itself, does not produce music or songs. What this company does is that it connects the people to the producers through an online platform, thus enabling trading. 

A visit to the website of Royalty Exchange will show you that they auction songs, films, and educational materials first. They don’t just sell the royalties to anyone without checking on their capability to invest. Another good thing about the platform is that it is very informative. It includes the contract term, royalty type, price, and the yield, among other metrics. These information will help you decide on which song you are going to bid for the royalties. 

Other royalty trading platforms out there include Lyric Financial and SongVest. Lyric Financial primarily aims to empower budding artists. That is why aside from trading royalties, song writers can also avail of the music catalog loan through their platform. Meanwhile, SongVest’s platform is very similar to that of Royalty Exchange because its founder once worked for Royalty Exchange. Both Lyric Financial and SongVest start with auctioning royalty packages before they sell them. 

Now that you are familiar with different platforms for royalty investment, you can start making your move. Assess if the song you want to invest in is capable of maintaining its stream popularity in the long run. Remember that you can only get money from royalties if people actually listen to your selected song. And once you are sure about it, place your bid and wait until it gets approved. After that, you can just chill while the royalties keep on coming into your bank account regularly. 

Now is the Time to Start!

Just like other investment vehicles, royalties are time-dependent. The sooner you start your term, the more money you will possibly get. So, if you are thinking about investing in music royalties, now is the proper time to start! Prepare your money, select your preferred platform, and place your bid. 

Yes, there are possibilities of not getting your money back. Perhaps people don’t want to listen to that song anymore. However, this rarely happens because singers revive even old songs from the 80’s every now and then. There are billions of Spotify and Youtube users worldwide, and they will surely stream the song you’ll invest in. Before you know, income from your royalty investment will begin filling up your pockets. 

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