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Why Are Music Royalties A Popular Asset Class?

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Alternative Investing
Why Are Music Royalties A Popular Asset Class?

Music royalties are becoming a more appealing asset class in the present market context of low returns and interest rates. Because of their poor association with macroeconomic performance and strong income potential, more investors have been interested in their financial potential.


What are the main levers that active investors use to boost the value of music intellectual property?


Aside from the reasons stated above, investing in music may really strive to raise the value of their investment. To increase value, active investors use three main levers:


1) Developing new music IP by performing artists and songwriters. Traditional record labels and music publishers devote a substantial amount of time and resources to recognising outstanding performers and composers, as well as assisting them in the creation and marketing of new music IP.


2) Identifying new ways to monetize current music IP through creative licencing. Labels, publishers, and royalty funds that can licence their music IP will "work" their current library of songs by looking for new licencing possibilities in cinema, television, advertising, cover songs, and video games.


3) Lowering the cost of royalty collections and the time it takes for them to be paid. The money transfer from end-users to music IP owners is complicated, and it frequently involves a number of "middlemen," such as collecting organisations and agencies. Payments to these collectors and rights holders might take anywhere from 6 to 12 months, or even longer. In order to optimise cash flow accessible to shareholders, labels, publishers, and royalty funds with the capacity to control their library of songs will aim to reduce these expenses and the time lag between payments.


What Is the Best Way to Invest in Music Intellectual Property?


There are three ways to invest in music intellectual property:


  • Publishers and record labels
  • Royalty funds for music
  • Purchases of music IP assets on a direct basis


Find the best comics to invest in, visit Alts.com for more information.

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