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Sound Waves: Investing in Music & Audio

Updated: Oct 10, 2021

live a rich life. level up with actionable wealth strategies. ______________________________________________________ This week's focus is music & audio investing. ______________________________________________________ quote of the week: "And we're merrily, merrily eatin' off these streams" - Jay-Z level 1: nod to the pod.

get your midnight miracle on... Joe Rogan say "the beautiful thing about podcasting is it's just talking." They start as a labor of love, but podcasts can provide many benefits as a powerful strategic side hustle and tool for networking, branding & business building. There are many ways to monetize a podcast, but the primary way is through ad spend, which is expected to double to $2.7B by 2025. Also, podcasts command the highest advertising rates across all ad platforms:

typical cost per thousand impressions on various ad platforms

source: netsuite Podcasts are cheap to make, which is good. It's why 2M+ podcasts exist. Out of 48M episodes, only half get 100 listens. Episodes need 300 downloads to be in the top 25%, 1K to be top 10%, and 15K to be top 1 percent. After hitting 1K downloads an episode, getting paid becomes a thing (here's a breakdown), and like other media, a podcast can pay you forever. Just be sure you actually enjoy the process (i.e., creative outlet), and are strategic with it. Gravy tips to kill the podcast game:​​

level 2: music money.

"came a long way from 3 bills in royalties" If you have more money than time or a podcast isn't your thing, then let's talk investing music royalties, which are how the people involved in the sale or creation of a song (e.g., artist, songwriter, label, publisher, etc.) make money.

In the music biz, you need to pay for the right to use someone else’s work. These rights, which are managed by distributors who ensure the holders get paid, can be resold to investors looking for largely passive, recurring income.

how song royalties work

source: royalty exchange.

The boom in smartphone adoption & paid music service subscriptions, (blame Kanye) along with exploding growth on streaming platforms, grew publishing revenue ~10% in 2020 to $4B+.

3 ways to invest in music royalties:

  • Record Labels and Publishers: they are going public. WMG IPO'd in June 2020, and Vivendi plans to IPO UMG by 2023. Easy peasy.

  • Public Music Royalty Funds: public companies that own music royalties like Hipgnosis Songs and Round Hill Music are blowing up. Check 'em out.

  • Direct Purchases of Music IP Assets: online marketplaces such as Royalty Exchange and SongVest allow folks to buy an interest in song catalogs.

As with other asset classes, prices for music royalties are skyrocketing. A decade ago, Songs traded at multiples of 9x or 10x earnings. They're now up to 13.5x,16x, and 17.5x earnings in 2018, 2019 & 2020, respectively. Wowsers. No wonder Bob Dylan, RZA, Shakira, Calvin Harris, and others have sold their song catalogs. So, do your homework with this primer on valuing royalties, a guide to value offerings on royalty exchange, and a set of sample returns. *Poll: If you could own rights to any song, what would the song be? Drop an answer in our slack and be entered to win a $50 DoorDash gift card* level 3: ride the sound wave.

"I swag, I surf" As usual, the wealthy have access to investment opportunities that ride the audio consumption wave and aren't available to ordinary people. If you're well-capitalized, there are a few long-term angles to diversify into the music. Ways to ride the sound wave:

join the conversation:

  • Join us Thursday, Aug 26th, from 4 - 5 pm PT for "My Pre-IPO to Post-IPO Journey," with Gravy's Brandon Jones in conversation with DoorDash's Jeff Rada & Broderick McClinton reflecting on the decision to join pre-IPO and the journey that followed [sponsored by DoorDash - register here].

  • Link with hundreds of gravy members talking wealth strategies, investing approaches, and investment opportunities in our Slack & LinkedIn groups.

  • Want a gravy spotlight? Want to share an investment power move you've made or how you've applied a gravy tactic? Hit reply and let us know!

sponsored jobs:

  • DoorDash: Regional Account Sales Executive (Oakland, CA)

  • DoorDash: Senior Manager, Grocery (San Francisco, CA)

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Yours in wealth, gravy.

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