This article will give you a clear-eyed view of these platforms, helping you decide if investing in music royalties aligns with your financial goals, risk tolerance, and willingness to navigate a speculative and evolving market. By the end, you’ll have the tools to determine whether this niche investment is worth exploring—or if it’s best left to the playlist of others.
Overview of Key Platforms to Invest in Music Royalties
Sonomo
| Feature | Description |
|---|---|
| Investment Options | Individual songs or curated Baskets. |
| Transparency | Provides detailed performance data for songs, including historical and real-time metrics, ensuring informed decisions. |
| Royalty Dividends | Royalty payouts distributed monthly, directly to your account. |
| Average return | 27.2% annualized yield, based on actual investor performance. |
| Seconadary Market | ✔ Yes |
| Fees | Trading Commission - 1%; Label Plan Fee - €45/month; Label Pro Plan Fee - €90/month. |
Sonomo transforms the abstract world of music royalties into a structured and accessible marketplace. Through its web platform, you can invest in individual tracks or curated collections known as Baskets. Each Basket functions like a music-centric ETF, bundling songs to help mitigate risks and stabilize returns.
For example, Sonomo highlights collections such as The Great Composite with a 21% annual yield and Ms. Grace with a striking 26% yield. Even individual songs like Contact by Edwin Starr show yields as high as 37%. This approach caters to diverse investor profiles, allowing you to choose between stable, iconic tracks and high-risk, high-reward emerging hits.
Monthly dividends derived from streaming royalties make this asset class an attractive source of passive income. Sonomo boasts a median portfolio yield of 27.2% for its investors—far outpacing many traditional asset classes, including real estate and the S&P 500.
The platform provides real-time and historical metrics such as streaming counts and chart performance for each song or Basket. Additionally, the platform’s secondary market also allows for trading shares of music assets, providing a way to adjust your portfolio or realize gains. However, liquidity in this market can vary, making it imperative to consider the demand for your holdings before committing significant capital.
Pros:
- Attractive returns
- Consistent income stream
- Real-time and historical streaming data
- Secondary market
Cons:
- As a relatively new platform, Sonomo’s long-term performance and stability are yet to be established.
- Currently, Sonomo primarily serves EU-based investors.
ANote
| Feature | Description |
|---|---|
| Investment Options | Individual music catalogs across genres. |
| Transparency | Access clear charts and summaries of financial data and information for analysis. |
| Royalty Dividends | Receive payouts each time royalties are distributed; royalties are collected and distributed monthly, quarterly, or semi-annually. |
| Average return | An average yearly return of just above 10% |
| Seconadary Market | ✔ Yes |
| Fees | Listing Fee - varies by agreement; Distribution Fee - 4% (Primary Market), 8% (Secondary Market), capped at 0.5% of catalog market capitalization at distribution. |
ANote Music offers a diverse range of music catalogs across various genres and regions. Investors can participate in live auctions to acquire shares in these catalogs, with prices varying based on the catalog’s popularity and historical performance. For instance, shares in the “Dynoro – Lithuania HQ Catalogue” are priced at €10.10, while the “Cadillac Records Soundtrack” featuring Beyoncé is listed at €38.01. ANote offers a wide array of music catalogs, from evergreen disco songs of the 70s to contemporary EDM tracks, catering to varied investor preferences.
Investors receive royalty payouts each time the associated music generates income, akin to receiving dividends. Historically, the platform has delivered an average annual return of 10.3% to its investor community.
Before listing, each music catalog undergoes a comprehensive review, including analysis of historical data, contracts, and future potential, ensuring transparency and informed decision-making for investors. Beyond initial auctions, ANote facilitates a secondary market where investors can trade their shares, providing liquidity and opportunities to adjust portfolios based on market dynamics. The platform provides clear charts and summaries of financial data as well.
Pros:
- Monthly payouts may averaging around €200, making it a reliable income stream.
- Detailed financial data and performance metrics for each catalog.
- Ease of navigation and visually appealing design.
- The active Discord community and responsive customer support team.
- Secondary market
Cons:
- Trading fees and commissions are higher than average.
- Currently, Sonomo primarily serves EU-based investors.
SongVest
| Feature | Description |
|---|---|
| Investment Options | Fractional shares of individual music catalogs and songs across various genres. |
| Transparency | Offers curated, SEC-qualified offerings with verified royalty statements. |
| Royalty Dividends | Quarterly payouts based on song performance; actual returns vary. |
| Average return | Not provided. |
| Seconadary Market | No |
| Fees | Listing Fee - varies by agreement; Distribution Fee - 4% (Primary Market), 8% (Secondary Market), capped at 0.5% of catalog market capitalization at distribution. |
SongVest’s is developed to invest in music royalties through fractional SongShares®. This gives regular investors access to a previously exclusive market. The catalog is impressive, featuring big-name artists like Cardi B and Beyoncé, which makes it feel like you’re part of something significant. The platform provides a well-designed dashboard for tracking investments and quarterly royalty payouts. However, the offerings can feel limited at times. If you’re not interested in the current lineup, you might find yourself waiting for something appealing to pop up. Additionally, the auction-based bidding process adds a layer of complexity, and the requirement to confirm accredited investor status for certain auctions makes it less accessible for the average fan.
The platform is fairly transparent about its process, which is reassuring. They verify the accuracy of royalty statements and file offerings with the SEC, which makes you feel like there’s some legitimacy to the investment. However, the communication around potential returns is vague. While the site hints at the potential for earnings, there’s little concrete information about historical or average returns.
One of the more enticing features is the quarterly royalty payouts. It’s satisfying to see tangible returns, even if they’re relatively small. While SongVest doesn’t explicitly advertise an average return, it’s clear that this is not a “get-rich-quick” platform. The return on investment can be modest unless you’re buying into a blockbuster track or catalog.
The secondary market is a great idea in theory, offering a way to sell your SongShares if you need liquidity. In practice, it’s still a developing feature. Activity on the secondary market can be sparse, meaning you might struggle to sell your shares quickly. The 1% brokerage fee for transactions is reasonable, but it’s another cost to consider when you’re weighing the profitability of your investment. Speaking of costs, SongVest is upfront about its fees, which is good, but they do add up. The 3.15% + $0.94 processing fee for credit card purchases feels steep, especially if you’re buying smaller amounts. These fees can eat into your potential returns, particularly for casual investors who aren’t committing significant funds.
Using SongVest is an interesting experience. It’s exciting to feel connected to the music industry in such a tangible way, and the platform does a decent job of making the process accessible. However, it’s not without its downsides. The fees, the unpredictability of returns, and the limited secondary market activity can make it feel less like an investment platform and more like a novelty for music enthusiasts.
Pros:
- Includes high-profile artists.
- SEC compliance and verified offerings.
- Quarterly royalty payouts
- Secondary market
Cons:
- Accredited investor status required for some auctions.
- Limited transparency on average returns.
- Fees reduce profits
Royalty Exchange
| Feature | Description |
|---|---|
| Investment Options | Individual music royalties, catalogs. |
| Transparency | Marketplace data provided by sellers. |
| Royalty Dividends | Quarterly payouts based on song performance; actual returns vary. |
| Average return | Not explicitly provided. |
| Seconadary Market | ✔ Yes |
| Fees | Marketplace Fee: 2.5% or $500 minimum; Late Fees: $500 or 2% of unpaid amount plus daily interest. |
Payments typically align with royalty distribution schedules, often quarterly, which gives a steady sense of returns. The secondary market depends entirely on demand, and if your asset isn’t a hot commodity, you could be stuck holding it. There’s also a 2.5% Marketplace Fee on transactions, which eats into your profits.
Royalty Exchange offers a broad range of options, from individual song royalties to entire catalogs. This diversity is appealing, especially if you want to align your investments with artists or genres you’re passionate about. However, the marketplace feels like it puts the burden entirely on the buyer to figure out whether a deal is worth it. They make it clear that the listings are the responsibility of the sellers, which means if the data is incomplete, inaccurate, or overly optimistic, you’re on your own.
They provide historical data on royalty earnings, future projections, and the terms of the sale. But dig deeper, and you realize the information is only as good as the seller’s honesty and the buyer’s ability to interpret it.
If you’re looking for platforms with investments as low as $5 or $100, you might be thinking of fractional investment platforms like SongVest, which work differently from Royalty Exchange. Royalty Exchange focuses on auctions where the investment threshold is significantly higher.
Pros:
- Offers access to unique music royalty investments.
- Secondary market
- Provides historical royalty data and projections.
- Quarterly royalty payouts
Cons:
- Extremely high minimum investment amount.
- Responsibility for evaluating investment opportunities rests entirely on the buyer.
- Data accuracy depends on sellers.
- Late fees (e.g., $500 or 2% of unpaid amounts) and daily interest can quickly add up.
Tangy Market
| Feature | Description |
|---|---|
| Investment Options | It offers songs, EPs, and albums, the variety and quality of options available. |
| Transparency | Access to information about valuation models and investment terms, though detailed insights into proprietary algorithms are limited. |
| Royalty Dividends | Receive payouts based on song performance; actual returns vary. |
| Average return | Not explicitly provided. |
| Seconadary Market | ✔ Yes |
| Fees | 2% transaction fee (plus VAT) on trades; €0.25 + 2.5% fee on euro deposits; free withdrawals. |
Tangy Market offers songs, EPs, and albums, the variety and quality of options available. Available to users in compliance with EU regulations, with services facilitated through licensed institutions.
At its core, Tangy Market differs from many other royalty investment platforms by emphasizing a time-limited leasing model for royalties rather than selling outright copyright ownership or permanent shares. This means that as an investor, you’re essentially buying into a slice of future royalties for a specific period, after which the rights revert fully to the copyright owner. For casual investors or music enthusiasts, it could be a fun way to explore a new type of investment.
The time-limited nature of investments further complicates things. If you hold onto an asset for the full period and it doesn’t perform well, you’re stuck with whatever royalties it generates, with no option to recoup your investment later. This makes it critical to use the secondary market.
Tangy Market offers a mobile application that enables to invest in music royalties from various songs, albums, and music catalogs. Available for iOS devices, the app allows to create an account, deposit funds, and purchase shares of music assets, thereby building a portfolio of music royalty investments. It emphasizes secure payments, with transactions handled through Mangopay S.A., an EU-licensed electronic money institution. You can withdraw your funds at any time without incurring additional costs.
Tangy Market charges a 2% fee (excluding VAT) on every transaction made within the app. This fee applies to both buying and selling shares. Additionally, deposits made in euros are subject to a fee of €0.25 plus 2.5%.
Pros:
- Offers forecasts and historical royalties statistics.
- Access to future royalty income without acquiring copyright ownership.
- Allows artists to maintain full control over their work.
- Secondary market
- Adherence to EU anti-money laundering laws and secure transactions through licensed institutions like Mangopay S.A.
Cons:
- The temporary nature of investments may restrict long-term appreciation potential.
- Frequent trading can lead to significant fees over time.
- Limited geographic accessibility
Master Exchange
| Feature | Description |
|---|---|
| Investment Options | Purchase royalty shares for individual songs via structured IMOs. |
| Transparency | Offers due diligence on listed songs but lacks real-time streaming metrics or detailed financial breakdowns. |
| Royalty Dividends | Quarterly dividends |
| Average return | Not explicitly provided. |
| Seconadary Market | ✔ Yes |
| Fees | 2% transaction fee for both buyer and seller; 1% administrative fee on royalty payouts. |
One aspect that sets MasterExchange apart is its Initial Music Offering (IMO) model. This concept mirrors an IPO in financial markets but applies it to master royalties for music. Artists or rights holders can sell a portion of their master royalties for a fixed period during a seven-day subscription window, with shares then distributed to investors. This system provides a structured and transparent entry point. It contrasts with other platforms where shares are simply released without this clear delineation of an “offering” period. Among the platforms we’ve listed — Sonomo and Tangy Market release shares without a distinct “offering” period.
Additionally, each royalty share in MasterExchange is represented as a NFT on the Polygon blockchain. However, the platform keeps its operations simple for users by not requiring direct interaction with NFTs or cryptocurrencies; all transactions are conducted in euros.
The platform’s royalty distribution model is straightforward, with quarterly payouts to investors based on the master royalties collected for their assets. However, the prioritization of payments according to token identification numbers is a nuanced detail that warrants consideration. If the master royalty recipient goes bankrupt, lower-numbered tokens are prioritized for payouts, which could leave higher-numbered token holders empty-handed. This unique structure may appeal to collectors but poses a clear financial risk to many investors.
It acknowledges that past performance is no guarantee of future success and emphasizes that liquidity can be a significant challenge. For example, the trading system on the platform relies heavily on buyer and seller activity, which could result in a stagnant market for lesser-known songs or artists.
However, the platform does boast some notable trading activity for specific assets. For example:
- “Oasis” by The Him & Sorana has seen a price increase of +67.47% since its listing, reflecting strong demand and potentially good returns for early investors.
- “Puff The Magic Dragon” by The Soft Music Box has achieved an impressive +77.78% return, demonstrating the potential profitability of nostalgic or niche assets.
- On the other hand, “Boss Bitch” by Doja Cat has experienced a -3.85% decline, showcasing the platform’s risk dynamics and the volatility of even high-profile tracks.
MasterExchange charges a 2% trading fee on both buying and selling transactions, along with a 1% administrative fee on royalty distributions.
The platform markets itself as a way to diversify investments, citing Goldman Sachs’ projection of a 12% annual growth rate for the music streaming industry through 2030.
Pros:
- Offers forecasts and historical royalties statistics.
- Songs undergo due diligence before listing.
- Safe transactions via Mangopay S.A., a licensed organisation that offers historical royalty data and forecasts.
- Blockchain-Backed Royalty Shares
Cons:
- The temporary nature of investments may restrict long-term appreciation potential.
- Frequent trading can lead to significant fees over time.
- While the IMO structure ensures initial distribution, liquidity in the secondary market can be thin, especially for lesser-known songs.
- Token prioritization in insolvency cases may disadvantage higher-numbered token holders, creating uneven risk exposure.
- Accessibility is limited to residents of the European Economic Area (EEA), the UK, and Switzerland. Excludes potential investors from other major markets like the U.S. or Asia.
JKBX
| Feature | Description |
|---|---|
| Investment Options | Options include individual songs or curated baskets, providing choices between specific tracks or bundled assets. |
| Transparency | Provides real-time and historical data for streaming metrics |
| Royalty Dividends | Quarterly dividends |
| Average return | Up to 9.66% annualized yield based on actual investor performance as of July 26, 2024. |
| Seconadary Market | ✔ Yes |
| Fees | No additional fees to purchase Royalty Shares; fees are contained within the price presented on the platform. |
One of the defining characteristics of JKBX is its rigorous regulatory compliance. Each offering undergoes SEC review, with a comprehensive offering circular detailing the specifics of the Royalty Shares, from trailing yields to the song’s historical performance. While the SEC qualification process adds credibility to JKBX’s offerings, it does not eliminate risk — these securities are unregistered.
JKBX also excels in providing detailed performance data for its listed assets. You can access historical performance metrics, analytics, and artist backgrounds. This contrasts with platforms where due diligence is often summarized rather than elaborated.
JKBX emphasizes accessibility, with a minimum investment threshold of $100. Unlike platforms that adopt a quantity-over-quality approach, JKBX emphasizes curation. The songs and royalty shares available for investment are carefully selected by issuers who partner with rights holders.
The platform also touts a user-friendly experience, with a secure interface and personalized dashboards. The inclusion of professional-grade tools for tracking royalties and portfolio performance enhances the investor journey.
Pros:
- Offers a substantial median portfolio yield.
- Extensive real-time and historical data available.
- Songs are carefully vetted with SEC review.
- Focuses on high-profile artists and popular tracks.
Cons:
- Platform currently optimized for U.S.-based individuals; international investors may face limitations.
- The secondary market is not yet available, limiting immediate liquidity options for investors
Typical Issues When Making Music Royalty Investments
Investing in music royalties offers an exciting way to diversify portfolios and align investments with personal music tastes. However, it comes with several challenges and risks that should be considered before diving in:
- Responsibility for evaluating investments is entirely on the buyer
While some platforms offer historical data and projections, these are only as reliable as the sellers’ honesty and the buyer’s ability to interpret them. A lack of standardized metrics across platforms makes it challenging to compare potential returns effectively. - Inconsistent and unclear yield data
Yield data is often inconsistently disclosed, with some platforms touting high average returns while others remain vague. The reality is that returns vary significantly based on song royalties, streaming activity, and trading dynamics. This unpredictability makes it difficult to set realistic expectations, and you may find themselves earning far less than initially anticipated. - Liquidity depends on demand
While secondary markets offer some degree of liquidity, their effectiveness depends heavily on the demand for specific music assets. If a song or catalog isn’t performing well or lacks broad appeal, selling shares could be difficult—or even impossible—without taking a loss. Thin markets for niche assets exacerbate this issue, leaving investors holding onto assets they can’t offload. Additionally, transaction fees can chip away at profits, especially for frequent traders. - No guaranteed payouts
Royalty payouts are tied to music performance and rely on third-party distributors and seller agreements. There’s no certainty that royalties will meet expectations—or even be distributed in full. Delays, disputes, or shifts in distribution agreements can impact returns, leaving investors with less income than promised. - Volatility of music performance
Streaming revenues can spike unpredictably due to viral trends, media exposure, or artist promotion. Conversely, they can plummet just as quickly if a track falls out of favor or fails to gain traction. This volatility is beyond control, making these investments inherently speculative.
Conclusion
Investing in music royalties can be a way to diversify your portfolio and tap into an industry that feels more personal than stocks or bonds. But it’s not a straightforward or guaranteed path to success. Platforms offer access to this market, but they also come with challenges—liquidity issues, unpredictable returns, and varying degrees of transparency.
At the end of your exploration into music royalty investments, you’ll have a deeper understanding of the platforms available and their distinct features. Here’s what you should walk away with:
1.Practical Tools for Decision-Making
- You’ll have tools at your disposal, from platforms offering historical and real-time data like JKBX to those providing curated assets and community support like ANote. This helps you make informed decisions and tailor your investments to your risk tolerance and financial goals.
2. Clarity on Investment Goals
- If you’re seeking emotional gratification and a sense of connection to music, platforms like SongVest or Royalty Exchange may appeal due to their association with high-profile artists and catalogs.
- For purely financial goals, platforms such as Sonomo or JKBX may offer higher potential returns and curated investment options, balancing risk and reward.
3. Understanding of the Risks
- Music royalties are tied to volatile factors like streaming trends, media exposure, and even shifting licensing agreements. Returns may be inconsistent and depend heavily on the performance of the chosen assets.
- Platforms differ in transparency and reliability, so your success will also depend on how much time and effort you’re willing to dedicate to evaluating your options.
4. Knowledge of Platform Dynamics
- Each platform has unique advantages and challenges. Whether it’s the high returns and real-time data of Sonomo, the regulatory rigor of JKBX, or the time-limited leasing approach of Tangy Market, your choice will shape your experience as an investor.
- By understanding secondary market liquidity, you’ll know how easily you can adjust your portfolio or exit investments.
5. Balanced Expectations on Returns
- Music royalty platforms promise varied returns, from JKBX’s up-to-9.66% annualized yield to Sonomo’s impressive 27.2%. Yet, the actual income depends on asset performance and market demand, and these figures are not guaranteed.
- Platforms like Master Exchange or ANote might offer steady payouts for reliable tracks, while higher-risk options may provide greater rewards—or losses.
If you’re considering this route, ask yourself:
- Are you comfortable with a speculative investment?
- Do you have the patience and resources to navigate illiquid assets?
- Are you prepared to research thoroughly and account for platform fees?
Music royalties can be rewarding, both financially and emotionally, but only if you approach them with the right expectations. This is a high-risk, niche market—not a surefire way to passive income. If you’re willing to embrace the risks and do the legwork, it can add an interesting dimension to your investment portfolio.
Related Articles
How do music royalty platforms differ from each other?
Platforms vary in their investment offerings, fee structures, and transparency. Some, like Sonomo, focus on high yields with curated baskets, while others, like ANote, provide access to diverse catalogs across genres. Platforms such as Tangy Market emphasize temporary royalty leasing, while JKBX offers carefully vetted assets with SEC-reviewed data. Secondary markets and fees also differ, influencing how easily investors can buy or sell shares and their overall return on investment.
What should I consider when choosing a music royalty platform?
Key factors include the platform's transparency, fee structure, and liquidity. Look for platforms offering real-time performance data, low fees, and active secondary markets for trading shares. Consider your investment goals: if you prioritize emotional gratification, platforms featuring high-profile artists may appeal, whereas financially driven investors might prefer platforms with higher historical returns. Lastly, evaluate the geographic accessibility and regulatory compliance of the platform, especially if you’re investing internationally.
Are music royalties a good way to earn passive income?
Music royalties can provide passive income, but returns are highly dependent on the performance of your chosen assets. High-profile tracks or established catalogs tend to offer more stable income, while emerging artists or niche songs may be riskier. Platforms like Sonomo and JKBX report attractive yields, but these figures are not guaranteed. Additionally, fees and market volatility can impact net returns. While not a guaranteed income stream, music royalties can complement a diversified portfolio if approached thoughtfully.
What is the role of the secondary market in music royalty investments?
The secondary market allows investors to buy or sell music royalty shares after the initial offering. This provides liquidity, enabling investors to exit investments or adjust their portfolios. However, liquidity depends on demand; lesser-known or underperforming assets may be hard to sell. Some platforms, like Sonomo and ANote, actively promote secondary markets, while others, such as JKBX, are still developing these features.
Can international investors participate in music royalty platforms?
Participation depends on the platform's geographic restrictions and regulatory compliance. For instance, platforms like Tangy Market and Master Exchange are primarily accessible to EU residents, while JKBX focuses on U.S.-based investors. Check the platform’s terms of service and ensure compliance with local investment regulations. Some platforms may expand their accessibility over time, but it's important to verify eligibility before investing.
How do taxes apply to music royalty income?
Music royalty income is typically considered taxable income in most jurisdictions. The specific tax treatment depends on your location and the platform’s reporting practices. Some platforms provide annual tax statements, but it’s your responsibility to report income and pay any applicable taxes. Consult with a tax advisor to understand how royalty income fits into your overall tax situation and whether deductions for platform fees apply.
What happens to my investment if the platform shuts down?
If a platform shuts down, the fate of your investment depends on how the rights and royalties are managed. Some platforms hold shares as independent financial assets, while others may act as intermediaries. Review the platform’s terms and conditions to understand its policy on asset custody and what protections are in place.