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Royalties are generally paid as a percentage of the revenues from the use of the asset.

It starts to get a little complicated when you look at the different types of music royalties. It's not important to understand exactly how this works, it's just a bit of background information. So there are
Performance fees – on the radio, in cafés, in sports stadiums.
Mechanical Royalties – Think CDs, vinyls, or streaming on Spotify and YouTube (this is why when someone plays music on YouTube, all the money the video makes goes to mechanical royalties and not to the person who made the video).
Recording copyright – This occurs when the song is played in a movie, television show, or advertisement.

Benefits of Owning a Royalty Owning a royalty offers two major benefits.

1. It's an uncorrelated asset. That means other industries don't really affect royalties. People listen to music when the stock market crashes. People listen to music when a disease keeps everyone home. So if the housing market crashes and the stock market goes to 0, royalties would still keep flowing. As long as people like music. Royalties will be valuable.
2. It's very passive. Music royalties are one of the most passive incomes there is. You can be sick for 3 months and your royalty payments will still keep coming in. You literally don't have to do anything.

The main exchange for this is called Royalty Exchange. You already knew that from the title of this video. Royalty Exchange is the platform I would recommend for finding music royalties.

I'm new to this asset class and still trying to understand everything. But I think it's a very strong alternative investment that I'd like to diversify into with the right royalties.
But as with anything, I like to be patient and find something that I believe is a worthwhile investment.

I hope you enjoyed learning about a different asset class today.

Please leave a comment if you have any questions. I will answer them all.
See you soon.

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