Eminem goes IPO: what does it mean
Eminem had a busy year: his ninth album was released, and before that he had " committed " the current US president. In addition, the rights to the work of Marshall have become something of a stock exchange. In this article we will deal with how this happened.
Photo of Slippy Slappy Follow / CC BY-ND
The economy of the music industry is based on rights to tracks recorded and released by musicians. They are the main subject of trade, around which the revenues of labels, disc and record sellers, streaming platforms and musicians themselves line up.
It works like this: a music track is considered as an object of copyright and exclusive rights, and its author and / or performer - as the holder of these rights. Depending on the contract with the label or distributor, for the reproduction, distribution or commercial use of rights holders are entitled to remuneration - " royalties ".
The label may invest in the recording of the album or its promotion, but will provide for the full or partial transfer of exclusive rights to the recorded music. Distributor - works with retailers and online storefronts, and its labor costs for distribution can be compensated, for example, through a sales commission.
In 1992, Jeff and Mark Bass signed the first production contract with Marshall . The brothers' company was called FBT Productions, and later it grew into the Web Entertainment label, on which Infinite was released - the first studio album of the artist.
The first producers of Eminem still receive the corresponding deductions. Here we will not delve into the specifics, but if you would like to explore the issue, we recommend reading the case on the issue of the distribution of rights and income between FBT Productions and Aftermath Records.
Photo VasenkaPhotography / CC BY
Last September, Royalty Exchange , an online platform for asset management in the field of exclusive rights to musical works, signed a letter of intent to acquire from FBT Productions a 15% share of the revenue received from royalty payments for the commercial use of Marshall tracks.
The company planned to bring these assets to a mini-IPO - place them on the NASDAQ exchange . Mini-IPO is an alternative to initial public offerings . It is available for technology startups who wish to take advantage of a full-fledged IPO, but with far less stringent requirements and commitments.
This transaction took place . Royalty Flow, a division of Royalty Exchange, paid the label an amount of $ 18.75 million for 25% of the royalties, and Eminem's “shares” were listed on the stock exchange.
Representatives of the artist stressed that Marshall did not take a personal part in the negotiations and the transaction itself, and the agreement was reached without any discussion with the artist.
The efficiency of using royalties as an investment tool is growing .
A year earlier, analysts at Goldman Sachs predicted a doubling of the streaming market by 2030, and this year the US Congress came out in favor of simplifying the regulation of the work of the streaming platforms and the procedure for corresponding payments.
In addition, it was reported that the streaming platforms will increase the amount of contributions to authors and publishers by 44% over the next 5 years.
Photo by Matt J Carbone Follow / CC BY
According to the report of the US Securities and Exchange Commission, the amount of royalties from Marshall's work was more than $ 82 million for the period from 1999 to 2016. Royalty Flow claims an average return on its assets of 8-16%. Based on these data, you can make the assumption that the minimum package of 300 shares will bring at least 270 dollars a year.
It is important to remember and understand that this market is unpredictable. In confirmation of this, we can recall the story of the "David Bowie bonds." He was one of the first musicians who began to earn on his work with the help of a stock mechanic. Securities provided royalties from the commercial use of musician albums, but amid the emergence of services like Napster and the iTunes Store, bonds actually depreciated.
Photo of Slippy Slappy Follow / CC BY-ND
Moment of theory
The economy of the music industry is based on rights to tracks recorded and released by musicians. They are the main subject of trade, around which the revenues of labels, disc and record sellers, streaming platforms and musicians themselves line up.
It works like this: a music track is considered as an object of copyright and exclusive rights, and its author and / or performer - as the holder of these rights. Depending on the contract with the label or distributor, for the reproduction, distribution or commercial use of rights holders are entitled to remuneration - " royalties ".
The label may invest in the recording of the album or its promotion, but will provide for the full or partial transfer of exclusive rights to the recorded music. Distributor - works with retailers and online storefronts, and its labor costs for distribution can be compensated, for example, through a sales commission.
How Slim Shady got on the stock exchange
In 1992, Jeff and Mark Bass signed the first production contract with Marshall . The brothers' company was called FBT Productions, and later it grew into the Web Entertainment label, on which Infinite was released - the first studio album of the artist.
The first producers of Eminem still receive the corresponding deductions. Here we will not delve into the specifics, but if you would like to explore the issue, we recommend reading the case on the issue of the distribution of rights and income between FBT Productions and Aftermath Records.
Photo VasenkaPhotography / CC BYLast September, Royalty Exchange , an online platform for asset management in the field of exclusive rights to musical works, signed a letter of intent to acquire from FBT Productions a 15% share of the revenue received from royalty payments for the commercial use of Marshall tracks.
The company planned to bring these assets to a mini-IPO - place them on the NASDAQ exchange . Mini-IPO is an alternative to initial public offerings . It is available for technology startups who wish to take advantage of a full-fledged IPO, but with far less stringent requirements and commitments.
This transaction took place . Royalty Flow, a division of Royalty Exchange, paid the label an amount of $ 18.75 million for 25% of the royalties, and Eminem's “shares” were listed on the stock exchange.
Representatives of the artist stressed that Marshall did not take a personal part in the negotiations and the transaction itself, and the agreement was reached without any discussion with the artist.
What can affect the value of "Eminem shares"
The efficiency of using royalties as an investment tool is growing .
A year earlier, analysts at Goldman Sachs predicted a doubling of the streaming market by 2030, and this year the US Congress came out in favor of simplifying the regulation of the work of the streaming platforms and the procedure for corresponding payments.
In addition, it was reported that the streaming platforms will increase the amount of contributions to authors and publishers by 44% over the next 5 years.
Photo by Matt J Carbone Follow / CC BYAccording to the report of the US Securities and Exchange Commission, the amount of royalties from Marshall's work was more than $ 82 million for the period from 1999 to 2016. Royalty Flow claims an average return on its assets of 8-16%. Based on these data, you can make the assumption that the minimum package of 300 shares will bring at least 270 dollars a year.
Fresh deals in this area
- The company Carin Music Publishing, which controlled the rights to the songs of Elvis, AC / DC and other legendary musical groups, was bought for 240 million dollars.
- Imagem, which controlled the rights to the compositions of Vampire Weekend, Justin Timberlake and a number of other artists, was sold this summer for $ 600 million .
- In June 2017, the former manager of Guns N 'Roses announced the launch of the Hipgnosis Songs Fund. The task of the foundation is to manage the rights to the works of more than 50 artists, including Adele, Rihanna, Bruno Mars and Beyonce. Investors are promised dividends and access to the LSE .
- Along with Royalty Flow and Hipgnosis Songs Fund, services appear that allow users to become investors bypassing the traditional stock exchange. These are various platforms and projects based on certain variations of the use of the blockchain. Their basic model is the sale of thematic tokens, with which you can invest in the creative career of musicians and acquire rights to royalties from compositions prepared as a result.
It is important to remember and understand that this market is unpredictable. In confirmation of this, we can recall the story of the "David Bowie bonds." He was one of the first musicians who began to earn on his work with the help of a stock mechanic. Securities provided royalties from the commercial use of musician albums, but amid the emergence of services like Napster and the iTunes Store, bonds actually depreciated.
Source: https://habr.com/ru/post/409783/