Music Royalties: How to Earn Double-Digit Yields from Your Favorite Songs
Music Royalties: How to Earn Double-Digit Yields from Your Favorite Songs
COACHING POINTS
- The Asset Class: When you listen to “Don’t Stop Believin'” on Spotify, someone gets paid. Institutional investors (like Blackstone) are buying these rights because they produce predictable, recurring cash flow similar to a rental property, but without the tenants.
- The Uncorrelation: People listen to music when they are happy, sad, or broke. Music streaming revenue has shown virtually zero correlation to interest rates or stock market crashes. It is the ultimate “Emotional Hedge.”
- The Yield: Top-tier catalogs often trade at 10x-15x multiples (yielding 6-10%), while niche catalogs can yield 12-15%. Unlike bonds, these payouts can grow if the song goes viral or gets licensed for a movie.
In a world of volatile stocks and low-yield bonds, “Intellectual Property” is emerging as the new gold.
Music Royalties turn culture into capital. By owning a slice of a song’s copyright, you secure a royalty stream that is protected by federal law for the life of the author plus 70 years.
Source: Goldman Sachs “Music in the Air” Report
Why old songs are safer investments than new hits.
- New Hits (Pop): massive spike in Year 1, then crash 80% in Year 2. (High Risk).
- Evergreens (Classics): Songs older than 10 years (e.g., Queen, Journey). Their decay curve has flattened. They generate consistent, predictable income year after year.
- Investment Strategy: Smart money buys “Catalog” (Old Songs) for stability, not “Frontline” (New Songs) for speculation.
What-If Scenario: 2022 Bear Market
Comparison: S&P 500 vs. Music Copyright Fund.
| Asset | Market Driver | 2022 Return |
|---|---|---|
| S&P 500 | Inflation / Fed Rates | -19.4% |
| Music Rights (Avg) | Spotify/Apple Subscribers | +8.0% (Yield + Growth) |
Result: Music royalties acted as a true diversifier. Listeners did not cancel their Spotify subscriptions just because the Fed raised rates.
Visualizing the Yield Advantage
| Asset Class | Average Annual Yield (%) |
|---|---|
| S&P 500 Dividend | 1.5 |
| 10-Year Treasury | 4.2 |
| Real Estate (Cap Rate) | 5.5 |
| Music Royalties | 9.5 |
*Music royalties offer yields comparable to private credit or high-risk bonds, but with a completely different risk profile driven by consumer streaming habits.
Execution Protocol
Platforms like Royalty Exchange allow you to bid on auctions for specific songs or catalogs. You buy the rights directly and collect quarterly checks from the distributor (e.g., ASCAP/BMI).
Newer platforms allow you to buy “shares” of a song for as little as $100. This offers liquidity but comes with platform fees and less control than direct ownership.
Before bidding, look at the “Dollar Age” of the catalog. Ideally, invest in songs that have been earning royalties for at least 3-5 years. Avoid songs that were released last month; their future earnings are impossible to predict.
COACHING DIRECTIVE
- Do This: If you are looking for “Mailbox Money” that isn’t tied to the real estate market or interest rates. Target “Evergreen” tracks with 10+ years of history.
- Avoid This: If you are chasing the next Taylor Swift. Speculating on new artists is gambling. Investing in established catalogs is finance.
Frequently Asked Questions
What exactly am I buying?
You are usually buying the ‘Writer’s Share’ or ‘Publisher’s Share’ of the public performance royalties. This entitles you to a percentage of the revenue every time the song is streamed, played on radio, or used in TV/film.
How long do the payments last?
Under current US Copyright law, copyright lasts for the life of the author plus 70 years. If you buy a classic rock song today, the income stream could easily last another 50-80 years.
Is it liquid?
Direct ownership is illiquid. Selling a catalog takes time (like selling a house). Fractional platforms offer some secondary market liquidity, but volume is low compared to stocks.