Crypto

Episode 10: Investing in Royalty Rights with Antony Bruno of Royalty Exchange

Ben Lakoff, CFA
October 5, 2020
57
 MIN
Listen to this episode on your favorite platform!

Have you ever thought about investing in Music Royalties?

In this interview Antony Bruno of Royalty Exchange, we discuss just that.

Royalty Exchange is an online auction platform for royalty rights (primarily related to music). Specifics vary, but you’re investing in future income streams derived from royalty payments. With returns around 12%, like many other Alts, this could truly be another great uncorrelated investment – people don’t stop listening to music when stocks go down.

Royalty Exchange is open to non-accredited investors, but you’re looking at larger minimum investments (5 or 6 figures).

Enjoy this conversation talking about royalties in general, royalties as investments, and finally about Royalty Exchange in general and the value they’re creating.

Show Notes

0:00:00   Welcome and context

0:02:01   How did you start Royalty Exchange?

0:05:16   What are royalties?

0:10:05   Why invest in music royalties?

0:12:55   Why would an artist sell their royalty?

0:15:11   What opportunities you see for music?

0:18:54   What are some of the risks you see with royalties?

0:20:50   How are artists getting paid through royalties?

0:23:33   What should the investor do to help the royalty they bought? 0:24:41   Investors’ due diligence checklist

0:27:35   What is the negative 5% trend rate?

0:30:03   What is royalty with no end date?

0:33:36   What key elements investors need to understand beforehand?

0:36:35   What are the other options to invest in music royalties?

0:39:37   Do you see institutional interest in royalties through Royalty Exchange?

0:42:29   What is the average deal flow on Royalty Exchange?

0:47:51   What is next on your roadmap?

0:51:51   Who can invest through Royalty Exchange?

0:55:42   What gets you most excited with royalties in general?

0:57:15   Where can people find more about Royalty Exchange?

Show Links

Royalty Exchange

Mills Music Trust

Universal Studios Stock

Hipgnosis Songs Fund

Spotify

Pandora


Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor.

Here’s your host Ben Lakoff. Good morning, everybody. And welcome to the alt asset allocation podcast. Today’s interview is with Antony Bruno, who is director of communications at Royalty Exchange.

Have you heard of royalty exchange? So this is an online auction platform for him for royalty rates. This year, specifics can vary considerably from auction auction, but you’re investing in the future income streams derived from royalty payments, primarily from music. This is a completely different asset class returns around 12% ROI.

They’re an uncovered investment, similar to a lot of the other alternative assets, high yield, low correlation people don’t stop listening to music when stocks go down. So this is very different from some other investments. Royalty exchange is open to unaccredited investors, but you’re looking at larger minimum investments.

Somewhere around five or six figures. I hope you enjoy this conversation with Anthony talking about royalties in general, royalties as investments and why this should be interesting for investors and finally about royalty exchange in general and the value that they’re creating in the space. Enjoy it.

Morning, everybody. I’m here with Anthony Bruno was director of communications at roti exchange. Welcome Anthony.

Antony: [00:01:31] Yeah. Thanks very much. Good to be here. Glad to have you.

Ben: [00:01:34] Yeah, so. We talked a little bit before we started about Royal to use in what you’re doing. I’m really excited to have you, obviously royalties as an investment really fits into our whole ethos of uncorrelated assets. something a little little outside of the world of traditional stocks and bonds and these traditional assets. But I wanted to start off a little bit of your background. You had said that you’ve written a lot of the great collateral. That you have on your website. So what’s your background and how’d you find royalty exchange.

Antony: [00:02:05] Sure. So yeah, I wrote the collateral. What, you’re the one who called it. Great. Yeah, I did just kidding. But, yeah, so I actually don’t have, an investment background. My background is actually in the music industry. for the most part, I was a journalist for most of my career. I guess the most relevant component of it was I was the digital, digital music business editor at billboard magazine.

So I kind of covered the space of the emerging digital music space from pretty much the launch of iTunes until late 2012. So I was kind of right in the middle of how all this stuff went, all, worked all the transition of formats, et cetera, et cetera. And I’m basically. I, you know, I work remotely. I started working at billboard Angeles, but moved to Denver and I was working remotely.

And that kind of limits you a little bit and what you can do in terms of progression and such and B the vendor, you know, being an expert on digital music in Denver, Colorado, isn’t a highly marketable skill and a local standpoint basis. Right. So, and plus with the state of journalism, I did, I made the choice to, expand my horizons a little bit and start going into consulting on the communications level.

Right? So started working with a lot of different, mostly music companies. Cause that was my wheelhouse, did a lot of, communications with some, emerging music services, beats music before they got acquired by Apple. did some work with the Xbox music, service. vocally there’s one here called beat pork.

There’s one in UK called Mixcloud. Anyway, I just, I, I consulted with a lot of these music services on their messaging and how they communicate, how they describe and explain things basically. So, yeah, as I was doing that, there was a had in the local, Denver paper for this company called royalty exchange.

Now there’s not a lot of music companies in Denver, so I just like, okay. you know, I check it out. I don’t understand any of it. I gotta know what was going on, but I was like, you know, they seem to have some questions about roles. Well is I’ve been hugely visible, we’ll meet. And so, just, you know, met the team and was really impressed with the leadership.

After a few months of just consulting, they approached me for a full time position and, You know, after I wound down a couple of our other contracts that basically accepted it and it’s been, I’ve been there ever since it’s been, I think it’s a little over four years now. I did leave briefly to get out of the music business.

I went into some renewable energy related, interests, but that didn’t quite last. And I, I was, I did the boomerang. I actually came back. I’m like, you know what? That job suck. If you guys still want me I’m here. And so I’ve been back since last November and happy year as can be as a result. So yeah, that’s sort of my background.

So yeah, basically like my job is. To not only explain the benefits of how our platform might help, an artist, from the music and his perspective is that was my more traditional audience music, you know, artists, managers, publishers, things like that, but also using some of the knowledge I have about how the music industry works and translate and explain that to an investor audience who is unfamiliar with it.

So, but it’s really just more education explaining and introducing these new ideas to these audiences that that can work together very well. But to date have never really interacted. Awesome.

Ben: [00:04:56] Well, you’re the perfect guy to have onto this podcast.

Antony: [00:04:59] Oh, great.

Ben: [00:05:00] So royalty exchange actually is based in Denver, right?

Antony: [00:05:03] Correct. Correct.

Ben: [00:05:04] I’m curious, a lot of what you’re doing is talking to investors and artists about the benefits of using somebody like royalty exchange. Backing up a bit, starting a little bit more at the basics for somebody a little bit less familiar with what royalties are and how you invest in them.

If you could start kind of bigger picture what they are, how you would invest them, why you would invest in them, how you make money, you know, give me, give me the whole pitch.

Antony: [00:05:29] I’ll give you the full funnel here. So a royalty is essentially a cutoff, the top of revenue. Okay. So if you own a royalty in anything, all right, you are collecting a set.

Dollar amount for the sale or use of that thing before anything else. So though the way we like to put is that it, you know, it’s, it’s like the difference between owning a share of Apple stock versus, Oh, you know, get your, I mean, a penny for every iPhone sold. Right. it’s nice owning stock. It’s nice getting dividends, but all those things lower in the payment tier in that regard where there’s a lot of, you know, given the decisions are made by a board, your, you know, your, your stock price can be affected by all manner of different things.

You know, whereas the royalty is just very clean and it puts you closest to the revenue stream as there is. This thing happens. You get this. Everything else works itself on its own on the side and the sideline. So we try to put investors as close to the royalty stream as possible by offering a direct ownership in it.

So that’s what a royalty is to kind of start there now in the music business. And I’m going to start real. I’m going to try to be as really basic as this can be a rabbit hole that could take an hour alone. Trust me,

Ben: [00:06:34] like I said, I mean, you have a ton of collateral. Dives into these, you have hour long videos just on the specific

Antony: [00:06:41] yeah, it can get, I can get a little much, but it’s, it’s really easy once you kind of get the understanding of it, but in the music business, what happens is this, everyone here knows music.

So for every song, That’s ever been made, essentially there are two copyrights, right? That are created one for the song as it is written. And one for the song as it is recorded. Okay. So you sit down and take a piece of paper. You write out a song, you write down the notes, you write down the lyrics. That’s the composition copyright.

Okay. That’s one copyright. And then let’s say you wrote that, then you get the, I take it. I put that in front of you. I take my guitar. I sing those songs, those words from those notes. And it’s recorded onto a tape that creates a recording sound recording copyrights so that there are two different copyrights.

sometimes. Same person that owns both. Right. Sometimes they’re different. Okay. But those are the two basic copyrights. Now, as those copyrights are then used are, there’s licensing that another activity that is created around them, they can generate royalties. The songwriter generally is impacted by the composition copyright.

Whenever that song that is, that is, that was then recorded later on by it, whatever that is, the song is sold. Streamed played on the radio. License for a movie or an app ad or anything like that, that generates. Different types of royalties. So you, you, you basically for when it’s sold or streamed, when it’s reproduced in some way, it’s called a mechanical royalty.

If it’s less listened to, if it’s streamed over the radio, you hear it on the radio that, generates a public performance royalty. And then if it’s used in a commercial or a film or something like that, it’s called a sync royalty. It’s licensing the sync up the music with the, with the image or the other audio.

Okay. So that’s the composition side. Similarly on the Roseanne recording side, same thing for solar strangers. That reproduction though. A sales royalty that’s generated if it’s played on yeah. You mean service, it also generates a performance royalty. It does not generate a performance royalty on the radio.

Right? So if you of the performer, I don’t know, people, people don’t know this, but when you listen to a song on the radio, the band. If they didn’t write the song, earns nothing from that song being played on the radio.

Ben: [00:08:42] I realize that I’ve read that in one of your articles.

Antony: [00:08:44] Yes. Just in the U S yeah. It’s just in the U S and we share that with, we share that unique distinction with Iran and North Korea.

And I think Syria, so that’s a good company to be in there. Right. But anyway, that’s how that works. And and then there’s also a, in some cases, a sound recording royalty when the song, when that actual recording is used in a, an ad or a TV show. And so what’s great about this is that if the, if you’re the composition owner, you, you know, Like Bob Dylan wrote knocking on heaven’s door.

Okay. You also perform that. So when Bob Dylan’s version of that song is played, he earns as both the sound recording cut right on her and as a songwriter, but there’s also the Erica with the guns and roses version. Okay. When those are utilized guns and roses and Eric Clapton, they are, they both, Bob Dylan is the owner of the copyright earns from all.

Okay. Wow. So that’s basically, that’s how it works. That’s a long explanation. I hope that was succinct yet. Descriptive enough for you. For your needs.

Ben: [00:09:41] No. And that, that makes a lot of sense. So obviously it’s very appealing from an investment standpoint. Like if you were able to get in on the ground floor of knocking on heaven, heaven store, like the residual royalty payments of this thing would just be insane.

Right,

Antony: [00:09:58] right. But let me just, but here’s the thing you don’t need to get into the ground floor too, to benefit from this. Okay. In fact, it’s better if you don’t. All right. and that kind of goes into the role of the strategy part. So I could pull it back if I need to, but basically whenever a song is released, it’s usually the first, like three years are gangbusters.

Right. It’s when everyone’s listening to it, it’s when it gets the most activity and whatnot. And then it typically, levels off. some, some cases it might go away completely. Right? You never hear the song again. And other cases like my son’s not going to have in store. It’s a perennial thing. You, you, you continue to get that in movies.

You continue to hear it on the radio stream at the sector, et cetera. So, while the earnings that it gets per year, today might be substantially less than. The earnings of that song and his first year after release, the point is that it’s, it’s stable, right? It’s you can look at it. You look at the last five years of earnings for that song.

It’s generally going to be about the same it’s it’s it’s reliable. Okay. It’s not going away. So even getting into it now you can actually get into it at a, maybe a lower price. Actually, in this case would probably be very high given that song in particular. But the point is that you almost want to get into it and evaluate it.

Three years plus after it’s been released and then buy into what his earnings has settled to then trying to get it in those first couple of years. Cause you don’t know whether that’s going to, you know, have no idea where that’s going to go. That’s the whole indie effect in investing affiliate group.

People don’t understand that one

Ben: [00:11:18] One study that I read was music as a capital asset. indicated 75% of the royalty income occurs during the first year after release.

And then it depreciates at a 10% annual rate between one and five and then basically goes to zero. This is kind of

Antony: [00:11:35] the, on an average basis.

Yeah. But you gotta set that average is almost, I mean, that’s a tough average to do because of the vast volume of songs that are out there. The lower end of that, of that average thing is so much greater than the higher end. So it really kind of depends on an asset by asset basis. Right? So that’s why, when you like with us, we allow people to buy a portion of, of a, of a royalty stream in a song.

And when you’re evaluating it, you’re able to look at its history and kind of see, okay, how long has this asset been earning royalties for starters? How much has it been earning the last three years? And then you can kind of create your own evaluation that way. And we have a lot, we can get into that if you like, but like that’s, that’s what you want to kind of look at.

So the main thing is that the biggest confusion point is that you’re going to come onto our site. You’re going to find some vendor. No one’s ever heard of before. You’re going to buy a royalty and the takeoff, your role in it. Right? We are more looking at proven assets that have a history of earnings that can be reliably analyzed and then gotten into at a reasonable price that allows you to continue enjoying that yield going

Ben: [00:12:33] forward.

Yeah, that makes a lot of sense, but begs the question. Why would, I guess the IP owner or the artists be selling the rights to this royalty?

Antony: [00:12:42] There’s a number of reasons. I mean, but primarily that, because. They their earnings come only from most, most them writers also speak about songwriters. That’s primarily who we work with right there.

Their earnings has been disrupted in the digital of evolution. Okay. It used to be that people would buy albums. And then when we bought albums, their MCAT and the mechanical warranty rate, just to use that specific type was far greater, they would, they would earn a big lump sum. During that three year process, that’s when all the sales happened and then they wrote another song and repeat, repeat, and repeat.

Well, what’s happening is that now they’re earning that potential, that same amount, but over a far longer timeframe. And for someone who kind of relies on a certain level on an incoming per year basis, that that could be a little disruptive. Okay. So that’s one reason this allows you to sort of sell those future royalties and collect those today.

They don’t have to sell all of them. Right. We could just sell 25% of a single song if you had, if it’s the right song. Right. But you could collect money today. It could be, could benefit from it from the present value of money. Right. Then, then just kind of collect them as they trickle on over time. it’s also just on their back catalog.

A lot of them will raise money, use that, use that money to sit, write music, and then release any new music in the future without having to, pay off in advance. To like a label or a publisher or anyone else. So it gives a little bit more control over their finances than they ever had before. And those are the two main reasons.

Yeah. We’ve seen other, some, some songwriters are looking to become performers and so they want to take all the songs for other people sell that off, get that money. We’re really focused on the new visitor that they’re going to do in the future. Some of that, I mean, there’s lots of different, different reasons, but I mean, anyone who could.

Be in a position where they could sell, say 25% of their salary for upfront cash today. Continue collecting the other 75%, but Oh, is that, that sale right now today? I don’t know anyone who wouldn’t at least seriously consider

Ben: [00:14:29] that. Oh time, value, time value of money. Right. Although right now, I don’t know if somebody gave me a, a boatload of cash and told me, you know, for my future income, I’m not sure I could confidently invest it in any one asset class right

Antony: [00:14:43] now.

It’s different, different asset classes. Sure,

Ben: [00:14:46] exactly. For royalties in general, on a royalty exchange. Primarily music, but you also have movies. And one third, one that I’m forgetting,

Antony: [00:14:56] right? Some trademarks.

Ben: [00:14:57] What are the, what is like the bull case? What are the hail wins for royalties in general? Why is this such an exciting new asset class?

So I know music streaming and these things have really changed and revived a lot of it. But what other tailwinds are you seeing for music? Sure.

Antony: [00:15:17] Sure. Well, the streaming absolutely is, is one. I mean, it’s, it’s really revolutionized the, the, the music business, in different ways and you’re seeing it continue to grow.

so that you’re definitely, if you’re we have different, tricks that we encourage investors to look at when they’re evaluating a royalty stream. And one of those is source of earnings. So this is, is, does this, does this royalties asset earn primarily from. Radio’s play or from streaming, right. Or from CD sales.

Okay. So of those three streaming would be the, the one you want to invest in. Right? Cause that’s where the tailwind is. That’s where the growth is and that’s, and it’s sustainable. Right. It’s continuing over and over and over again. So long as fans are still interested in listening to that music, rather.

Ben: [00:15:58] So it as long. The trends continue. Right? I mean, Spotify and these things are expected to explode upward, right?

Antony: [00:16:07] Well, exactly. I mean, look at mobile, you could look at the expanding into other countries. You look at, continued to, penetration into mobile devices, continued, addition of streaming services into like smart home speakers into the car.

I mean, it’s just, there’s a lot of Greenfield opportunity there. So, so that’s a huge tailwind that’s, that’s that’s worth noting. The other one from an investment standpoint is simply. A yield. I mean, look at where the opportunities are particularly now with today’s low interest rates for generating any kind of yield with your investments.

I mean, there’s, there’s, there’s trillions of dollars of capital trying to chase a better yield out there. And this is actually a high yield opportunity, in a massive way. So we actually, I mean, we have a. We regularly look at the returns that we see through the platform. And generally on average, you’re looking under on a 12%, average ROI.

Okay. So that’s where cash, cash return, right? on the municipal investment, that’s not factored into selling them, anything like that, but generally, like that’s a high yield opportunity that I challenge you to find elsewhere in this, with the same level of, of relative risk. Right. So that’s a huge tailwind, right there is just trying to find something that is.

That it pays regularly at known dates. that’s that’s I guess it’s uncorrelated, as you mentioned earlier, you almost talk my book for me there. It was great, but, you know, the stock market goes up and down. The rate for that royalty stream remains the same. there’s no evidence that people listen to less music during a downturn in the stock market.

Right. So there’s all of those factors that come into play. And then, again, like I said, there’s the, there’s the, the, the, the likelihood that these assets will go to zero are virtually. Nonexistent. And that’s what another investment person told me when he was explaining why he was interested in the asset class.

I’m not a financial advisor, past performance. Isn’t an indication of future.

Ben: [00:17:51] All, all the disclosures. They’re everywhere. Don’t, don’t worry,

Antony: [00:17:55] but I’m,

I’m not saying it’s guaranteed, but it’s definitely, it may even reduce, but it’s like, even if it’s falling, it’s falling out of it relatively. Stable and somewhat. Manageable rate. Okay. So anyway, those are the, those are the different, motivations, I would think from, for an investor particular, if you’re an income investor.

Ben: [00:18:15] Yeah. That makes a lot of sense. Obviously, a lot of tailwinds for royalties in general, and a lot of, a lot of the stars kind of aligned here, but what, what kind of lurking icebergs gigantic risks to royalties? In general. Do you see,

Antony: [00:18:32] so let’s see here in general, in general, it’s a, that’s a tough one to answer.

I mean, is, you know, could there be some other new 98 to 2000 and Napster came maybe? I, it’s hard for me to see what that might be streaming. It seems pretty stable. So, you know, that’s one, it could there be some, I think it’s more specific to the asset, perhaps like you could buy a royalty for a song writer who suddenly gets canceled.

I’m not sorry, but an artist, like, you know, some has some scandal. Boom, that’s it. No one plays the stuff that could impact that specific royalty. That’s kind of a hit or miss thing. there are, you know, whenever there’s hardship in the music business, you see, you know, a lot of, the music industry kind of eats itself a little bit, so you get some litigation.

So there are some instances of, the state of one, artist or songwriters suing a more modern songwriter for writing a song that they say, utilize their work without permission. And there could be some change up in the royalty structure. Again, that’s very case by case. We’ve never seen that happen with, anything that we’ve sold them.

We’re actually seeing. Oh, there was a couple of high profile cases, but those are actually starting to get reversed. Now those are the, those are the biggest, Things that I could think of. I mean, even if any of the streaming services go out of business, I don’t see that as necessarily a risk because all those subscribers go.

Some, I remember I was the guy that covered all these services back in the day. And whenever one company went out of business, another one came up and just bought up their subscriber base and they were just like, fine, same music, different platform, whatever we’ll keep going. So, but that’s stabilized quite a bit with Apple music, Spotify, Google and YouTube and, and whatnot.

So, yeah, those are, those are kind of the major issues that I could see out there.

Ben: [00:20:01] Okay. And, and at risk of not, let’s not go too, too deep into the weeds, but so I invest in a particular song. And then every time that particular song is played on Spotify or Pandora or Apple music, a tiny fraction is calculated and paid.

To the copyright owners or, or are they paying like a blanket number to that artist and it’s divvied

Antony: [00:20:27] up, like how does, how does that work? That’s a good question. And I’ll try not to get into the weeds. So, the answer is kind of depends on, on which portion of it. So with essentially Spotify we’ll pay the label.

Okay, we’re gonna assume that there’s a label relationship involved just to make this easier. So a label has a deal with a Spotify for the licensing of its music on the platform that music gets played. Spotify pays the label. The label then pays the artist based on the contract they have with the artist.

And that includes the producer and the different bandmates and things like that. Okay. So that’s there, on the publisher side, mechanical royalty for just sticking out with that one, generally there’s they either pay the label and the label then pays the publisher. Sure. Or in some cases they’ll have a direct relationship with the publisher, but they basically pay the publisher.

The publisher then pays the different songwriters. That may have been involved in the song. So that’s how it works kind of on the, on the mechanical side, a route, not to get too much in the weeds, but just because we primarily deal with public performance, I’ll mention that. Cause it’s actually a little bit easier.

Okay. The public performance royalty is collected directly. It’s collected by the songwriter generally. Okay. And so the songwriters are usually members of these large organizations called performing rights organizations, otherwise known as PRS, right. Pro is collect the public performance royalties, and then they divvy up the, the royalties.

Per the split that each songwriter has keep track of all that stuff. So the point is there are entities, right? Not sole job, but primary job is to track, collect and distribute royalties. And with our platform, what you’re doing is we’re, we’re inserting the new owner into that split mix based on the established system of payment that’s already out there.

Ben: [00:22:06] Yeah. And this, this tracking and paying and divvying system, I mean, it just, it sounds like a beast, so,

Antony: [00:22:14] that’s what we’re happy to be, but up to others. Yeah, exactly. We don’t, we don’t even let that that’s, that’s their job. You’re lesson, you’re here investing alongside them. You don’t have to take on that burden.

That’s their burden.

Ben: [00:22:23] And the funny thing is when I’m thinking about this, I’m just thinking, you know, so you find these artists you invest in and, or, or, or, you know, you, you buy these royalties for these songs that you think are cool. And then you instantly go to like a number of influencers in the space and you’re like, make this song gigantic and you just have them spread it like crazy.

And so every it stuck in everybody’s heads and they’re playing it like crazy. So your royalties go, huh?

Antony: [00:22:50] Yeah, that’s funny. I mean, we get this question a lot. Like what can I, after I acquire royalty, what can I do to kind of, but the answer is nothing.

Ben: [00:22:57] Any you go viral? No,

Antony: [00:22:58] no, no, no, no, no. Don’t don’t, you’re not, that’s not, you’re not, you’re not, that’s not what your job man, like there’s a whole.

Business out there whose job it is to do that. If you want to look, if you want to put it on, get on your Spotify playlist to try to jam up royalties, mazeltov. Okay. But like, that’s not really going to do much difference. You got labels, you’ve got publishers, you’ve got managers. All of these people are already financially incentivized to do what they can to make the song.

make money dream. You’re not buying the right to license this music anywhere. You don’t have the authority to do that. other than I, again, hit heavy, repeat on your, on your own

Ben: [00:23:32] all the time. You never know an investor. They’ve been convinced royalties make sense. It’s great. Diversifier. I understand the risks.

You talked briefly about the investment due diligence process, source of earnings. Are they sustainable? Where did they come from? You talked about some of these, the other potential risks about litigation. you know, if these things pop up, what is the investor due diligence? Checklists that somebody should be thinking about before they make an investment in

Antony: [00:24:04] music row.

Okay. Good question. So we make an education, a priority for investors primarily because this is a new asset class that does require a little bit of understanding. And so we have a number of metrics that we tend to, recommend people focus on. And we, this is based on our history on all the Cadillacs we’ve analyzed and the returns we’ve analyzed over time.

the number one metric, the, the, the, the volume I’ll, I’ll put it right, is what we call dollar age. Okay. Now dollar age is a metric that says, for how long has this asset earned royalties. So like, so let me just put another way of putting this. If, if let’s say it earned $5,000 last year, but it’s been earning royalties for 10 years.

Those $5,000 have a higher dollar age and are as such more valuable than a separate song that also earned $5,000 last year. But it’s only been earning for three years. Okay. So they may have earned the same amount in the last year, but the one that’s been earning royalties for a longer period of time, those dollars are valued higher than those that have been already less.

So dollar age is the one thing that we look and we have it in all of our assets that you see right there. You know what it is, the sources of earnings, right. Streaming versus CD sales. Okay. And then the other would be the trend rate. So, looking at his last three years, Is it trending upwards downwards, anything negative, 5% trend rate or better is considered, you know, a pretty solid asset.

So those would be the different areas that, that we didn’t than to focus on. We actually have just real quick. We, there’s a, an ability to leave, what we call a standing order on our platform, which is, allows you to go and say, okay, I want to invest. You know, this dollar amount in royalties that have this dollar age, that, you know, at a multiple of X, right?

And then any, any, thing that comes to their platform that meets your requirements will create an automatic match to what you’re not reviewing. Are the artist, the song, sorry. I said that doesn’t matter. Okay. It’s really those metrics that really are the quantitative differences. Like, you know, you could look at a country song or rap song and a rock song.

Maybe you’re thinking your music, maybe adult. Well, how do you know which was the quote, better song? You don’t, you look at the performance and the performance is the one thing that stays standard throughout those, through those different, differences.

Ben: [00:26:18] Right. That’s a, that’s a very nice value proposition.

So it’s an auto investment based on these factors that you’ve chosen. It’s just to repeat those. What’s the dollar age

Antony: [00:26:29] you said age. Exactly.

Ben: [00:26:30] So you want high dollar age. You want this earnings from sustainable sources? Probably. Well diversified, no CD sales. We’re very hello, I guess technically it’s still one probably.

And then what was the negative trend?

Antony: [00:26:43] The trend rate looking for a trend rate of no, of better than negative 5%.

Ben: [00:26:48] And what does that mean?

Antony: [00:26:49] so you mentioned before the appreciation that you might see after a song, you know, so, so you want to look at something that’s not depreciating value more than 5%.

Gotcha.

Ben: [00:26:57] Okay. So it’s fine to be depreciating just no more than 5%,

Antony: [00:27:01] 5%. And then that would be over its three year average. Okay. But like, you feel like you want to, you want to have a wider base of, of data to, you know, to analyze basically.

Ben: [00:27:10] Okay. So based on these factors, you come up with some sort of multiple that I’m investing in these royalties.

I would presume the way it works.

Antony: [00:27:20] well, when I say, when I say you, I mean, the investor would, would determine the multiple over the last 12 months early is that they wish to pay. That’s how, that’s how we measure. We don’t look at like overall dollar amount. We look at what is the multiple over its last 12 months that they’re willing to invest.

Okay.

Ben: [00:27:34] And what you’d normally, I mean that multiple is very wide ranging, I would imagine. But what’s the low, what’s the highest that you can think of.

Antony: [00:27:42] Goodness. the highest I would say has been over 17. And

Ben: [00:27:48] the 17 times last year, spurning

Antony: [00:27:51] last 12 months earnings. Exactly. Exactly. And I’m the lowest would be, you know, I guess in the, even the one or two rains, I mean, there’s some, there’s just to make clear that we have two different kinds of assets.

All right. There’s there’s. If you’re, there’s a life of rights asset where you’re buying the asset for them, life of the copyright, which is typically the light span of the author, plus another 70 years. So it’s a very long time, but there’s also assets on the platform. You can buy 10 year terms. So you’re buying this and you’re collecting income for 10 years after which, the royalties were referred back to this, to the owner.

so the, so the multiples that are naturally going to be lower. Because there’s a, there’s a more of a limited scope. So that’s where you kind of get into more of the two, two times or so range for, and those are generally for newer assets. If someone’s selling their asset for say 10 years, and it’s only been out for a year and a half, you’re going to see around a two, a half X kind of thing going on there.

So that’s, that’s a pretty wide spectrum.

Ben: [00:28:42] That makes sense. And the much higher ones, these would be like the knocking on heaven’s door, just super stable. You’re willing to pay a high multiple, because you know, it’s very consistent.

Antony: [00:28:52] I mean, going back and staying power, you know, the one that went a song, cause we had two that were up in there through that.

I can remember. Anyway, the song was bet Midler. It was the album, but it was bet. Midler is the Rose. Which is mean kind of been around forever. Right? So that was a good one. And then the other one was actually a trademark royalty on Listerine sales, which had no end date, which is very unique.

Ben: [00:29:15] What does, what does that mean?

Antony: [00:29:17] That means that the, this is a trademark royalty, so it’s not music, but in fact, it’s not even a trademark is a trade secret royalty. And so the, the contract with Listerine was such that Listerine has to pay, whoever owns this. Sheriff royalties by the original inventor of Listerine. they pay a set flat royalty for every gross of Listerine sold.

And there’s no end date to it. There’s no like until this number of years, it’s in perpetuity. It’s transferable. So, I mean, this is something, this was great. This was a contract that was created in 1882 or something like that, right? Yeah.

Ben: [00:29:52] That’s when the original Listerine formula was

Antony: [00:29:56] it 1880s and then vendor Listerine, amended it, but couldn’t sell it.

So we basically licensed it to some pharmaceutical company, with the agreement saying you will pay me my heirs and our signs, whatever it was that it was like $6 per gross sold of the street. I’m in perpetuity, right? And like in the fifties, whoever, you know, the pharmaceutics pharmacy companies gets bought and sold and whatnot, and this royalties continued being paid by all the new owners and the owner.

Then I don’t recall the name of the owner then sued saying, Hey, this is this crazy fantasy for 75 years. And, the secret formula is out. It’s been public. What’s the medical journals. Why are we paying this for court said. Contractor didn’t say anything about that contract. He said, you’re going to keep paying this forever.

So as long as Listerine is sold, they have to pay this royalty in this royalty has been split up. Like, I don’t even know how many ways between like different airs and people that would sell it. And they had, some of it went to like a real estate government, New Jersey had a interest in it at one point.

Right? So all of these people are collecting this forum. So that one for 17 next that was pretty valuable.

Ben: [00:30:55] Yeah, that’s just absolutely baffling. So you can transfer these royalty rights very easily. I can buy it, own it for three years, then decide, you know, I actually like scope and I hate lists.

Antony: [00:31:08] Well sort of we have a, we do have a secondary market where, Not every asset that you acquire on our, on our platform currently can be sold on there, but basically public performance royalties as distributed by the PRS in the U S if that’s what you’ve acquired, that goes up on the secondary market pretty much automatically.

So what it means there is that it’s just there, it’s just sitting there. And so you could go to our site right now. This is the secondary market review, like over almost 200 assets that are listed there and you can make an offer directly to the owner of those assets right now, for whatever price you want.

Now, the owner could ignore it or say no. So we, you know, we see a handful of sales or pretty much every week of investors coming in and just making unsolicited offers to two others. Now, if you actually want to actively sell it, there’s some steps you can take, you know, you put a list price, say, Hey, you know, this is.

This is what I’m willing to accept for it. There’s a little bit more promotion around that, on the site and whatnot and so on. So there is some liquidity there, but, it, it is, it’s not as easy as just like selling your stock. you know, in terms of getting re getting rid of the assets, there’s gonna, there’s going to be a little more of a process involved.

Yeah,

Ben: [00:32:15] that makes sense. So it sounds like a lot of what you’re doing. I mean, education is also important with this because it’s something very outside of the comfort zone of a lot of people, they don’t know a lot myself included about IP and these things, an investor purchases, this, it sounds like it’s relatively illiquid, but you do have the second secondary market.

What things do you want to really ensure that the, the investor understands beforehand? what key areas are people most. Often surprised or confused by just any, any light you could shed on these?

Antony: [00:32:48] Sure. Good question. we always encourage folks when they first sign up to basically to sign up, to watch an auction.

You don’t need the bit. Just watch, I’ll go have demand, you know, review, Oh, the different assets that are listed. We’ll see a number of just an office, you know, go in and go into the financials of each one. take a look at those three, much. We talked about dollar age, source of earnings, trend rate of earnings and whatnot.

And just, just take some time to kind of get familiar with how those things are looking at the secondary markets, actually a great place for this as well. Cause then you could, you know, you were able to see, on a quarterly basis, the changes on, okay, this was, this is how much it earned. You know, as of that last quarter, now there’s been a new distribution.

Okay. Now there’s, there’s, there’s new set of data available to you. So you just, you know, it’s a matter of watching of these things. That’s sort of one area that we always just, just take some time to watch what’s happening before you jump right in, is number one, two. We have, a monthly office hours open Q and a webinars session that we had.

In fact, we had it this morning was our, it was our August one and you can literally sign up and we limited to a hundred people just so we can answer every question. And we’ll answer any question directly from our staff, our CEO, or chief financial analyst, or chief counsel and myself. and we will answer all questions that, that, that come in.

but basically the, the, the, the, and of course, there’s a, there’s a host of information on the site. They kind of get you, up. And running in terms of the basic parameters. But I think that what happens is, you, you want to understand that the basics of how music royalties work, the different, types of royalties and the different distribution paths for those royalties.

Take a minute to understand that first. Okay. That’s really important. And then take some time to watch how that might be reflected in the actual assets on the site. Okay. That might be second. And then definitely. Call in and ask the questions that you have of us would be, it would be sort of the third route.

I think that would be the easiest ways to get started. and if you’re particularly motivated, and you, you know, intend to start deploying some capital in this space, we have a, a premium membership tier called all access investor, which has a number of benefits. One of which being a more in depth monthly report, called the insights report that we send out where we.

Deep dive into a lot of the metrics on our marketplace. We’re more, you’re not two of them right now. in some cases we’ll be a deep dive into sort of more industry wide metrics. We did one that looked very closely at the impact of the pandemic on music, royalty sources and flows and things like that.

and so on. So, that is a premium membership, opportunity. I’m not here to sell it. I’m just saying that there is, there’s a, there’s a lot more available, through that as well.

Ben: [00:35:13] Okay. That’s, that’s really helpful. I’m curious. So investing in music royalties via, or, or royalties in general through royalties exchange is one option.

What are other options for an investor that wants to invest in royalties?

Antony: [00:35:30] Oh, that’s it. That’s a really good question. There will be. We had several that we live, we once presented in a webinar. So one is, there are some. there’s a public fund you may have heard of, out of a UK called hypnosis song’s fund.

And what that does is that they’ve raised to above, you know, like a billion dollars or something like that. And they just buy up a ton of music royalties, and then you could buy shares of the company. And then, as those royalties perform for them, you, or neither a dividend, or I don’t know, I don’t know.

I don’t know. It’s either your price goes up or you’re in a dividends would be like that, but you can, you can, you can, it’s a public fund that you can invest in. I’d be remiss to say that you’re not going to see you the same types of returns as if you owned a world too directly, like you can’t with us, but it allows you to get in at a lower, a price point, but it is the London stock exchange.

And I don’t, I’m not sure how that affects investors here and whatnot. So there are also a number of private funds. There is a little bit more difficult to do, but there’s a number of, of, of funds that are emerging to do very much the same thing, which is to acquire a catalog of royalties and enjoy the earnings that they create.

there are, let’s see here, switching gears a little bit, you can’t invest directly in, Warner music group. It just went public earlier this year. not a great time to do so, but they did it, you know? And, so they had their IPO. And so you can invest in the, the, the label, investing in the label definitely gets to you exposure to the collection of royalties.

So that is one part of their revenue stream, but it also exposes you to a lot of other expenses that you would otherwise not get like, They are what we call ANR costs in ours. Basically the cost that they have to find and develop new talent, that’s their sort of their VC fund, if you will. Right. And so there’s a lot of money gets spread around there for, you know, hopefully getting a couple of big hits to pay that off.

So anyway, there’s a, there’s a there’s that? Yeah. Universal and Sony are both other major labels, but they are part of larger stock, which is got a number of other things involved in it. Like, you know, news movies. Technology and such universal is basically an event, the stock, right? That’s got your tele telecoms and you know, all the stuff that kind of goes into that.

And there is one there’s one that’s called the mills music trust. It’s highly difficult to get into people. Don’t sell those shares a whole lot, but that, that is out there somewhere. If you want to take a look at that one, this is just a similar public fund where there’s a it’s it’s actually, it’s one catalog.

There’s no new catalog coming into it. It’s just one set catalog from, I forget what’s in it. There’s no, it’s not going to have any new music attitude. It’s just, that’s it. That’s your, that’s the catalog, man. And if you could find someone exactly, and ain’t gonna change, man. So those are that’s another one.

And I guess if you want it to there’s, you know, there’s Spotify, there’s Pandora. It’s that gets you involved in music. However, you’re, you’re now invested in the companies that are paying the royalties, which is a little bit of a different, model. I’m not saying it’s bad, it’s just. It’s a, it’s a much different,

Ben: [00:38:13] thesis, very different investment.

Right? You have operational risks of Spotify, that company as they’re acquiring users, but yeah, it can definitely be a indirect way.

Antony: [00:38:22] Yeah.

Ben: [00:38:23] So when you’re talking about like hypnosis fund and miles’ music fund, do you see institutional interest in royalties on

Antony: [00:38:32] royalty range? Absolutely. Absolutely. Yes. I mean, we’ve been mostly our product work.

If you want to call it that aimed at the investment side of our business is looking for ways to allow institutional investors, to express their interest more easily through us. you know, the first one we offered her auctions, right. and auctions for very different. I go for an institution to become involved with, simply because the price is always changing and there’s a time limit to it.

I mean, yeah. You know, it’s a little harder for them to do. so we’ve induced a number of things along the way. One of which being the secondary market in particular, a large institution that wanted to deploy a city, wanted to play $5 million of capital into music royalties right now. you could simply go into the secondary market and make an offer to every single person in there.

Okay. So as an institution, if you’re more, it, you know, if seven, eight, 9% returns are. You know, acceptable to you. you could make an offer that would generate that from, to a individual who bought in to a single royalty at like a 12 to 14% return and be like, yeah, you know, Also I’ll sell that. You know what I’m saying?

Like they bought it at a lower price. It allowed them enjoy those higher returns. Whereas an institution is happy with that with, with a lower return than an individual would be. So there’s, there’s a lot of opportunity there and we’re doing more and more things. We’re looking at larger catalogs. Like w we, we weren’t sure if an auction would ever work for an asset over a million dollars, and we’ve since found that.

not to be true. People are more than willing to bid on a million dollar plus assets on the catalog. So we’re looking at higher value catalogs to add to the platform as well. and other things like that. So, there’s a lot, there’s a lot of opportunity. So

Ben: [00:40:12] that million dollar catalog, that means one. Person group institution pays a million dollars and gets rights to these royalties going forward.

Antony: [00:40:22] Exactly. So just like whether it’s an asset that you bought for $10,000 or for a million dollars, it’s the same basic premise.

Ben: [00:40:30] And I, I just perused your site, but it seems like a lot of the offerings are much lower than the Oh

Antony: [00:40:36] yeah.

Not a million dollars would be the outlier. We just started testing that, not even in the last year, like a less than a year ago. and so it’s, it’s a new. Components are, plus you’re not going to get as many at that at that level, but then when they do come, we can, we can facilitate it is the point, right?

Like what’s the investors willing to get at that level. Yeah. Thanks. Yeah.

Ben: [00:40:56] That’s amazing. So, diving into the platform a little bit more, I think I have a lot more clarity on royalties in general and some of the risks and opportunities deals on the platform. Like, what kind of deal flow are you seeing?

What kind of due diligence to you royalty exchange do on each deal before putting them on there? How much can an investor get involved? You know, with a hundred dollars?

Is there anything I can buy or, you know, am I looking at $20,000?

Antony: [00:41:25] Yeah. Yeah. Okay. Oh, it was a couple of questions here. Let me see if I can remember what they all were.

So that’s sort of the last ones. That’s what I remember in terms of the average closing deal on average. Is a, I think $65,000. So they add that and that’s, again, averages are misleading, but you

Ben: [00:41:41] know, we just, there’s a million dollar deal in there. Right,

Antony: [00:41:44] right. So exactly. Yeah. All kinds of stuff. Right. But, that’s about the average.

So, you know, you’re looking, if you only have a couple hundred dollars, it’s not gonna, I mean, in order for an artist to sell on our platform, they have to be earning at least a thousand dollars or there’s nothing in the previous 12 months. Portions, their selling has to have it at that level. So if you’re looking at a couple X that you’re talking about, I think the lowest we’ve done is around $5,000 in the sale.

Okay. All right. And that’s about as rare as the million dollar ones are. Okay. So generally you’re looking into the, you know, five to six figures. What kinds assets move forward? I’m assuming you mean new assets being listed on the auction house? Yeah. On the auction house, you know, you can get anywhere between a slow week would be two or three, a good week would be five to 10 and auctions running, throughout the course of the week, not concurrently necessarily, but, throughout the course of the week, I think we did eight.

A couple of weeks ago. So that was pretty good, but yeah, so that’s kinda what we looking at deal flow. That’s on the auction house, on the secondary market. Again, there’s close to 200 assets that are just there that you can bid on anytime you’d like. and it just depends on whether you are making an offer to someone who has any interest whatsoever in selling.

and if you make a proper, you know, real, meaningful

Ben: [00:42:54] offer yeah. And. If there was one more good job. No. Well, that’s what I did. I wanted to surprise you just throw like six questions at you and see if you could remember all of that.

Antony: [00:43:03] Oh, I’m happy with three. Three is about as far as my brain will

Ben: [00:43:05] go.

Yeah, same. I’m one. now the, that the last question was more

Antony: [00:43:09] due diligence process. So it sounds

Ben: [00:43:11] like the $1,000 a month trailing 12 months is that’s your absolute minimum. So you know that there’s like there’s recurring revenue in the past 12 months and you pay a little multiple, but what, What is the other due diligence check checklist that you go through before?

Antony: [00:43:26] Something that, yeah, what we do is, you know, we’re, we’re, we’re trying to ensure that the person selling the asset has a clear path to ownership of that asset. So if someone buys it from them, they also will have a clear path of ownership and no ambiguity whatsoever, no counterparty risk, et cetera. So generally what we do is if someone comes and says, Hey, I have.

This asset I want to sell it. The first we’re going to do is want to look at the statement. We want to ensure that the person at the entity rather, and then distributing those royalties that I mentioned earlier are collected industry, distribute those royalties to this person. Okay. That, you know, so ASCAP, one of the bureaus has been paying this person for the last 10 years for them songs.

We feel pretty comfortable that they’re the one who’s going to be able to sell it. Right. so that’s what we do. We, we, ensure that there’s no, liens and conferences or judgments against them. So tax liens, you know, anything that might, siphoned off any of the royalties that that person is earning after.

The distribution is made from the distributing party. Right. So we’ll make sure we look into that. and you know, those are the general areas of due diligence that we do, in terms of the investors due diligence. Yeah. I mean, this, you have to. Look at, you know, we present that. We do present the earnings when you present ’em the last, on the, on the listing tab, right?

The easiest stuff to access would be the last three years worth of earnings and the sources of earnings and the top stocks, et cetera, et cetera, that you can review. There’s also a, everything we have, you’ll have an option to look at it. It’s a big old CSV file and you can manipulate it any way you like and create any kind of forecasts or whatever that you like.

So that’s all available to you as well. But yes, you know, there was, you know, we were the only, the only, Assurances that we’re making is that, That this person is selling this asset on our platform. We are a marketplace. Okay. We’re not a broker. so our job is to, is to connect buyers and sellers and facilitate those sales.

Ben: [00:45:09] Yeah. Yeah. That makes sense. And I mean, in terms of investors on the platform, what kind of mix of institutional versus smaller individual retail investors do you see?

Antony: [00:45:22] It’s predominantly retail investors just by nature of the format and the history that we’ve had. so, you know, Rich Dennis and Houston looking to invest, you know, an extra $200,000 in an alternative asset that, to diversify the portfolio, that sort of thing.

but we do have, an increasing almost by the day interest on the institutional level, institutions are highly, highly interested in how they can get involved in this asset class. Most of them talk to us out of an educational standpoint first and then try to look at okay, you know, Where are there opportunities that they can work with us to also acquire, those royalty streams?

So, institutions are getting, I mean, when I say institutions I’m even talking about sovereign wealth funds, I mean, Oh, absolutely. I mean,

Ben: [00:45:59] so they’re going to put it and get 10%.

Antony: [00:46:02] I mean, exactly. So there’s a lot of the interest is growing. I can’t name any of them obviously, but, but in terms of that, most of the activity we’re seeing is, Yeah, the retail investor.

Ben: [00:46:10] Okay. And then, in terms of tools for the retail investor yeah. To get more easily invested, do you have any plans to launch some sort of crowdfunding mechanism or some sort of royalty exchange fund? You know, that’s automatically legal, they auto investing in smaller increments or anything like that on the roadmap.

Antony: [00:46:33] Not necessarily, no, we don’t, we don’t have any plans, hands on becoming a fun. We’d get asked that question all the time. And our focus is remaining in the marketplace. hands down, in terms of other ways of making it easy for retail investors, like yeah, we had to, we do have the automated investing in standpoint.

there’s no other features imminent that I’m willing to share at this point. but I can’t say that we are constantly innovating, trying to basically bring, I think the best thing we can do to help. Investors on our platform is to increase the opportunities available to them, to invest. All right. So, if you look at it, our track record, it started with an auction where someone would list so would buy and then that deal will be closed.

They will have expanded it to the secondary market where someone can. Someone could buy on the auction platform and then given the asset and have that asset listed on a secondary market. So now it gives you more opportunities to place offers not to other investors. Right? so we are expanding and working on some very eminent, features, flexible and easier way.

So it’s, it’s just a matter of like our, our, our, our challenges. I’ve never really been, From demand. The demand among investors have always been very high it’s higher than ever. Even in this current investment environment, we have seen an explosion since April in investor interest in getting into these assets.

Our challenge has been and likely always will be, on the supply side, on getting assets for them to buy. And so, as we iterate on that side of things, we hope that the investors that are involved will benefit from it.

Ben: [00:47:59] And these investors, how do they normally find royalty exchange and what are they looking for?

They’re just looking for uncorrelated returns and they find you from Google.

Antony: [00:48:09] Yeah. I mean, you know, if you invent the, I there’s all the, all of the above in terms of how they find this, right? They either hear about essentials shows like this, they read about us, then we can, we’ve done a decent amount of success in press in the, on the investor side, you know, the wall street journal because of newcomers to the market, like hypnosis, which is a, a different value proposition before.

investors, but just adds to the drum beat. Right. Other of, of, musical royalties as an investible asset class, which is great. Okay. So yeah, they find us, we, we have, we average over a thousand new, investors registering to the site a month. and that’s twice what it was like a year ago. Okay.

So, which was good then too, I thought, but yeah, so they, they just find us either by Googling, how do I buy assets? They read about it. They get interested, they join, et cetera, et cetera. yeah. So what they’re looking for is, is it was like what you said, they’re looking for an alternative asset.

That’s uncorrelated that delivers yield. Those are the top three, right? Generally. Yes. We have some folks that are, we, you know, purely music fans that just kind of, I want to check stuff out. A lot of them get weeded out pretty early on. this is, this is, you know, the, it would be a mistake to think this is like some kind of novelty, fun, like really highly clarified Merck, something like that.

I mean, people, you know, get into what they buy sometimes, and that’s fine, but it’s really important. Understand that while it is music and while there’s a lot of pop culture, you know, Trappings that that comes with the investment thesis behind it is as sound as any boring municipal bond. I mean, like it’s, it’s, there’s, there’s maybe that’s not a perfect example in terms of thesis, but the idea is this is, these are serious investments.

Okay. These are not just, Hey, look, I own, you know, part of Cardi B or something, very, foundational thesis that, that you’re investing in here. And that was what, the kind of folks that, that ultimately, engaged in the platform.

Ben: [00:49:55] That makes sense. And royalty exchange is only accessible by accredited investors or anybody can,

Antony: [00:50:02] Oh no. you do not need to be accredited investor. anyone can register once you register. If you actually do want to place a bid or make offers, we do have to go through a short verification process, but that verification process is not. making sure that you’re, an accredited, it’s just understood that you understand the rules of the platform.

That if you make a bid, you actually have to honor that bid. Should it be successful and not just be like, Hey, I’ll just throw a bit up there and see what happens. Oops. I won. Yeah. Yeah, exactly. Yeah. And you know, we have to do that. You know, you are able to transfer the funds within two business days to satisfy the sale and things like that.

So, It’s it’s a, it’s a short form. You fill out on the site and then it’s a short five, 10 minute phone call with a member of our account management team. once you’re verified, it’s a onetime process. And once you’re verified, you can bid or make offers to your heart’s content for as long as you.

Ben: [00:50:47] Okay. And then fees for, from the actual auction itself and then ongoing, what do those look like? No.

Antony: [00:50:53] So the only fees that are charged to an investor is a, we call a marketplace fee at the point of sale. that is going to be 1% of the closing price of the. Listing, with a minimum of $500 and that’s a onetime fee that goes to the cost of us administry and those payments for you after you acquired it.

So you’re not buying it from us. You’re buying it from the individual. We facilitate the, the, the transfer of the funds that are not going basis for one time fee. And that’s it.

Ben: [00:51:21] Easy easy to understand. I like that. Speaking of easy to understand what is the biggest mix misconception you see from investors when they, when they come onto the platform,

Antony: [00:51:31] when they come out the bug, the biggest misconception in general is this idea of, buying low selling high, unknown acting.

They’re going to be the next. New kids on the block or something like that. Right. it’s really an education about no, in investing in older assets, particularly, in fact, here, I will say that once they’re on there, they, they they’ll, there’s a lot of investors who, and understandably want to invest the music they’ve heard of before they, Oh, I’ve heard that.

Oh, Bette Midler. I know who that is. You know, that kind of thing. And so generally. You’ll see if you normalize all the data, you’ll see, people’s probably overpaying quote, unquote overpaying. Cause you know, it’s relative, for assets that they recognize and that they know then for assets that they don’t, which is interesting because at the end of the day, it’s really about the performance of the earnings that really, drive the returns.

Right. So I would say the biggest misconception is that something that I recognize is somehow more valuable than something that I don’t, or even. Something that I like musically investors in our platform with that have had the most success have acquired catalogs. Of artists and music that they have never heard of before.

They have no idea who this person is. And this is like, and I’m talking like household names, like Cardi V and, and others. I don’t know what Cardi B was, but it was catalog like grapes and they just doing great with it, you know, versus, you know, other stuff. So that’s, you know, so there’s a lot of stuff on it that you may not recognize, but it’s really worth looking at the fundamentals of the earnings for it to, to really be successful, I think, or at least at least be more successful than others.

Ben: [00:53:05] Which is, which is really interesting because you know, investing based on spreadsheet, numbers is always a very dangerous thing. But with royalties, it’s almost like, no, you, you don’t know what a good song sounds like or what that will pay. Well, like something that has a great jingle to you doesn’t mean it’s going to be a great returning.

Royalty. Right. So it’s, it’s very interesting

Antony: [00:53:29] that, huh? I don’t know about hip hop. I’m not sure that’s going to really stay. I’m like, okay. You know, knock yourself out. But

Ben: [00:53:35] yeah, they work well, right. Maybe. With royalties in general, what gets you most excited over the next two days? Five years, sort of thing

Antony: [00:53:47] with royalties in general as a class.

Ben: [00:53:50] Yeah. Asset types coming online.

Antony: [00:53:55] you know, so I, you know, I’m looking forward to like, we’ve been at this for a little over four years now. I would love to see a lot more artists using this as a regular part. Well, if they’re of their careers of their day to day lives, it’s still something that a lot of creators are trying to wrap their head around in terms of, you know, you know, what is the present value of money?

You know, how do I utilize this as a new way? Like one of the phrases that one of our founders used the other day that I’m going to steal and use is that, you know, we were trying to be an arms dealer for a creative revolution. Okay. Like the ability for the creative class to get access to capital outside the traditional.

Debt heavy. And we’re part of that. I’m proud to be part of it. It’s what keeps me at the company more than anything else is the, is the ability to have the offer a real meaningful, capital to a creative class that has been. Victimized in some cases I don’t want to overly stated here. Right. But you know, over the years where they can, you know, they could really take control of their financial future, really gain the artistic freedom that they need, that excites me tremendously.

and I’m looking forward to finding more and more ways to, to make that happen and make it more, a more regular part of this industry that I’ve covered for so long. So that’s what excites me,

Ben: [00:55:07] Anthony really, really good interview. Really appreciate you coming,

Antony: [00:55:10] coming on today. Yeah, I haven’t done one in a while, so it was good.

Perfect.

Ben: [00:55:15] So I’ll be linking up a lot of the things we talked about in the show notes, but, what do you want to leave my listeners with? where can they go to find out more about you about royalty? Sure.

Antony: [00:55:25] So, you know, if any of this sounds interesting, I’ll host of information available to you, I would start just, you know, go to the investors tab and it kind of lays out the basic, Case for what it is that you’re able to do on our site.

the blog has a, an investor resources section that has a number of different guides and resources and articles. We send out a marketplace update every week that summarizes the activity in the marketplace. Here’s what’s available now. Here’s what’s. Bought here’s what sold, here’s some, you know, share links to, news articles about this space.

So you can educate yourself. we have monthly office hours that we can, we encourage you if you’re new to, or even if you’re not new to participate in and ask your questions. We love talking about this stuff. and we love educated investors. That’s the opportunities that are available to them. So just basically start at the website and, If you have any other questions, I’ll even throw out [email protected] is a kind of a catchall email that myself and others monitor at the end to answer questions as well are created just

Ben: [00:56:20] for you. The Anthony really appreciate it. Thanks for coming.

Antony: [00:56:23] Oh, Hey listen. It has been a blast. Thanks for having me .

Ben: [00:56:25] Thank you

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Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.