Is Owning a Piece of a Song the Future of Investing?

This summer, I have found myself lost in the energy of music festivals; the crowds, the live bands, and the connection people feel to songs that define specific moments of their lives. Primavera Sound and The Governors Ball stick out to me highlights due the gigantic crowds they each pulled in just this past month. This got me thinking, we spend so much money to experience music, to feel closer to it, so it it possible if we could actually own a piece of the music that moves us? and to make it part of our day-to-day activities? Last years’ Lollapalooza festival feels relevant here—thousands of people singing the same lyrics of one song in unison, with a diverse music lineup in the heart of downtown Chicago. That’s when the idea for this article hit me, maybe music isn’t just something we listen to, maybe it’s the next thing we invest in!

Imagine earning a quarterly payout every time your favorite song is streamed on Spotify, incorporated in a TV show, or played in a retail store. This can now be a reality thanks to a new wave of platforms democratizing access to music royalties. This dream is becoming a reality for everyday fans and retail investors.

Forget stocks! What if you could earn dividends from your favorite track? This is what we will explore on today on Five Seconds Flat.

Investing in Royalties

Royalties are payments made to the owner of an asset (like music, books, patents, or natural resources) whenever someone else uses that asset. Since 2019, there has been at least $20.4 billion which has been poured into music rights acquisitions (like music royalties in this case) involving many new private investors from outside the industry, with BlackRock, Blackstone, Apollo Global Management, and KKR leading the change. These firms are acquiring catalogues either directly through in-house funds or via specialized music IPR companies like Hipgnosis (now Recognition Music Group), Primary Wave and Litmus Music, while also collaborating with major labels in the industry to secure and manage valuable music portfolios (Cuntz, Kos, Valdes).

The World Intellectual Property Organization (WIPO)

Even more so, platforms like Royal, SongVest, and AnotherBlock are pioneering ways for fans to invest directly in royalty-generating music assets. These companies partner with artists and rights holders to tokenize* royalty streams and sell them in fractional shares to the public.

While on my quest to search for what ‘investing in a song’ even means or if that is even a possibility, I came across an interesting study by The WIPO (The World Intellectual Property Organization) titled Music as an Asset Class: A Preliminary Analysis of the Investment Characteristics of Music Rights (WIPO, 2023). The report explores music rights from an investor’s perspective and finds that they can offer appealing characteristics such as low correlation with traditional markets, potential inflation protection, and stable cash flows, especially for mature catalogs.

The WIPO notes that "music rights may be considered a form of intellectual property-backed fixed income," drawing comparisons to the predictability of bonds.

*converting the rights to future royalty payments (like music royalties, book royalties, or licensing fees) into digital tokens that can be bought, sold, or traded.

The case study also highlights how different types of rights (for example: performance, mechanical, and sync rights) generate income from a variety of sources including streaming platforms, public performances, and licensing deals. These diversified revenue streams can help reduce risk, though they also introduce complexity for valuation and forecasting.

Here’s why this concept is, for lack of a better word, revolutionary according to me.

By buying a share in a song’s royalties, investors can receive a portion of the income it generates from streaming, licensing, and other revenue sources. For example, a $50 investment might earn you a small percentage of streaming revenues from a hit song, paid out quarterly. And what was once the domain of major labels and hedge funds (who have recently poured billions on billions into music catalogs) is now being offered to individual investors, including your regular run-of-the-mill music fan.

Here’s How it Works

Over the last year I’ve gone into detail about our daily-driver streaming services (i.e. Apple Music & Spotify) and how they operate. And so I think it’s pretty clear that music royalty investment platforms operate under varying legal and financial structures, just like their streaming service counterparts. Let me break down how the process typically works:

1. Song Selection - Rights holders (usually individuals like artists or songwriters) offer a percentage of future royalty income from a specific song or catalog

2. Platform Partnerships - The rights are listed on a marketplace like Royal or SongVest as I mentioned before and as discussed in the WIPO case study, with a detailed prospectus including past royalty earnings, risk disclosures, and contractual details

3. Tokenization - In many cases, platforms use blockchain technology to tokenize ownership, each token representing a slice of royalty rights

4. Payouts to Investors - Just like in any other investment, once the offering closes, investors receive royalty payments based on revenue collected from streaming services, sync placements, and other licensed uses

Lollapalooza Festival 2024

What is Blockchain Technology and Why Music Royalties are Special

It is now useful to note the importance and severity of Blockchain technology . Blockchain is a decentralized digital ledger that records transactions across a network of computers. Each transaction is stored in a “block” that is cryptographically linked to previous blocks, forming a secure and “tamper-proof” chain. In music investing, blockchain ensures transparent ownership records, instant royalty tracking, and secure token transfers between parties (Hayes, 2025)

To remain compliant, platforms often structure these offerings under U.S. Securities and Exchange Commission (SEC) exemptions like Regulation A+ or Regulation Crowdfunding thereby allowing them to market to non-accredited investors.

You may be wondering, what makes music royalties so special and why would anyone think of investing in them? Here’s a small anecdote about why I think royalties, especially music royalties are powerful. As a child, I’d always been drawn to storytelling, but not traditional storytelling with a book or chapters from The Magic Treehouse; I’ve been drawn to storytelling in the forms of melodies and catchy hooks. Those that have stuck with me through every era of my life up until the age of 21. Music can captivate you in a way traditional books can’t; to me they offer romance, longing, hope and nostalgia. And if you close your eyes and get lost in melody, you may just be transported back in time and relive a certain feeling from the past that you may have thought you’d lost over the years.

And so, for investors, here is why royalties may offer a compelling combination of emotional and financial appeal:

1. Stable Income: Evergreen songs with consistent streaming numbers can generate reliable passive income. Some of my favorite examples are ‘Blinding Lights’ by The Weekend, ‘Cruel Summer’ by Taylor Swift and ‘As it Was’ by Harry Styles. A great bunch of songs that still get over 1.2 million daily streams years after their initial release.

2. Uncorrelated Returns: Royalty payments don’t typically move in sync with stock markets, offering a hedge during volatility in the market and hence the economy. In fact, music royalties often behave more like fixed-income investments that provide periodic cash flow rather than capital gains. And that’s part of their appeal for long-term, yield-oriented investor

3. Tangible Connection: Investors gain a personal stake in the cultural products they love, while also offering those outside the investing world an option to consider their options regarding ‘songvesting’

4. High Profile Interest: Hedge funds and institutions like Blackstone and KKR have invested in music rights, validating the asset class

Lollapalooza Festival 2024

Diving Deeper: A Case Study on Royal and Nas

In early 2022, rapper ‘Nas’ (Nasir bin Olu Dara Jones,) sold royalty shares for two of his songs: "Ultra Black" and "Rare," on the music investment platform Royal. Fans could purchase NFTs (Non-Fungible Tokens) that represented a portion of the streaming royalties for these songs, according to Hypebeast. The platform allowed for fractional ownership, enabling fans to invest in their favorite artist's music.

Within hours, the drop sold out, earning over $300,000

This deal was significant not just for the earnings potential, but for the symbolic shift it represented: a direct-to-fan financial relationship where fans are stakeholders, not just listeners or consumers! It also represented a shift in the music industry’s relationship to its listeners by forging a stronger bond between artist and fan.

One of the most significant implications of this case study where Nas tokenized royalty streams, is the democratization of music investment. Traditionally, only record labels, publishing companies, and major investors could profit from music royalties. With platforms like Royal, everyday fans now have the opportunity to purchase fractional ownership of songs. This opens up a previously exclusive investment market to the general public, allowing anyone to become a stakeholder in the music they love. For artists, this model introduces a new and potentially more independent revenue stream. Selling royalty shares directly to fans can provide artists with upfront capital, which could reduce their dependence on record labels for funding. This shift also empowers artists to maintain more creative and financial control over their work, ultimately supporting more independent careers in the music industry.

Though, as with any other investment, music royalties come with its uncertainties, pitfalls and risks:

1. Popularity Decay: Songs may lose relevance quickly. Especially today; in 2025 a viral TikTok hit may generate strong earnings one quarter and fall off the map the next. It seems as if music nowadays is manufactured in a way that captures ones’ attention span in matter of seconds, only to be abandoned moments later and never returned to again.

2. Platform Dependence: Payouts rely on accurate reporting and royalty collection from platforms like Spotify, Apple Music, and ASCAP (American Society of Composers, Authors and Publishers)

3. Illiquidity: There's limited secondary market access, meaning it can be difficult to resell your shares or ‘tokens’

4. Valuation Uncertainty: Emotional attachment can inflate perceived value. Without consistent earnings history, it's easy to overpay. This includes songs from the early 2000s

5. Regulatory Ambiguity: As this market grows, SEC (Securities and Exchange Commission) scrutiny may increase, especially if platforms mislead about expected returns due to inaccurate reporting and royalty collection from music platforms

Rapper ‘Nas’, late 1990s to early 2000s

The Future of ‘Songvesting’’

This ‘Songvesting’ approach and straregy appeals to music superfans (like me!) that want to support artists while earning a return, as well as alternative investors looking for portfolio diversification. It’s also attractive to cultural investors who value emotional return on investment (ROI) as much as financial ROI, and to tech-savvy millennials and Gen Z users already familiar with NFTs and cryptocurrency.

This being said, investors should be cautious about dedicating a large portion of their portfolio to these assets. For most individuals, a balanced approach, treating music royalties as a 1–5% allocation makes the most sense.

While writing this article, it has shown me that owning a piece of a song was once a privilege reserved for primarily record executives, billionaires and record labels . Today, it’s accessible to anyone with an internet connection and disposable income. While it’s unlikely to replace traditional investing strategies, it opens a new frontier for superfans who want to grow their money while supporting and enjoying their favorite artists songs simultaneously.

Looking ahead, the future of this strategy will depend on market stability, clearer regulations, and wider adoption by artists and fans. If these elements come together, owning pieces of songs could become a more mainstream investment option. However, the space is still evolving and carries real risks, especially around fluctuating royalty payouts and unclear legal protections. Even today, what we once called a ‘hit song’, (one that could generate significant revenue) now seems to come and go quickly. From that perspective, it may not be sustainable for long-term investing.

To conclude, a ‘songvesting’ strategy is likely to become a valuable complement to traditional investments rather than a replacement. This type of model offers both financial returns and emotional engagement, making it attractive to fans and investors who want to actively participate in the music industry’s growth while supporting their favorite artists.