Podcasts

Turning music rights into an investable asset with Royalty Exchange’s PJ Miklus

  • PJ Miklus began his career on Wall Street.
  • Now, he leads IR for an exchange to buy and sell music royalties as an investment.
close

Email a Friend

Turning music rights into an investable asset with Royalty Exchange’s PJ Miklus

One of the major themes on the podcast a few years back was the investification of various asset classes. We’ve seen Lending Club open up personal lending at scale to investors. Companies like Angel List and OurCrowd helped popularize investing in early stage companies by removing much of the friction in the process. Crowdfunding has made investing easier and we’ve seen foreign exchange, business lending, income sharing agreements, and even domain names all find their way to platforms.

Music, too.

Today’s guest is PJ Miklus, the VP of investor relations at Royalty Exchange, a platform to buy and sell music rights. The massive wave of streaming services has breathed new life into the music industry and Royalty Exchange is working hard to enable investors — both accredited individuals and increasingly, professional investors — own a piece of some of music’s most iconic works. More than just an ego asset, music rights provide a real return.

SubscribeiTunes I SoundCloud

The following excerpts were edited for clarity.

You began your career on Wall Street. How did you get into investing in music rights?

I spent over 10 years on Wall Street before joining Royalty Exchange last year. I was in business development for various alternative asset managers. I’ve been learning everything I can about alternative investments. Music royalties are a nascent example of alternative investing that checks all the boxes, providing a pure form of uncorrelated asset class to traditional markets. It also has a passive income component, as well.

Can you explain how music royalties work?

Music royalties are basically how the money flows in the music industry. Artists don’t receive salaries. They get paid royalties based on consumption, whether it’s purchases of cassettes, records, and CDs or nowadays, downloads and streams. What we do at Royalty Exchange is make those royalty streams investable. We bring transparency, liquidity, and price discovery to the marketplace.

It’s not just the artists who have rights in their music. We put together a slide recently for an institutional investment consultant and there were upwards of 20 rights holders just on just one song produced by Eminem. That includes producers, song writers, and record labels.

What’s driving growth in the music industry and in music royalties?

Starting in 1999, with Napster, Kazaa, and Limewire, piracy became so easy that a lot of people just stopped buying music. That lead to about a 40 percent decrease in music industry revenues. It wasn’t until 2015 that things started to turn around and it’s been growing. Paid streams increased 53 percent in 2017 over the previous year. The growth that streaming is bringing the industry is creating somewhat of a bull market that we think is only in the second or third innings right now.

What work does Royalty Exchange do behind the scenes to get a deal up on the marketplace?

In terms of sourcing deals, they come from a variety of different sources. We have a team that reaches out to artists and the industry. We actually just relocated two employees to Nashville to get closer to that community. A lot of our business is referral-based. People talk about us, they hear success stories of rights holders who have had good experiences with us.

Once we get the documentation on the asset and the revenue streams, we begin doing due diligence. We make sure there’s clear title of ownership, that there aren’t any liens or anything that would hinder future payments. After we sign a listing agreement with the seller, we put the asset up on our site. There’s generally a three to five day auction process. We try to standardize everything we do, so people become familiar with what to look for in a deal.

It feels like you’re moving to more of an institutional investor focus. Is that true?

We launched a new initiative called Private Syndicates. These are multi-million dollar higher caliber assets that investors can invest in as limited partners. Our last deal we did was with a composition copyright for the first four albums from Cage the Elephant, the alternative rock band that won a Grammy for best rock album in 2017. This is the type of catalog we see upside potential in.

0 comments on “Turning music rights into an investable asset with Royalty Exchange’s PJ Miklus”

Payments, Power of Payments Podcast

Power of Payments Ep. 19: Stripe’s Josh Ackerman on the changing nature of online checkout

  • Josh Ackerman, Product Lead at Stripe, joins host Ismail Umar on this week’s podcast.
  • He talks about the existing gaps between consumer expectations from online checkout and what most merchants currently offer, as well as how the checkout experience has evolved over the years.
Ismail Umar | December 02, 2022
Green Finance, The Green Finance Podcast

The Green Finance Podcast Ep. 14: COP27 – is finance ready to move from pledges to implementation?

  • COP27 ended around a week ago, and by now we've all probably seen the headlines – an agreement was finally reached to create a loss and damage fund. But what about GFANZ?
  • To help us get a better sense of what happened at the conference, today we're chatting with Lubomila Jordanova, the founder and CEO of PlanA.
Iulia Ciutina | November 30, 2022
Podcasts

‘Everything else is just digital, digital, digital’: Wells Fargo’s Ulrike Guigui on enterprise payments trends

  • New rails and changing customer demands are challenging enterprise payments players.
  • At Money 20/20, we sat with Wells Fargo's Ulrike Guigui, head of enterprise payments strategy, to discuss where the industry and her firm are headed.
Zachary Miller | November 28, 2022
Where Credit's Due Podcast

Where Credit’s Due Ep.13: The growing popularity of virtual cards, with Deserve and M1

  • Plastic is making way for virtual when it comes to card technology.
  • Host Iulia Ciutina speaks to two experts on the future of virtual cards, both in and out of the financial industry.
Iulia Ciutina | November 23, 2022
Podcasts

Steez Podcast #1: What financial services has learned so far trying to capture, delight, and retain the hearts and minds of today’s youth

  • Understanding what makes Gen Z tick is imperative for financial services firms in positioning themselves for future success.
  • With a series of 3 interviews, Tearsheet's Steez Podcast explores how this generation is already impacting banking, investing, and payments.
Tearsheet Editors | November 23, 2022
More Articles