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. Subscribe: iTunes 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.