Multi-Platinum Pop: Sound Recording Royalties

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WHAT RIGHTS ARE INCLUDED?

Description

Up for bid is a valuable offering that features sound recording royalties generated by the multi-Platinum, alt-pop band Echosmith.

As the winning bidder, you will collect earnings generated by the band’s two albums — Talking Dreams and Inside A Dream EP. These royalties derive from the streaming of the individual song/albums, sales (physical and downloads) and upfront sync fees for any of the included songs.

Royalties for this asset have been rather consistent over the last three years, averaging around $72,000/each biannual distribution. Looking to the catalog’s income sources, subscription streaming is the leading contributor with the majority last year's revenue. 

The foundation of this asset is the group’s debut, Gold-certified album Talking Dreams. All twelve songs from the album are included in this catalog. Released in 2013, Talking Dreams boasts Echosmith’s most successful single to date — the triple Platinum smash “Cool Kids.”

"Cool Kids” became Warner Record’s fifth highest-selling digital song of 2014 and propelled Echosmith into the pop spotlight. To date, the song has a staggering 323 million spins on Spotify, while the music video has over 115 million views on YouTube. “Cool Kids” was a worldwide success, peaking at No. 13 on Billboard’s Hot 100 (among other Billboard positions), along with charting in 23 other countries.

Not surprisingly, “Cool Kids” is the highest-earning track, accounting for 39% of last year’s income. The second highest-earning song is 2018 single “Over My Head,” accounting for 14% of income in the last year. Not to be overlooked is Echosmith’s Platinum-certified “Bright,” which charted on multiple Billboard charts.

Key Drivers

Sound Recordings: Sound recording royalties benefit from streaming disproportionately more than composition-based royalties. If Spotify pays 70-cents of every dollar on music rights, 60-cents of that goes to the sound recording copyright (which the label splits with the artist based on their contract agreement), while the remaining 10-cents goes to the composition copyright.

Record labels see significant benefits as a result. According to an analysis of publicly-stated financial results by Music Business Worldwide, labels Universal, Sony and Warner Music Group jointly turned over just over $6.93 billion globally last year from streaming income alone.

You can see this trend reflected in the catalog up for bid. In the last year, the majority of royalties came from subscription streaming services. This is good news for you as the investor, as it follows the industry macro trend of rising label streaming royalties.

Multiple Income Streams. The winner of this auction can receive royalties from various streams:

• Sales: Royalties paid to artists and producers when a recording is sold, which can be downloaded (on a platform like iTunes), as well as physical copies being sold (such as a C.D.).

• Streaming: Royalties paid to artists and producers when a recording is streamed “on-demand” (like Spotify for example) as well as non-interactive streaming (Pandora).

• Synchronization: Royalties paid to artists and producers for the licensing of a recording in music for a movie, TV show, or commercial.

Continue Relevance: Echosmith is a multi-Platinum selling band that has a vibrant fanbase. With the success of their debut album Talking Dreams, the group shot to pop stardom with rave reviews from Rolling Stone, Teen Vogue, and ELLE, and have performed on TV programs like Ellen, Late Night with Seth Meyers, American Idol, The Tonight Show With Jimmy Fallon, to name a few. The band has also embarked on two headlining tours, along with numerous co-headlining tours.

In June 2019, Echosmith was featured in a collaboration single “God Only Knows” with contemporary Christian duo For King & Country and legendary hip-hop producer Timbaland. The band also plans to release new material in the near future. While the new releases are not part of this offering, new material can help boost an artist's back catalog. The release of new music can lead to discovery among first-time listeners, and re-engage existing fans.

What Is Being Sold? 

Subject to the exceptions below, this asset includes an interest in the artist’s share of all record royalties attributable to the sound recordings specified on the Track List, currently distributed by Warner Bros. Records, Inc. 

Asset Exceptions: synchronization royalties attributable to the license of the recordings and compositions on the Track Lists in connection with the proposed Lively McCabe Entertainment audio-visual project tentatively titled “Cool Kids” will be split on a 50/50 basis between the seller and the purchaser of this asset.

NOTE ABOUT Detailed Data

Detailed royalty data was obtained from Warner Music Group. The recording artist’s gross royalty payments are offset by producer payments and other costs that are deducted separately from the historical royalty reports. Please see the Raw Data file for detailed statements and lump-sum deduction information.

About the Royalty Distributor

Warner Bros. Records Inc. is one of the top major record labels in the world. They are the foundation label of the present-day Warner Music Group (WMG). Warner Bros. Records is home to a wide array of legendary artists with a rich catalog of contemporary hits and influential standards. With a commitment to artist-friendly policies and long-range career development, they continue to maintain a strong share of the label market around the world.

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