Today I stumbled upon RoyaltyExchange, a place where bidders can buy the royalties on many famous hits.
For example, someone bought the royalties for “Empire State Of Mind” by Jay-Z for $190,500, or the entire “musical” catalogue of the Logan Brothers in 2020 for $26,000. Lately, Kygo’s hit “Firestone”, arguably the most famous Tropical House song ever, is being sold to the public, at the crazy price of 275.000$ (+ fees). It’s an auction, so the price could go even higher in the future!
Song’s royalties are considered as an investment, with estimates earnings, detailed breakdowns and analysis… It’s a fun world, I didn’t know that it was possible to buy and sell them like they were financial assets!
If you choose the right song, selling its royalties can be very profitable. You don’t actually own the production, but simply receive the revenues from streamings, copies sold etc… The site is very precise in showing the past earnings: for example, “Firestone” has gained 30-40k$ yearly revenues in the past 4 years, and even if there’s a slow decline as time goes on, it’s likely that it will bring at least 10% of the original investment back to the owner every year.
So, in 10 years you’ll gain back the original investment, in an optimistic scenario and with my amateurish calculations: that’s quite a good return!
Whenever you want, you can sold the royalties back in RoyaltyExchange, probably at a minor price than before, but recovering the majority of your initial investment.
The risk of this particular asset is mostly related to the author: if Kygo will release another worldwide hit, fans will indirectly listen more to his other songs, and the “Firestone” royalties could perform better than expected, increasing in value. If Kygo gets involved in a scandal, or simply becomes less relevant year over year, the price will drop to unpredictable levels.
Personally, I think that it’s not likely that “Firestone” royalties will make you rich or you’ll lose all the money invested: they can be a good way to diversify your money with an unusual asset, without risking too much. Plus, it has a sentimental value: I suppose that they buyer will be a very rich Kygo fan!
What do you think?
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