Historic royalty income is no indication of future royalty income. Future royalty income is dependent upon future sales and licensing revenue generated by the sound recordings or compositions associated with this listing.
What is a peer advance?
Royalty Exchange is extending a new service to royalty owners and investors called Peer Advance, combining the concepts of music industry advances with established peer-lending practices.
In the music industry, advances are a common practice whereby rightsholders can request advance payment against future earnings, typically from a label, publishing company, or private services. However these advances are not made available to everyone, and often times are associated with aggressive--bordering on predatory--interest rates and repayment terms.
Royalty Exchange is making this investment vehicle available to a wider investment community through a peer-lending platform that is more transparent and more attractively priced for both the investor and owner. By simplifying contracts, we are offering a product that will provide attractive short-term yields to investors, with appealing terms and rates to royalty income stream owners.
Simply, a Peer Advance is when an investor agrees to advance a royalty income stream owner a set amount, which is repaid with a set repayment amount via the borrower's royalty income stream. An investor will pay the “Advance Amount” to the owner, facilitated by Royalty Exchange, and receive payments generated from the royalty income stream until they receive the full “Repayment Amount.” The “Advance Amount” is the cost and the “Repayment Amount” is the return.
In this case, the “Repayment Amount” is the “Advance Amount” plus 16% ($13,125 x 1.16 = $15,225). Royalty Exchange projects the investor to recoup the “Repayment Amount” within one or two years, making this investment vehicle an interesting option for investors seeking a yield tied to a short-term holding.
What is the royalty income stream?
100% of the royalties generated from the owner's interest in the musical composition copyrights for owner's catalog of musical works currently administered by Music Sales Group. This catalog generates royalties from synch and mechanical licensing. The royalties are distributed on a bi-annual basis by Music Sales Group, and will be administered by Royalty Exchange. The first payment will be in February 2017. In the past 12 months, this catalog has generated $10,799, which is represented in the financial information.
How does a peer advance work?
Royalty Exchange will administer 100% of the royalties generated by the owner's catalog of musical works to the investor on a quarterly basis. Payments will continue until the investor recoups $15,225. As soon as the investor realizes the entire Repayment Amount, the owner will again receive 100% of the royalties generated by their catalog of musical works.
What is the return?
This investment has an estimated 16% return on the “Advance Amount.” The investor's realized rate of return will be determined by the amount of time, or bi-annual payments, it takes to receive the entire “Repayment Amount.”*
*Information presented is not intended to be investment, tax or legal advice. Past performance is no guarantee of future results. Estimated or projected investment returns and payback periods are not guaranteed, and investors may lose some or all of the principal invested. Investors should consult their financial advisor if they have any questions or need additional information.
Public performance royalties are payments made by radio stations, hotels, restaurants, night clubs, etc. to the composition copyright holder(s) for each public performance of the copyrighted work. In the U.S., public performance royalties are typically paid to performing rights organizations (e.g., ASCAP, BMI) who then distribute the royalties to the copyright holder(s).
Mechanical royalties are royalties deriving from per-unit payments made by recording companies or digital download providers to the composition copyright holder(s) for every purchase of a sound recording that reproduces the copyrighted composition.
Non-interactive digital performance royalties are payments made by non-interactive music services (i.e. those that mimic the experience of a radio broadcast) of a statutorily-set amount (on either a per-play or annual basis—depending on the type of service) to SoundExchange for the benefit of the sound recording copyright holder and the performing artists for the right to perform the copyrighted sound recording via non-interactive, digital means.
non-interactive digital performance royalties
The royalties owed to the creator(s) of a musical composition which are paid in return for the right to reproduce, distribute, or perform the copyrighted work.
A musical composition is one of the two copyrightable parts of a recorded song. It consists of the song's music, including any accompanying words, (i.e. the portion of a song that is capable of being fully expressed as sheet music) and is separate from any particular recording of the song or its performance by any particular artist.
A sound recording is one of the two copyrightable portions of a recorded song. It results from the fixation of a series of musical, spoken, or other sounds in a tangible (at least momentarily permanent) medium.
The portion of royalties owed to the owner of a sound recording. The owner may the performing artist, the producer, or another party (such as a record label) who contractually acquired the ownership of the copyrighted work (e.g., through a recording agreement), owns it by virtue of an employer-employee relationship with the creator(s) of the work, or specially commissioned the work.
rights owner's share
The portion of royalties owed to the performers of a sound recording in return for the right to perform the copyrighted work via non-interactive, digital services (e.g., Pandora, Spotify).
The portion of royalties owed to the music publisher which are paid in return for the right to reproduce, distribute, or perform a copyrighted musical composition, arising from a contractual obligation (i.e. a publishing agreement) or employer-employee relationship with the creator of composition (i.e. the songwriter(s)).
If an asset requires splitting up a catalog by works or percentages, Royalty Exchange may need to provide royalty accounting services to the buyer, seller, or both. This is because the royalty distributor may not be able to split royalties as intended by the asset transfer. Royalty Exchange's involvement helps to ensure accurate royalty payments. It also helps assure buyers and sellers that they are not missing out on potential earnings.
The accounting process often involves manual spreadsheet work and coordinating with royalty distributors. Royalty Exchange's goal is for the accounting service to be temporary. We plan to work with distributors to find solutions that will allow us to revert accounting and payment obligations back to the distributor, removing ourselves from the process. In the meantime, we've instituted the 5% fee to help offset costs in the manual accounting.
Please see the sample accounting agreement document for reference.
Why does Royalty Exchange need to account?
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