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  • Close Up: The Royalty Exchange

    21
    Jun

    royaltyTHUMBFounded in 2011 by tech entrepreneur Sean Peace, together with partners Wilson Owens and ‘80s hitmaking artist and producer Reggie Calloway (Midnight Star, Calloway), The Royalty Exchange (TRE) emerged from a need to create a centralized online platform for royalty owners seeking liquidity, and buyers seeking alternative assets in a time when many have lost trust in Wall Street.

    The exchange is open to all types of royalty streams, including music, film, TV, books, solar energy, pharmaceutical, intellectual property, oil/gas and more. In creating a transparent and efficient auction-marketplace, the organization’s mission is focused on getting royalty owners top value for their royalty assets, in addition to providing buyers with a simple, secure platform to invest in stable and unique asset class.

    Valued worldwide at around $11 billion, music royalties are emerging not only as a highly desirable alternative investment, but as a practical and predictable source of income with the added benefit of longevity.

    “Until now, there has been no managed marketplace for the valuation, sale and purchase of music royalties,” says Peace. “The Royalty Exchange provides the first managed marketplace for music royalty rights by identifying, connecting and accommodating buyers and sellers with turnkey services within a professional, transparent and efficient transactional environment.”

    TRE evolved from its origins as Song Vest, launched by Peace in 2008 to sell investors “a piece” of individual songs to fans of artists and songwriters. In addition to receiving regular royalty streams based on their percentage of ownership, the company gave the fans related souvenirs like a gold record and handwritten lyrics. An example of this high-end memorabilia is Earth, Wind & Fire’s Larry Dunn selling a piece of “Shining Star” for $65,000. Among the other songs up for purchase was the “Theme from The Monkees.” Song Vest also netted over $100,000 for Stryper frontman Michael Sweet.

    Calloway joined forces with Peace and Owens to create The Royalty Exchange after connecting as a client of Song Vest.

    “Ultimately,” says Peace, “we weren’t able, with Song Vest, to get larger artists and the people who were investing were mostly fans of the clients we had. My partners and I realized the solution was to flip the model so that we wouldn’t be selling songs and their royalties as memorabilia, which only appeals to a limited fan base. We wanted to help provide artists with a way to generate full market value for their royalties–which were becoming increasingly desirable among investors—whether that meant selling a song catalog or a percentage of one.

    theroyaltyexchangeTHUMB“The Royalty Exchange was born out of the idea of selling full and partial catalogs to high net wealth individuals who were looking at the time for attractive alternative investments in the wake of the 2008 crash. They could make a steady, low-risk return on their money by paying songwriters, artists and producers for years of potential royalties up front.”

    Buyers are given detailed information about each royalty asset up for auction (including 2-3 years of revenue history) so they can make an informed purchase. The TRE marketplace is formatted in a way that allows sellers to offer royalties when they want, at the price they want and at the percentage they want—maintaining complete control of their assets at every stage of the process. Peace compares the auctions to eBay, with reserve prices, proxy bidding and a “15 minute” rule that extends an auction if a bid comes in last minute.

    Not surprisingly, interest from sellers is growing, coming from a variety of content categories and genres. TRE has managed royalty sales of songs from artists as diverse as Whitney Houston, Jerry Garcia and Judy Garland, as well as songs from classic Disney films.

    “The most fulfilling aspect of The Royalty Exchange,” Peace says, “is being in a business where both buyers and sellers are happy and I am able to broker dreams for songwriters and producers that also allow investors to put their money in solid entities. I enjoy creating and being part of an environment where everyone walks away with a smile on their face.”

    Contact The Royalty Exchange, 919-848-0445