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Investors invited to share in Eminem royalties

By | Published on Tuesday 26 September 2017


US-based online royalty marketplace Royalty Exchange has launched a new sister business called Royalty Flow which will “acquire and hold royalties from music catalogues of the world’s biggest music artists”. And it’s seeking investors to back the business, who will ultimately share in the profits made from the royalties it’s hoped will flow into the new venture.

To get things going, Royalty Flow has already announced a deal with the Bass Brothers, who have a stake in much of Eminem’s sound recordings. Jeff and Mark Bass, sometimes known via their FBT Productions brand, are partly know as the producers who first signed Eminem, and partly as the duo behind a landmark legal battle with Universal Music over how legacy record contracts should be interpreted in the digital age. The brothers won that legal battle, though it didn’t set quite the game-changing precedent across all artist record contracts that some hoped.

The producers are making up to 25% of the royalties they earn from Eminem recordings released between 1999 and 2013 available to the new Royalty Flow business. The start-up will also seek similar deals with other major artists, providing said acts with upfront cash in return for some or all of their future royalty income. Royalty Flow is seeking finance itself to fund these deals via a so called ‘Regulation A+’ public offering of its shares.

Announcing the new business, Royalty Exchange CEO Matthew Smith told reporters: “Royalty Flow gives investors the opportunity to participate in assets that are uncorrelated with public markets, and directly benefit in the music industry’s growth. It also gives thousands of artists, producers, labels, songwriters, publishers, and other rightsholders who contribute to the success of the superstars they work with access to on-demand financing options with the kind of flexibility seldom found in the music industry”.

Meanwhile the Eminem collaborators’ manager Joel Martin added: “We’ve supported increased transparency for artists our entire career, and Royalty Exchange is no different. They give investors simple, direct access to royalty opportunities that previously were available only to industry insiders. This changes everything”.

Royalty Exchange is one of the companies seeking to capitalise on new interest in investment circles in the music rights business on the back of the record industry going back into growth thanks to the streaming boom. Of course, the streaming business itself is still pretty fragile, but some share at least some of the optimism of analysts at Goldman Sachs with regards the near future of the music rights sector.

And with enterprises like Royalty Exchange and Royalty Flow, there are increased opportunities for investors to buy into the royalty streams of successful songs and recordings as well as actually acquiring music copyrights.