Why Music Royalties Are Gaining Investor Interest

The global music industry saw its 8th consecutive year of growth, generating royalties of over $26.2 billion in 2022. Looking at global revenue shares, streaming took the majority with 67%, having a very positive impact on the composition of mechanical royalties for rights holders. This has left investment bankers, hedge funds, and private equity investors tempted to follow the latest trends in pop - all looking at this as an attractive asset class.

Music royalties offer a valuable diversification away from traditional asset classes. Their low correlation with macroeconomic performance and high-income potential has resulted in more investors wanting to invest in music royalties. 

Over the past few years, several artists have sold their catalogues in big money deals as their music became more valuable thanks to streaming platforms such as Spotify and Apple Music. For example, David Bowie introduced "Bowie Bonds" in 1997, since then making headlines with a total valuation of $55M. These "Bowie Bonds" attracted investors with the prospect of passive income from his musical works, bringing the concept of investing in music royalties into the public consciousness for the first time.

Central to this growth is the maturation of the music rights market in recent years, driven by the billions being pumped into the sector by major players including Sony, Universal, Roundhill, Blackrock, and BMG.

This is why investment platforms are popping up around the world and changing the market. New platforms, from blockchain to owning song and album catalogues, have emerged to provide alternative ways for investors to participate in music. ANote Music, also known as "marketplace for music investments," represents a significant development in this direction. It allows not only the wealthy, but anyone to diversify, invest, and support the artists they believe in.

The platform presents a new opportunity for artists and investors alike, providing a different approach for them to generate income from their musical intellectual property rights. To date, investors have enjoyed an average annualised return of 10%, coupled with a profitability rate of nearly 90% on ANote's platform. When delving into the figures, it becomes evident why music catalogues are being acquired for substantial amounts.

"For investors, the appeal is clear. Royalties are a reliable, passive income, and largely insulated from broader economic changes." Marzio Schena, co-founder, and CEO of the music investment platform ANote Music.

When you invest in song royalties, you're setting up a passive income stream. Every time someone plays the song-whether it's a grocery store playing it in the aisles or a person streaming it through Spotify-you earn a small payout called a royalty. Depending on the music you invest in, you may earn royalties sporadically or you may earn them daily.

Undoubtedly, investing in music royalties isn't as simple as choosing your favourite songs-or even being able to predict when a song will skyrocket in popularity. Fortunately, with music trading platforms such as ANote Music, investors can buy music rights directly through the platform. The company only works with established music and catalogues will only get listed if they have a minimum track record of 3 years generating royalties above €10,000 a year. This is to ensure that investors can make calculated investment decisions rather than making a gamble on the sounds they like.

As the music industry continues to evolve, music investing will play an increasingly important role in shaping its future. By providing new sources of income, promoting transparency and fairness, and unlocking new revenue streams, music investing has the potential to revolutionise the way the music industry operates. 

If you're ready to start investing, download the ANote Music app right here. With it, you can invest in music artists, get paid to listen to music, and trade music stock on their alternative trading system.

While it's not wise to pull out of the stock market and put all your money into music royalties, adding them to your portfolio can help you optimise your investments and earn passive income.