Investing in Gargling? The Scoop on Entertainment & Other Royalty Investments!

by Fred Fuld III

Have you ever thought about owning the rights to music from your favorite band? Or maybe you would like to own the residuals from a movie you like. Maybe even investing in trademarks.

Recently, investors had the opportunity to own the right to royalties from Listerine. Yes, the mouthwash you use to gargle with. Yup, every time someone uses Listerine and spits it out, the investor would make money.

This investment was available through an organization called the Royalty Exchange. Investors could make an offer on what they would pay for receiving a flat rate royalty on worldwide Listerine sales, for as long as Listerine is sold. Listerine has been providing royalties for 142 years. 

Royalties are paid monthly and Listerine has paid $12,507 during the last twelve months.

What other things can you invest in? The music from the film Shrek, royalties from standardized tests, Apple (AAPL) alert tone royalties, and tracks of music from Enrique Iglesias and Rihanna.

Previous transactions that the company handled include royalties from Coldplay and Beyonce, Jerry Garcia’s Cherry Garcia Trademark Royalties, and Naked & Afraid TV placements.

I want to point out that these investments do have some risk, like any investments. Second, I am not recommending any of these investments; I’m only mentioning them for you to do your own due diligence. Third, I have no connection to the Royalty Exchange whatsoever. 

So what is the Royalty Exchange?

Royalty Exchange is an online marketplace that facilitates the buying and selling of royalties and intellectual property rights. It allows creators, artists, and copyright holders to monetize their intellectual property by selling a portion of their future royalties to investors. Here’s a general profile of Royalty Exchange:

Business Model and Purpose:

  • Royalty Exchange serves as a platform connecting creators of intellectual property (such as musicians, songwriters, authors, and other content creators) with investors interested in purchasing a share of their future royalties.
  • The platform allows creators to access immediate capital by selling a portion of their royalty income, often in exchange for a lump sum payment.

Types of Intellectual Property:

  • Royalty Exchange deals with a wide range of intellectual property, including music royalties, book royalties, film and TV show royalties, patent royalties, and more.
  • Music royalties are one of the most prominent categories on the platform. This includes royalties from songwriting, publishing, performance, and mechanical rights.

How It Works:

  1. Creators looking for funding list their intellectual property rights on the Royalty Exchange platform.
  2. Investors browse the available opportunities and can place bids on the rights they’re interested in purchasing.
  3. A competitive bidding process takes place, and the highest bidder wins the right to receive a portion of the future royalties.
  4. The creator receives an upfront payment, and the investor receives a share of the royalties generated by the intellectual property over time.

Benefits:

  • Creators can access immediate funding without taking on debt or selling ownership of their intellectual property outright.
  • Investors can diversify their portfolios by investing in various types of intellectual property.
  • The platform aims to create a win-win situation by allowing creators to unlock value from their royalties while providing investors with potential long-term income streams.

Marketplace Transparency:

  • Royalty Exchange aims to provide transparency by providing data and analytics related to the performance of the intellectual property being offered for sale.

The advantage of royalty trusts include the fact that they are uncorrelated assets, they have the potential to provide high yields, and offer passive income.

One thing you should be aware of is the time frame of the investment. The company provides these definitions:

  • Term Based: Investor collects royalty income for a fixed period of time (typically 10 years). Royalty income then reverts to the original seller after the end of the term.
  • Life of Rights: Investor collects royalty income for the length of the underlying copyright (Lifetime of the creator PLUS 70 years).

A Publicly Traded Entertainment Royalty Trust

If the Royalty Exchange investments are too rich for your blood, you could also consider Mills Music Trust (MMTRS), which is a publicly traded stock that trades Over-the-Counter.  It receives income from royalties from the music catalog of EMI Mills Music Inc. 

The catalogue is estimated to be composed of over 12,000 music titles, of which approximately 1,430 have produced royalty income in recent years. Some of the top songs include: 

  • Little Drummer Boy
  • Sleigh Ride
  • Star Dust
  • It Don’t Mean A Thing
  • Mood Indigo
  • I’ve Got the World On A String
  • Ain’t Misbehavin’
  • Lovesick Blues
  • Hold Me, Thrill Me, Kiss Me
  • Stormy Weather
  • Red Roses for a Blue Lady

This New York based trust was founded in 1964. It pays a dividend of 8.3%, and has very low trading volume, with a wide spread between the bid and ask prices. At one time, Paul McCartney was a major shareholder of the company.

Because it is a trust, it avoids the double taxation of corporations. There may be personal tax benefits to the investor; talk to your accountant about it.

Buying royalties is a quick way of getting into show business, but it carries a lot of risk.

Disclosure: Author owns MMTRS. Author and this site have no connection to Royalty Exchange, has not done due diligence on the company, and are not recommending the company or its royalty investments. No investments are expressed or implied. All investors should do their own due diligence.

How to Invest in EMINEM

Royalty Flow IPO Now Open to Investors

DENVER (Nov. 27, 2017)—Royalty Flow Inc. (“Royalty Flow”), a subsidiary of Royalty Exchange—the premier online marketplace for music and media royalties—today announced that interested investors can now place their orders for shares in the company’s Regulation A+ IPO.

Royalty Flow seeks to raise at least $11 million through the IPO, but will accept up to the $50 million limit allowed under Title IV of the 2012 JumpStart Our Business Start-ups (JOBS) Act. It intends to use the proceeds to acquire premium, royalty generating assets so that investors can participate directly in the growth of the music industry. The first such asset identified is the production company’s master sound recording royalties from the 1999-2013 recording catalog of hip-hop superstar EMINEM.

“Royalty Flow provides investors direct access to not only the growing music business, but to only the most premium, cherry picked catalogs within the music industry,” said Matthew Smith, Royalty Flow’s Executive Chairman.

His full comments can be found on the Royalty Exchange blog: https://www.royaltyexchange.com/blog/royalty-flow-the-ipo-that-makes-investing-in-music-possible 

Interested investors can get started here to reserve shares. The minimum investment is $2,250 for 300 shares at $7.50 per share.

About Royalty Flow

Royalty Flow is a specialty financing company created to acquire passive interests in premium, royalty generating catalogs of music and other media. Shareholders in Royalty Flow are eligible to receive dividends based on the performance of the royalty assets it holds, and participate directly in the growth of the music and media industries. It is a subsidiary of Royalty Exchange, the largest online marketplace of music and media royalties.

Forward-Looking Statements

The content above contains forward-looking statements that are subject to risks, uncertainties and assumptions. All statements addressing events or developments that Royalty Flow expects or anticipates will occur in the future, including but not limited to, the success of its offering campaign, listing on a securities exchange and development of a market for its securities, and its business strategy, including acquiring future royalties. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties, all of which are outlined in the company’s offering circular. Except as required by law, Royalty Flow disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in the content above.

 Legal Disclaimer

The offering will be made only by means of an offering circular. An offering statement on Form 1-A relating to these securities was filed with the Securities and Exchange Commission and was qualified on Nov. 22, 2017. You may obtain a copy of the offering circular contained in the offering statement at the following link: https://www.sec.gov/Archives/edgar/data/1709847/000147793217005751/royalty_1a.htm

You should read the offering circular before making any investment.

The content above shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No money or other consideration is being solicited at this time with respect to such an offering, and if sent in response to these materials for such an offering, it will not be accepted. Any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. An indication of interest made by a prospective investor in a Regulation A offering is non-binding and involves no obligation or commitment of any kind.

Our offering statement and any statements related to Marshall Mathers, aka Eminem, have not been approved or endorsed by Marshall Mathers.

The securities to be offered will be highly speculative. Investing in shares of Royalty Flow will involve significant risks. Investment will be suitable only for persons who can afford to lose their entire investment. Furthermore, investors must understand that such investment could be illiquid for an indefinite period of time. No public market currently exists for the securities, and if a public market develops following the anticipated offering, it may not continue.

Due to state Blue Sky laws and timelines, residents of Michigan must wait until after Dec. 4, 2017 to reserve shares. Residents of Colorado, Iowa, Kentucky, Maine, Washington, and Wyoming can reserve shares immediately, but must wait until after Dec. 14, 2017 before any shares they reserve can close.

Purchasers of our Class A Common Stock may be limited in their ability to sell shares of our Class A Common Stock (a secondary sale) to any person in any jurisdiction where applicable state securities laws (Blue Sky Laws) prohibit or limit such sale.