Matt Smith is CEO of Royalty Exchange, an online rights platform where users sell portions of their royalty income and investors bid on it. The primary goal of Royalty Exchange is to make royalty streams investable. They have held over 200 auctions in the last 18 months where artists and investors interact in the buying and selling of royalties. Recently Matt launched a sister company Royalty Flow–created to purchase larger royalty streams and get more investors involved.
What is the process of Royalty Flow? Investors can buy shares through a platform called Folio, those shares are then transferred to a major exchange like Nasdaq. Royalty Flow was created after being approached to buy Eminem’s royalties. Royalty Flow provides a way for a pool of investors to purchase. What are motivations for investors to buy royalties? Investors view this as a hedging strategy because it is uncorrelated to their other portfolios. In contrast, what are some motivations for selling off royalties?
There are hundreds of thousands of investors that contribute to artists getting their music out there – music producers, song writers, etc., not just performers. Those contributors have royalties. Artists and their contributors see the advantages to diversification and investors see a sense of security in having a steady flow of income outside of their Wall Street portfolios.
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