Royalty Exchange Performance Update: April 2022

Updated: Apr 26

I've been investing through Royalty Exchange since 2020. I thought it was time to provide an update on how my current active portfolio is performing.


But first...


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!





Music Royalties continue to be a part of my overall portfolio. I currently invest in music royalties via 3 different platforms:


  • Royalty Exchange: This is where I've invested the bulk of my royalty portfolio. I've written multiple articles about my experience with Royalty Exchange, which has been overwhelmingly positive.

  • ANote Music: (Affiliate Link) I've begun investing more here, but still represents a small portion of my portfolio. I'll be publishing more articles about them in the future.

  • SongVest: I just started investing here so not much to show from it just yet.


For full disclosure Music Royalties currently account for less than 5% of my total net worth, so even though they are the most enjoyable asset class I invest in, they still are relatively small in relation to my overall portfolio (which is heavy in real estate and equities).


Current Royalty Exchange Inventory

I currently own the rights to 7 catalogs on Royalty Exchange, as I've sold off 3 in the past year.


Dollar Age = How old catalog was at purchase; LTM = Last 12 Months of earnings at purchase

Worth calling out that the average multiple (Purchase Price / Last 12 Months Earnings) is less than 5. You tend to get better multiples when the catalog hasn't been around long (thus is more risky), and when you are investing a bit more at once (small investment amounts tend to have higher multiples).




My Return Breakdown

Here is the performance breakdown for my current Royalty Exchange invested portfolio:



Below are the descriptions and formulas for each of these categories. These are just the ones that make sense to me, I'm sure some of you who are deeper into accounting will have different names for these, and use additional formulas in your calculations. These are just the ones I'm comfortable with using and tell the story that makes sense to me.


  • Artist: The artist of the songs for the catalog.

  • Total Depreciated: How much of the catalog has depreciated. Here's the formula I use:

= Purchase Price - ((Years Remaining / Years Remaining at Purchase) * Purchase Price)


  • Total Revenue: How much revenue I've collected from the royalty.

  • Total Return: Total return on investment to date. Here's the formula:

= (Total Revenue - Depreciation)/Purchase Price


  • Days of Revenue: How many days I've owned the music royalty rights for that catalog.

  • Annualized Rate of Return: Average return per year. Here's the formula:

= (1+Cumulative Return)^(365/Days Held) - 1


  • Average Profit Per Year: How much cash profit I earn for that catalog per year

= (Total Revenue - Total Depreciation)/Days of Revenue)*365



(Note: I'm not an accountant so am not providing accounting advice, but here's an article I wrote that included information on depreciation that may be of interest. I believe the actual term for it is "depletion" however, but again - not an accountant)


So as you can see from my returns I'm earning a profit on 6 of the 7 catalogs I currently own. The best performing catalog is Queen Naija & K Michelle (16.57% Annualized Rate of Return) and my worst is Migos (-0.85% Annualized Rate of Return). On average I'm earning 7.5% from these catalogs which is respectable as long as you don't compare it to the current inflation rate.


When I look at the total return I've made from these investments (not annualized, not taking into account depletion) I'm at a 26.38% profit! Not too shabby.


I'll be doing similar reports for my ANote and SongVest investments in the future, after I've owned them for a long enough time to build history.


All in all I'm thrilled with my music royalty investments and will continue to grow them into the future.





 

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  • ANote Music: One of the ways I invest in Music Royalties.




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.


Follow my other blog dedicated to my journey to FIRE here: 3QFI.com


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