A new investment platform just launched after receiving the SEC’s approval, and it’s bringing an alternative asset class to investors who haven’t had the opportunity to invest in music as an asset.
As a fan of alternative asset classes, like crypto, NFTs, race horses, 2-family homes, and for a little while Pokemon cards, but I digress. I love the idea of being able to invest in musicians I listen to and love.
So how does this work exactly?
The music investment platform JKBX was founded in 2022 by Sam Handel and John Chapman of the venture capital and private equity firm Dundee Partners, and has raised $16.1 million in funding from Spotify, Red Light Management and Bertelsmann Digital Music. Additional backing came from Galaxy Digital, Valor Equity Partners and Tyler and Cameron Winklevoss.
The music investment platform that allows songwriters and recording artists to sell their royalties to investors. JKBX as a company sells royalty shares to retail investors through what’s called a Tier 2 of Regulation A under the Securities Act.
Ready to geek out on SEC regulations?
Regulation A allows companies like JKBX to bring investors into an asset class that previously hasn’t been open to anyone other than institutional investors. JKBX can now market these securities to retail investors who now have the opportunity to own a piece of the music they personally connect with and gain exposure to this non-correlated alternative asset class.
That was a mouthful.
Want to know how this works in practice? We got you covered!
According to an article in Billboard magazine, they give an example of how JKBX sells shares in a song, and how an investor makes money off those shares.
“JKBX is selling 200,000 shares of “Counting Stars,” written by Ryan Tedder (singer/songwriter/producer/member of OneRepublic) and recorded by OneRepublic, for $31.37 apiece. The site gives royalties — songwriter royalties for mechanical, synch, public performance and other income sources — for two years: $261,497.39 in 2022 and $180,839.00 in 2021. With a share price of $31.37 and average annual royalties per share of $1.11, an investment in “Counting Stars” produces an expected annual return of 3.52%.”
Clear as mud? Yea, I thought so.
Basically, they’ve collateralized a musician’s music, sold it as shares, and investors make a percentage or return on the revenue that the song’s royalties bring in.
If they had come out with this kind of alternative asset class musical platform when I was just out of college I’d either be filthy rich right now, or broke from investing in my favorite musicians – but it would have been one hell of a ride!
Music Investment Platform JKBX Officially Launches With SEC Approval