- There’s often about a 4 month delay from making an investment to receiving the first payments from it.
- Quarterly payments are variable, even from “stable” assets.
- It’s difficult to completely accurately estimate future payments.
- Good asset selection can produce solid investment results, even with the added fees of fractional assets.
I made my first investment on SongVest in September 2022 and received my first payout in February of 2023. Here’s a walkthrough of what my portfolio and results look like after two years.
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:
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.
My Investments
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. Since then, I’ve only added a little bit to my SongShares portfolio at the end of 2023.
I have made 8 different investments so far. Here’s what my portfolio looks like:
My Results
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 | Sep ’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 | Mar ’23 | 04/05/23 | Monthly | 08/15/2023 |
| “Countdown” by Beyonce and More Compositions | Mar ’23 | 04/19/23 | Quarterly | 08/15/2023 |
| Young L Catalog | Mar ’23 | 04/05/23 | Quarterly | 08/15/2023 |
| Katy Perry and Nicki Minaj’s “Swish Swish” | Dec ’23 | 01/16/24 | Quarterly | 06/21/2024 |
The time from the closing of an offering to the first payout ranged from 76-236 days. The average was 138 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 76-157 days, with a 126 day average. That’s just over 4 months.
Payouts Received So Far
With that context, let’s look at what the payouts I received:
I’ve been getting about a 7-17% annualized return for my SongShares, even with a decent amount of variance from quarter-to-quarter.
On the whole, I feel like performance has been about 60% true to my expectations.
Chippass and Erik Cain are declining faster than I anticipated and Swish, Swish has gotten off to a weak start. But Young L, Onyx, and Fear No More are all doing better than I expected. Countdown and Cross Me are the only ones I can say are performing just like I anticipated.
Asset Quality & Selection
When you include assets that “failed” the VIP Auction test of interest, there are far more assets that I didn’t invest in than the 8 that I did.
Not all offerings will have the same potential returns as what I have seen so far. In particular, the recent SongShare offerings have been a bit more towards the “fan” and “collectible” side of things, rather than pure investments.
In general, I tried to achieve an overall return level of at least 10%. I also looked to balance safety and upside. Here’s a couple of examples:
Countdown
I expected that “Countdown” was more likely to be in the 8-9% range longer-term.
The original offering was modeled at an 11.4% yield in the trailing 12 months. That was boosted by $3,245 of TV/Film income in one quarter. That’s drastically higher than what was seen in most of the 4 years of earnings data. Controlling for that knocks about 15% of the earnings of the last 12 months making it closer to 9.5% yield.
Erik Cain
For Erik Cain, it was an upside bet. It’s a bit of a younger song mix for a smaller artist.
At the time of the offering he had less than 7,000 YouTube subscribers and about 29,000 monthly listeners on Spotify. That’s the 128,345th highest monthly listeners total. Which is to say, there’s a lot of room for growth in his career still.
Conclusion
All-in-all, my investment return was just over 21% for the first two years.
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 whole time. When annualized, those returns bump up to about 12.5%.
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 (Liv-Ex)
The real results don’t quite live up to the strong performance the S&P 500 has had since the correction in 2022. Though they did outpace the overall US Home market and Liv-Ex 1000 (wine) over that timeframe.
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.
