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Speaker 1: Welcome to Fear and Greed. Sum are investing series brought

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Speaker 1: to you by Vanter, specialists in compliance lead growth. I'm

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Speaker 1: Sean Almer. We all know that music is big business,

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Speaker 1: even more so in recent years, with artists selling their

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Speaker 1: catalogs for huge thumbs. Justin Bieber apparently sold his catalog

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Speaker 1: for about two hundred million dollars, Bob Dylan about three

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Speaker 1: hundred million. We're talking us here saying for kiss Bruce

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Speaker 1: Springsteen five hundred million US dollars. But investing in music

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Speaker 1: isn't beyond the reach of ordinary investors. As always, this

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Speaker 1: is general information only and you should seek independent advice

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Speaker 1: before making investment decisions. Stefan von Imoff is the co

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Speaker 1: founder of alternative investing community fund Alts dot Colts dot co. Stefan,

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Speaker 1: welcome back to Fear and Greed.

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Speaker 2: Great to be here, Thank you.

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Speaker 1: How does someone invest in music?

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Speaker 2: Well, music has been securitized since the leite nineties. The

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Speaker 2: first person to actually do it was David Bowie Believe

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Speaker 2: it or not, that's right, Bowie bonds, Yeah, that's it.

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Speaker 2: And so so he kind of realized, like, you can

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Speaker 2: securitize these songs that the rights to the songs and

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Speaker 2: that's exactly what he did, and so he was kind

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Speaker 2: of the first. But in recent years, really since the

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Speaker 2: streaming era, the market has really taken off. And to

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Speaker 2: understand why, it's good to just take a step back

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Speaker 2: and understand kind of how music has changed. So, you know,

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Speaker 2: in the old days, an artists would release this, you know,

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Speaker 2: an album and they'd be a you know, a huge

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Speaker 2: spike up front and really lots of money being made,

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Speaker 2: truly more money per album was made back in you know,

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Speaker 2: in the pre streaming era. But then what happened is,

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Speaker 2: you know, over time that that revenue dried up and

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Speaker 2: it kind of there's kind of just you know, there's

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Speaker 2: like a long tail of revenue after that. But streaming's

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Speaker 2: dynamics are a little bit different. They're a lot different actually,

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Speaker 2: So with streaming, you don't usually get that big spike

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Speaker 2: in terms of like revenue like you used to. What

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Speaker 2: you get is a nice, steady, consistent, you know, number

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Speaker 2: of streams and downloads, and that consistency of cash flow,

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Speaker 2: that predictability of cash flow, the fact that these songs

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Speaker 2: now pump out cash every day for decades no matter

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Speaker 2: what's happening in the broader economy. That is what is

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Speaker 2: what's really kicked the music royalties investing industry into a

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Speaker 2: higher gear. And so to answer your question, now, there's

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Speaker 2: companies that have popped up around the world that allow

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Speaker 2: you to invest in the music rights, the royalties from

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Speaker 2: streaming in from other areas, areas as well. You're not

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Speaker 2: buying the whole song. You're buying, you know, a fraction

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Speaker 2: of the song that's been securitized by the songwriters and

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Speaker 2: the artists. But it's a it's a very interesting in

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Speaker 2: growing industry.

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Speaker 1: Okay, and this can be it's a retail product as well, now,

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Speaker 1: not just big, big investors.

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Speaker 2: Yeah, so let's be clear. The artists you mentioned earlier, Springsteen,

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Speaker 2: you know, Bieber, you know, Pink Floyd just sold their rights.

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Speaker 2: You know, these are scooped up by basically there's only

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Speaker 2: a few, you know, types of entities that are buying

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Speaker 2: this stuff. It's hedge funds, private equity, and actually the

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Speaker 2: publishers themselves. So Sony, you know, for example, are UMG.

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Speaker 2: They just buy the rights back, right. So that's kind

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Speaker 2: of what's happening at the top of the market. But

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Speaker 2: there's a lot of artists out there, and there's a

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Speaker 2: lot of downstream opportunity as well, so it is available

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Speaker 2: for retail investors. There are definitely platforms out there that

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Speaker 2: you do not have to be an a credited investor,

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Speaker 2: and you can get a slice of the royalty.

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Speaker 1: Is absolutely My daughter sings Delta Dawn to me. For

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Speaker 1: those who don't know Delta Dawn, I think it's sixties

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Speaker 1: or seventies or something, rather than presumably it's been on TikTok.

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Speaker 1: As a result, she knows that she is into Billy

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Speaker 1: Joel all that sort of thing. What I find fascinating

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Speaker 1: is this sixteen year old is interested in that sort

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Speaker 1: of music. Is that what we're talking about in terms

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Speaker 1: of the ability to make money for years and years

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Speaker 1: and years.

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Speaker 2: Yeah, So think of it this way. Every year there's

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Speaker 2: more and more streaming devices that come online, right, just

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Speaker 2: more and more mobile phones in developing countries. And that's

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Speaker 2: really what's fueling so much of the growth is just

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Speaker 2: the pure number of devices coming online, the pure number

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Speaker 2: of streaming minutes. I mean, Spotify when they announced they're

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Speaker 2: you know, they're wrapped. Every year, that's like a global event, now,

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Speaker 2: you know what I mean. And so this this is

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Speaker 2: shown to be predictable. You know, we have over ten

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Speaker 2: years of data. I mean Spotify you know, is almost

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Speaker 2: fifteen years old now, so we know that this is

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Speaker 2: basically consistent cash flow, massive global appeal, and the revenue

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Speaker 2: from the royalties will you know, should continue to flow nicely.

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Speaker 1: One of the big risks in investing in this.

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Speaker 2: Well, the interesting thing about this space is that there's

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Speaker 2: a lot of there's peaks, but there's actually not that

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Speaker 2: many valleys, so this is not an asset class. We

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Speaker 2: have to worry about the demand going down, but I

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Speaker 2: think you have to worry about is the valuation. And

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Speaker 2: this is what a lot of people forget when they

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Speaker 2: invest in this in this space, because music is so emotional,

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Speaker 2: we forget that, you know, the numbers still have to

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Speaker 2: make sense, right, and just because you can by a

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Speaker 2: slice of an Adele song or Justin Bieber song or

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Speaker 2: whatever it is, it doesn't necessarily mean it's a good

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Speaker 2: investment in the long run. It feels good, but you

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Speaker 2: really have to watch the valuations. So that's in terms

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Speaker 2: of risk, I would say Olliver paying is the biggest risk.

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Speaker 1: Definitely, Stepan, thanks for your time. Thank you. That was

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Speaker 1: Stefan von Imoff from alternative investing community fund ALTS dot co.

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Speaker 1: Remember to get your own independent advice before making decisions.

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Speaker 1: This is Fear and Greeds Summer Investing series brought to

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Speaker 1: Advanta dot com. Slash Fear and Greed. I'm Sean Aylmer,

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