(Bloomberg) — Retail investors will soon get a chance to purchase the music rights of their favorite artist or music catalog, thanks to a developing platform from market maker GTS Securities LLC.
The global trading firm is partnering with JKBX, a royalties technology platform also known as Jukebox, to make investing in music rights accessible to the general public, according to executives. The system, slated to go live at the end of 2023, will allow fans to invest in music in a manner similar to how they buy stocks.
“Music as an asset class has been around for as long as there’s been copyright law, but it’s owned and controlled by a handful of companies,” JKBX Chief Executive Officer Scott Cohen said in an interview. “By unlocking that value and offering it to retail investors we can create a level of wealth for stakeholders that doesn’t cannibalize or replace what’s already there, but builds on it.”
Music deals have taken off in recent years as high-profile artists sell their catalogs, and as record companies and investment firms bank on long-term revenue from chart-topping songs. Justin Bieber struck a deal with Blackstone Inc.-backed Hipgnosis Song Management last month, and John Legend sold his music catalog to KKR & Co. and BMG. Bob Dylan and Bruce Springsteen have also made deals.
GTS and JKBX are in talks with US regulators for approval so their platform is registered with the Securities and Exchange Commission, Cohen said. JKBX has about $1.7 billion in music rights “exclusively secured” and expects launching the platform by the end of the year with more than $4 billion of rights, he said.
GTS and JKBX also created a fund for the songwriters and recording artists so they can get ongoing revenue from the platform.
“If their rights are being traded, we should find a way that they make money as well,” said Ryan Sheftel, partner and global head of fixed income at GTS.
The firms will operate the system like today’s stock market, but instead of shares investors can buy parts of music royalties. Investors will be able to access the platform through a website and app, said Ari Rubenstein, co-founder and CEO of GTS.
Investors will essentially buy the rights and become a holder, taking a portion of the revenue from the copyright. The music royalties would be packaged into a new company, like an LLC, which is filed with the SEC and made available for investors to purchase, the executives said.
Through the registered entity, “the music listener will become the music investor,” Rubenstein said. “Now they can understand this as an investable instrument. And for the music industry, it will create more interest in artists and buzz for their music.”