Investment platform Public is offering retail investors the chance to invest in the rights to the “Shrek” soundtrack through fractionalized royalty investing. The platform bought the 768-track catalog, placed it in an LLC, and made the LLC public so that investors could purchase shares for as little as $10. Public believes that the nature of the royalty asset will appeal to long-term investors. Previously, royalty investing was limited to wealthy institutional investors, but Public aims to bring liquidity to royalties and make songwriters, artists, and producers wealthier.
Song royalties come in the form of master recordings or music publishing. While publishing rights may not be as valuable as recordings, they can still generate significant revenue over time through radio play, advertising, movie licensing, and more. Public claims that the “Shrek” royalties have generated an annual dividend yield of over 8% in both 2021 and 2022, compared to the 5% return on a 10-year Treasury note. By investing in music royalties, investors can earn passive income that is independent of traditional markets. However, the affordability of well-known catalogs will be a challenge, as many artists have sold the rights to their music for large sums in recent years.
Streaming services have contributed to the increased value of music rights, as they provide greater stability in the industry and make it easier for consumers to access songs. This predictability has attracted investors to the music business. Artists, both young and old, have sold their music catalogs for hundreds of millions of dollars. The older a song is, the more consistent the income stream tends to be. Even younger artists like Katy Perry and Justin Bieber have cashed in on this trend by selling the rights to their catalogs. Overall, the rise of fractionalized royalty investing presents a unique opportunity for investors to profit from their favorite songs while benefiting artists and expanding the possibilities for their careers.
