Okay, that's a really clickbaity title, but it's true. I was able to do this with one of my music royalty investments lately. What are music royalty investments you say? Here's an article I wrote that's a great starting point: Are Music Royalties a Good Investment?
So are the details of how I earned this monster return:
I purchased the lifetime rights to a music royalty catalog for an underground hip-hop artist (Rome Fortune) for $6,490 on 12/17/2020 from Royalty Exchange. The person I bought it from paid $3,116 for it in 2/2020. Not a bad return for that investor!
After I purchased the royalty, I received my first royalty payment on 1/26/2021 for $196.97. Not bad, in line with what I was hoping to receive quarterly from this investment, so life was good.
My next royalty payment was received on 4/5/2021 in the amount of $213.01. Nice! The royalty stream increased 8% in a quarter, I'll take that all day long. Let's keep this money flowing party going.
Come June 2021 I decided that I wanted to sell this royalty on the Royalty Exchange platform to see what I could get for it. Note that Royalty Exchange will automatically list your royalty catalogs for sale shortly after you purchase them. As a seller you can add a List Price to the catalog, however, which signals to investors that you're really open to selling. Which is what I did.
I set the list price to $8,280. At this price I would received $7,750 after Royalty Exchange's selling fees (note: if you are an All Access Member as I am your selling fees are 50% of the regular listing fee of 15%). A few investors tried to see if I'd sell for less than my listed price, but I wasn't budging. I really wasn't in a hurry to sell, so I could be patient. However it only took a few days for someone to agree to my listed price.
So here's the full breakdown of the cashflow for this investment:
This equates to a 25.73% total return (which is a 58.74% annualized return).
Not bad for a passive investment!
Now, guess what happened to the investor that purchased this royalty from me? They were able to sell it on 8/26/2021 for $10,000! There was a spike in the international royalties for it that happened shortly after I sold it, which helped drive the overall price up. So far every investor who has touched this royalty has achieved healthy returns.
Want to learn more about investing in music royalties? Join the conversation with us over at our Reddit page: Music Royalty Invest.
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As always this blog is meant for entertainment. I'm not a financial advisor in any way, shape or form. Anything I suggest here will need your own due diligence.