You Can Now Buy Shares in Music by Beyoncé or Taylor Swift

Startup JKBX is offering securities backed by the royalty streams from songs recorded by popular artists

By Alexander Osipovich of The WSJ. Excerpts:

"It’s the latest musical mashup: Top 40 hits meet financial engineering.

A startup is offering securities backed by the royalty streams from songs recorded by such artists as Beyoncé, Taylor Swift and the pop-rock band OneRepublic. Its goal is to bring music investing to the masses.

JKBX, pronounced “jukebox,” opened its new marketplace after the Securities and Exchange Commission signed off on its first offering last week. Individual investors can visit its website to buy slices of the income generated by dozens of songs—effectively, bonds backed by beats."

"Wall Street has been turning music rights into financial products for decades"

"JKBX is now aiming to bring such deals to the little guy. Founded in 2022, the company plans to keep listing more investments and ultimately build music royalties into a new asset class"

"JKBX operates a platform that allows holders of music rights to issue securities based on their royalties and sell those securities to investors. It makes money from executing transactions. 

Here’s how it works. Suppose you buy shares in the sound-recording rights to Beyoncé’s “Halo,” which are available on JKBX for $6.78 apiece. Holding those shares entitles you to a quarterly distribution of fees paid to the rights holder. Such fees could come from several sources: revenue from streaming services such as Spotify, album sales, satellite-radio royalties or fees from use in movies and TV shows. The size of those payments could vary from quarter to quarter. Recently they have worked out to an annual yield of about 3% for the “Halo” shares, according to JKBX data.

Yields of 3% to 4% are common among JKBX’s initial crop of listings. Such yields aren’t particularly attractive at a time when money-market funds are offering yields of about 5%."

Related post:

Rod Stewart Sells Song Catalog as Music-Rights Fundraising Surges (2024)

Katy Perry Sells Catalog to Litmus Music (2023)

Why Are More Performers Selling The Rights To Their Music? Maybe Tax Laws  (2022) 

Excerpt from that post:

"Bruce Springsteen, for example, recently sold his master recordings and music publishing rights to Sony for $500 million. I assume an artist would not sell their music for less than the amount of future income it would generate.

But that future income would get taxed at 37%. Selling it now means they only get taxed 20%. So that is a good deal for the artists.

The company buying the music could come out ahead if they pay a little less than what the music is worth because the artist does not need the full price. Why not? Because they are getting such a good tax deal they can sell it for less than it is worth.

If your music is worth $100 but you sell it for, say, $90, you still come out ahead. If you earned $100 by keeping the music, you pay $37 in taxes and you are left with $63. But if you sell it for $90 and only get taxed 20%, you pay $18 in taxes. That leaves you with $72, more than $63."