I started investing on SongVest in September 2022. Here’s a walkthrough of what my portfolio and results look like one year later.
What Are Music Royalties?
When songs are played or performed, rights holders accrue a small amount of earnings. As time goes on and songs are, for example, streamed hundreds of thousands of times those payments add up. They can be a very significant source of earnings.
If you’re new to the asset class, you might want to take a look at these resources:
Introduction To Music Royalties
New to the asset class? No worries! Take a look at this approachable introduction to get started.
How To Value Music Royalties
Learning how to value music royalties can be tricky. This guide will help explain what you need to know.
What Is SongVest?
SongVest is an alternative investment platform dedicated to music royalty offerings. They have auctions for larger music royalty assets as well as an SEC-qualified fractional investment offering called SongShares.
If you’d like to learn more, we have a detailed walkthrough of the platform:
Getting Started With SongVest
A comprehensive overview of SongVest, SongShares, VIP auctions, and how to invest.
I made my first investment on the platform in September of 2022. After, I added a few smaller investments towards the end of 2022 before adding more significantly in January and March of 2023.
I have invested into 7 different offerings so far. Here’s what my portfolio looks like:
Now that we’ve covered the investments, let’s take a look at the results.
Understanding Payout Schedules
An important piece of understanding the performance results is how many payouts that have been generated for each of the assets. There are a few important factors. One is how recently the investment was made. The other is the delay from the offering closing to when payouts began.
Here’s a table summary of the key points:
|Offering Name||Investment Made||Offering Closed||Asset Payout Frequency||First SongVest Payout Received|
|Chippass Master Catalog||Sept ’22||09/20/22||Monthly||02/15/2023|
|“Cross Me” feat. Lil Baby and Plies||Nov ’22||01/31/23||Quarterly||05/15/2023|
|“Fear No More”||Nov ’22||12/22/22||Quarterly||08/15/2023|
|Onyx, Travis Scott, The Notorious B.I.G. & More||Jan ’23||02/28/23||Bi-Annually||05/15/2023|
|Erik Cain Recordings||March ’23||04/05/23||Monthly||08/15/2023|
|“Countdown” by Beyonce and More Compositions||March ’23||04/19/23||Quarterly||08/15/2023|
|Young L Catalog||March ’23||04/05/23||Quarterly||08/15/2023|
The time from the closing of an offering to the first payout ranged from 76-236 days. The average was 135 days or roughly 4.5 months.
The main outlier is “Fear No More.” This asset was expected to deliver its first payout in May. However, delays from ASCAP meant that SongVest had not received domestic royalties in time for the payouts. This delayed the first payout to August.
If “Fear No More” had its first payout in May, the range would have been 76-148 days, with a 122 day average. That’s just over 4 months.
Payouts Received So Far
With that context, let’s look at what the payouts I received:
As for the individual components of the portfolio, “Countdown” had much lower performance than I expected in the first payout. Otherwise, I’ve been getting about a 7-14.5% annualized return for the other SongShares.
All-in-all, my investment return was just over 5% for the first year.
While that may not seem remarkable at first glance, it’s better when we consider that only about 1/5th of my portfolio was held for the year. When annualized, those returns bump up to about 12%.
Am I satisfied with the returns? For the most part, yes.
Here’s how the (non-annualized) returns stack up against a few other asset classes:
Sources: S&P 500 (YCharts), US Homes (Zillow), Liv-Ex 1000 (Vint Q2 Update)
The real results don’t quite live up to the strong performance the S&P 500 has had since the correction in 2022, though the annualized ones do. Though they did outpace the overall US Home market and Liv-Ex 1000 (wine) for the year.
I believe the real value will be during the years where risk assets perform poorly. Hopefully the consistent, uncorrelated performance of the music royalties will continue to provide positive returns independent of the various macroeconomic challenges that will inevitably emerge.