The value of music rights was given major investor validation last month with Universal Music Group‘s blockbuster listing on the Amsterdam Stock Exchange.
Now music rights as an asset class have been given further credibility over in the US, as we learn that fan investment platform and royalties marketplace SongVest has created what it claims is the first-ever public securities offering for royalties.
SongVest has received what it says is the first SEC qualification of music royalties, utilizing Regulation A+ of the US Securities Act in order to sell music royalties.
The song that received that SEC qualification is Hit the Quan (recorded by ILOVEMEMPHIS) and on Friday (October 8), the public sale of songwriter Buck Nasty’s share of producer royalties from the song started via SongVest’s platform – with 1,950 SongShares on offer at $16 per royalty share unit.
‘SongShares’ are royalty share units, which the firm describes as “the first-ever fractional shares of music royalties” from hit songs by major recording artists.
SongVest’s founder and CEO is Sean Peace, an original founder of US-based online music rights marketplace Royalty Exchange.
His new company says that access to exclusive investment opportunities in music rights is “normally available only to industry insiders, private equity, and institutional investors” and that SongVest’s aim is to bring fans into the equation via a secure online marketplace.
In addition to already being able to buy fractional shares in the Buck Nasty royalties, investors can use SongVest’s marketplace to bid in non-binding SongShares VIP Auctions for other songs.
Registered users can start bidding in these live VIP Auctions without any commitment to purchase, at a minimum price of $20, and make non-binding reservations to hold their SongShares.
In a VIP Auction, fans set the final price per royalty share unit, before the offering goes to the SEC for qualification, which means that if collectively the bidders determine they will pay $22/share for royalties, then SongVest would submit to the SEC an offering for $22 per royalty share.
Fans with successful bids at the end of the VIP Auction will receive the first notice and opportunity to purchase during a VIP Sale held after SEC qualification has been granted. SongVest tells MBW that it takes 10 days to get the SEC qualification.
After the VIP Sale period, any remaining SongShares are made available for sale to the public.
Fans who buy SongShares collect royalty income each quarter in proportion to the amount they own.
SongVest investors have a personal dashboard where they can view details on their purchases, plus track music data and the history of royalty payments they receive every quarter.
All transactions are registered using an append-only database, which SongVest says provides “the highest level of security, and transparency for buyers”.
In each offering, SongVest says that its “experts” work with a seller to evaluate their catalog, determine the limited number of royalty share units to be sold, and create a listing.
Eleswhere on SongVest.com, fans can register to view listings and bid in VIP Auctions for royalty streams being sold by major producers and songwriters including, starting on October 13, Grammy-nominated producer Sonny Digital’s sale of his royalties from songs recorded by artists like Travis Scott, including his multi-platinum Top 10 single Stargazing plus Pornography and Never Catch Me.
Other auctions announced today include: Writer’s and publisher’s shares of royalties from three major Beyoncé hits from her No.1 album Lemonade, including Sorry, and the songs Daddy Lessons and Don’t Hurt Yourself feat. Jack white and the No.1 single Electricity by Silk City and Dua Lipa Feat. Diplo and Mark Ronson) and many others.
These songs songs will be made available for sale in public offerings after each are qualified by the SEC.
“Never before has the fan been both emotionally invested, plus have a vested interest in helping to promote the music.”
Sean Peace, SongVest
Speaking to MBW, Sean Peace, said: “We’re certainly proud to reach this milestone and thrilled to introduce SongShares to music fans and our industry community.
“In 2007, I had the original vision of selling fractional shares of song catalogs in a novel way that could maximize value for both sellers and buyers with newfound synergies never before realized.
He added: “When Reg A of the JOBS Act was established, the change in financial regulations created the framework for us to build SongVest’s ground-breaking platform centered on engagement, empowering fans with insider access to build their own investment playlist and share it with friends.
“Never before has the fan been both emotionally invested, plus have a vested interest in helping to promote the music. With our new SongShares, fans can collect royalties from hit songs for the first time, and be aligned with artists, songwriters, producers, and labels, all together in the same boat, rowing in the same direction.”
“This is a whole new way for creatives to tap into capital. I love the idea of being able to give back to the fans and get them involved in the music.”
Sonny Digital
“This is a whole new way for creatives to tap into capital. I love the idea of being able to give back to the fans and get them involved in the music.
“SongVest was really the only thing that made sense for me. It’s the wave of the future.”Music Business Worldwide