The stock market can be mysterious. When you start investing, you may feel like you're profiting from companies you don't know much about or have no interest in. But what if there was a way you could make money from the stocks of your favorite music artists?
JKBX (pronounced jukebox) is a new music investment startup that is offering people the opportunity to buy securities of artists' streaming royalties. Royalties are defined as compensation for copyrighted music. It can be paid from streaming platforms, radio, television, movies and concerts.
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JKBX currently owns the stock, so you can buy the stock, but you can't sell it. JKBX makes money by charging trading fees to its customers. Customers are paid quarterly royalties based on when JKBX receives royalties.
So, should you invest in JKBX and receive a share of its royalties? GOBankingRates is a CFA, CPA, and expert contributor to Annuity.org with over 20 years of experience in investments, corporate finance, and accounting. We spoke to financial expert Thomas Brock.
Read on for Block's take on investing in JKBX and how to get started.
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this is not a new concept
Block said while this may sound revolutionary, it's not the first time royalty cash has been made available to the public. “The first bond issue, commonly referred to as the 'Bowie Bond Deal,' took place in 1997. It was a $55 million offering based on royalties from 25 David Bowie albums recorded before 1990. ”
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Block said several other similar deals emerged after the Bowie deal, but most of them languished for 20 years. In 2021 and beyond, royalty investing is back on the table.
JKBX will not sell its own shares
Although it may be difficult to understand at first, JKBX is not seeking investment in the company itself. What JKBX provides you with access to is a share of artist royalties.
“JKBX markets shares of its own securities as 'royalty shares,' but the use of the word 'stock' should not be misunderstood to mean that the company is issuing shares of JKBX stock,” Block said. said.
Purchasing shares from JKBX does not entitle you to a portion of JKBX shares. You're investing in royalties, but Block warned that's unreliable.
“Investors who purchase securities from JKBX are investing in unsecured private debt securities that have volatile cash flows and are highly illiquid, which is much riskier than U.S. Treasuries or investment grade corporate bonds.” Block said.
Thoroughly diversify
As with any investment strategy, it's important to diversify your portfolio. Block said he would consider all available options before purchasing shares from JKBX.
“We caution investors who like the idea of participating in music royalty payments to ensure that JKBX securities reflect a diverse range of artists, songs, and genres. You get stable cash flow and predictable investment returns,” Block said.
How to invest in royalties through JKBX
To start investing through JKBX, first visit jkbx.com. Once you create an account on the website and deposit funds into it, you will receive purchasing power. JKBX's website says you can start for as little as $100. This indicates that you need a minimum of $100 to start purchasing.
From there, you can browse songs with different prices. For example, as of this writing, OneRepublic's song “Counting Stars” costs him $31.37 per share, while Leona Lewis' “Bleeding Love” costs him $1.98 per share. Then, submit your order and receive payment when the label pays your royalties to her JKBX. Payments vary depending on the demand for a particular song's copyright. So the more times a song is played on the radio, remixed, used in commercials, etc., the more money flows into investors.
JKBX claims on its website that the advantage of investing in royalties rather than stocks is that royalties are not necessarily influenced by the market. Music copyright royalties, which are called “uncorrelated assets,” are said to be largely unaffected by changes in the financial market.
A recent article mentions Taylor Swift and Beyoncé as artists you can invest in via JKBX, but as of this writing, Taylor Swift and Beyoncé were not artists whose royalty shares could be purchased. In addition to the artists listed above, Colbie Caillat, Ellie Goulding, and American Authors were also artists who could invest royalties.
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This article originally appeared on GOBankingRates.com: Pop Culture Finance: Can You Invest In Taylor Swift or Beyoncé?
