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The idea of “buying shares in a song” refers to investing in music royalties. This has become an increasingly popular and accessible alternative investment class, allowing individuals to potentially earn passive income from the commercial success of songs they love.
Here’s how it generally works:
* Music Royalties: When a song is played on streaming services (Spotify, Apple Music), radio, TV, in films, or used in commercials, it generates royalties. These royalties are payments made to the creators (songwriters, composers), performers, publishers, and record labels who own the rights to the music.
* Fractional Ownership: Instead of buying an entire song catalog (which can be incredibly expensive), individuals can purchase fractional ownership of these royalty streams. This means you own a percentage of the future income generated by that song or a collection of songs.
* Platforms and Marketplaces: Several platforms have emerged that facilitate these investments:
* Royalty Exchange: One of the most prominent marketplaces, allowing individuals to buy and sell existing music royalty assets through auctions. They offer various types of deals, including “Life of Rights” (where you collect royalties for the copyright’s duration) and “Fixed Return” assets.
* SongVest: This platform offers “SongShares,” which are SEC-qualified offerings allowing for fractional ownership of song rights. Investors can collect royalties quarterly and become “Invested Fans.”
* Sonomo: Allows investors to buy shares in individual songs or “Baskets” (collections of songs) and earn monthly royalty dividends.
* Jukebox (jkbx.com): A newer platform that aims to turn music into an investable asset class, providing access to music royalties that were previously reserved for industry professionals.
* Public.com: This investment app has a “Royalties” section where you can invest in fractional shares of music royalties.
Key Considerations for Investing in Music Royalties:
* Passive Income: The primary appeal is the potential for passive income, as you receive a share of the royalties generated.
* Diversification: Music royalties can offer diversification to a traditional investment portfolio, as their performance is often less correlated with stock market fluctuations.
* Long-term Potential: Copyrights can last for many decades (often life of the author plus 70 years), providing a long-term revenue stream.
* Due Diligence: It’s crucial to research the songs or catalogs you’re considering. Look at historical earnings, the artists involved, and the potential for future popularity. Platforms often provide data to help with this.
* Liquidity: While some platforms offer secondary markets, these investments can be less liquid than traditional stocks.
* Risk: Like all investments, there’s risk involved. A song’s popularity could decline, affecting royalty payments.
This innovative investment model allows music enthusiasts to become part-owners of their favorite tracks and potentially benefit financially from their success.

Video courtesy of ABN-AMRO

Video courtesy of ABN-AMRO