, singer-songwriter Ryan Tedder was jogging through the flats of West Hollywood while talking to his friend and investment partner Abe Burns when they struck upon an idea.
Founded by Sam Hendel and John Chapman of venture capital and private equity firm Dundee Partners, JKBX aims to become the Fidelity of music investment — a platform where fans can buy, trade and sell royalty shares of songs with strong, sustained records of income. The company says all of the tracks offered will have been released over 18 months ago, with most of them older than 10 years.
Because it’s still seeking SEC qualification for its first batch of offerings, JKBX was careful to state in interviews withthat it’s not offering or soliciting investors in securities and that any future offerings will provide investors with all the normal disclosures, including how much revenue a song has generated over the past three years and ongoing audited financials.
Its launch also comes at a time when fans wield more power than ever to send old songs viral again, by using snippets of them in TikTok videos, for example, and may therefore have more interest in owning a share of these songs’ earnings than they did in the past. DJ-producer Diplo, who partnered with Royal in March 2022 to sell tokens linked to the streaming revenue of his song “Don’t Forget My Love,” says JKBX’s “business-minded” leaders and their embrace of conventional market rules — only SEC-registered and -regulated investments will be offered — convinced him the platform stands the best chance of succeeding.
JKBX’s idea to allow investors to create customized portfolios of songs follows the recent launch of several exchange-traded funds, including David Schulhof’s MUSQ, where investors buy shares to gain exposure to 48 different music companies, including Warner Music Group , Spotify and Live Nation, and TUNE, a fund providing exposure to 50 music and digital companies, including UMG, Netflix and The Walt Disney Company.
Hendel and Cohen like the fantasy sports comparison for a couple of reasons: Fans who invest in sports tend to spend more money overall on merchandise and experiences linked to games, and labels are eagerly searching for ways to find and reach their artists’ superfans. The Orchard paid off all of its debts a short time later thanks to a several-million-dollar infusion from media investor Daniel Stein, who Cohen says gave him sage advice: “He said, ‘You made it this far, but now you’re going to have competition. Everyone is going to pour into this space, and all that hard work to get into the lead will evaporate overnight because new people will come in fully capitalized without any debt and they’ll eat your lunch.
“When I look at the next year to 18 months, it’s a long, slow, educational curve where we just march forward month after month, quarter after quarter on a very clear path of what we want to do and not get stressed that every rights holder, artist and consumer isn’t on board on day one,” he continues. “It is going to take a moment for this to catch on, and as long as we are seeing the growth, we feel we are in the right place.
Hipgnosis Songs Fund, a pioneer in providing investors exposure to music royalties through its publicly listed trust, said in July that its investors have earned 27.9 cents per share of dividends since its July 2018 IPO — a 69% net asset value return to shareholders.
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