If you’ve ever wondered how to diversify your investment portfolio with a creative asset, investing in music royalties might be your next step. Music royalties are becoming an increasingly popular alternative asset class, offering steady passive income through platforms that allow you to purchase rights in songs or catalogues. 

Why Invest in Music Royalties? 

  1. Passive and Consistent Income:
    Once you invest in a song or a music catalogue, you start earning a share of the royalties every time the music is streamed, downloaded, or used in movies, ads, or TV shows. The payments come in regularly, typically on a monthly or quarterly basis, depending on the platform. 
  2. The Impact of the Streaming Services:
    Music consumption is at an all-time high thanks to the popularity of streaming services, which are now accessible globally. These platforms generate billions of streams daily, ensuring constant royalty payments for investors. Streaming revenue has become a major pillar of the music industry, now accounting for over 67% of global music revenue.
  3. Diversification from Traditional Investments:
    Even during times of economic turbulence or stock market volatility, your music royalty investments may remain stable, as people tend to continue consuming music regardless of market conditions.
  4. Global Market:
    Music has become a truly global product, consumed in every corner of the world. Additionally, with technological advances in data tracking and streaming analytics, platforms can now more accurately report music consumption, allowing for better royalty distribution and transparency. 
  5. Access to Different Types of Royalties:
    Investing in music royalties can also be tailored to your risk tolerance and interests. Platforms like Sonomo offer various royalty types, from classic songs with a stable, historical income track record to more contemporary music that might carry higher risks but also higher potential returns. You can spread your investments across different genres and artists, from iconic hits to up-and-coming talent, allowing you to customize your portfolio.

Participating in Music Crowdfunding Campaigns

Music crowdfunding platforms have democratized access to this unique asset class, allowing individual investors to participate in the once-exclusive music royalties market. Let’s look at two of the most prominent platforms in Europe.

1. ANote Music

ANote Music is a Luxembourg-based platform that allows investors to purchase shares in music catalogues. Here’s how it works:

  • Live Auctions: You can participate in auctions where music rights are sold by artists, labels, or songwriters. Once you successfully bid on a catalogue, you own a portion of future royalties.
  • Secondary Market: ANote also offers a secondary market where you can trade your shares with other investors, adding liquidity to your investment.
  • Royalty Payments: Once you’ve acquired shares, royalties are distributed periodically based on the performance of the catalogues you invested in. You can track your earnings through the platform and adjust your portfolio over time​.

2. Sonomo

Sonomo offers a similar, yet slightly different approach. Here’s what makes it stand out:

  • Baskets of Songs: Sonomo allows you to invest in “Baskets” of songs, which are curated collections of music. This approach spreads the risk across multiple tracks, much like a mutual fund for music royalties.
  • Monthly Payouts: Royalties are distributed to investors monthly, providing a more frequent return than some other platforms.
  • Artist-Centric Model: Artists retain control of their music and benefit from upfront cash flow when selling part of their royalty rights. This means you’re directly supporting artists while building a diversified portfolio​

Get Started with Music Royalties Investment

Choose the Right Platform

Platforms like ANote and Sonomo have made investing in music royalties accessible, user-friendly, and transparent for European investors. These platforms offer music catalogues for sale, allowing you to buy shares in the future earnings of a song or album. Before signing up, it’s important to familiarize yourself with how each platform works.

Evaluate Opportunities

Once you’re familiar with a platform, the next step is to carefully evaluate the music catalogues available for investment. Every catalogue is different, so you need to consider the following factors:

  • Historical Performance: Review the past earnings of the catalogue. Platforms like ANote and Sonomo provide transparent data, often showing three to five years of royalty history​
  • Artist Popularity and Genre: Popular songs or albums by well-known artists tend to generate more royalties. But don’t overlook niche genres that have dedicated fanbases; these can provide a steady stream of income over time.
  • Revenue Sources: Royalties come from various channels such as streaming, downloads, radio play, and synchronization licenses (when songs are used in films, TV shows, and commercials). The more diversified the income sources, the more stable the investment.

Platforms like ANote and Sonomo allow you to filter catalogues based on risk and potential reward, making it easier to align your investment with your financial goals.

Build Your Portfolio

Once you’ve chosen a catalogue, it’s time to place your investment. On platforms like ANote, you participate in live auctions to bid for shares. If your bid is successful, you’ll own a portion of the future royalties of that song or album. This ownership entitles you to a share of the earnings every time the music is consumed on platforms like Spotify or licensed for use in a film

For beginners, a good strategy is to start with smaller investments across multiple catalogues to ensure that your portfolio isn’t overly reliant on the success of one artist or genre. On Sonomo, you can buy into Baskets, which spread your investment across several songs or albums, providing a balanced portfolio right from the start.

Monitor and Manage Your Investment

Once your investment is live, you’ll start receiving royalty payments at intervals, often monthly or quarterly. Music crowdfunding platforms provide dashboards where you can monitor your portfolio’s performance, track your earnings, and evaluate the value of your shares. This visibility is crucial in helping you decide whether to hold onto your shares, sell them on the secondary market, or reinvest in new catalogues.

While music royalties generally provide consistent income, trends in the music industry can change. For instance, an older catalogue might see a sudden boost in popularity after being featured in a viral TikTok video, leading to a spike in royalties. Conversely, a catalogue’s income may decline if it falls out of favour or if new music trends take over.

Many investors reinvest their royalty earnings into new catalogues, allowing them to compound their earnings over time.

Final thoughts

If you’re ready to explore a creative and financially rewarding investment opportunity, now is the perfect time to dive into music royalties. Platforms like ANote and Sonomo have madethe perfect time to start investing, so why not turn your love for music into a profitable venture?

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FAQ: How to Invest in Music Royalties

ANote and Sonomo allow investors to purchase shares in music catalogues or rights to individual songs. ANote offers live auctions where investors can bid on catalogues, and a secondary market for trading shares. Sonomo provides "Baskets" of songs, spreading risk across multiple tracks. Both platforms distribute royalties based on the performance of the songs, with payments typically made monthly or quarterly.

When evaluating a music catalogue, consider its historical performance, the popularity of the artists involved, and the diversity of revenue sources (e.g., streaming, downloads, licensing). Additionally, ensure that the catalogue is registered with a Performance Rights Organization (PRO) to guarantee proper royalty collection and distribution.

Streaming platforms like Spotify and YouTube generate substantial royalty revenue due to the volume of streams. However, per-stream payouts are relatively low, typically ranging from $0.003 to $0.005. Music royalty income depends on the song's popularity and frequency of plays, with high-traffic playlists and media use boosting earnings.