Everything you need to know
WHAT ARE ROYALTIES?
Royalties are payments made from one party (the licensee) to another (the licensor) for the right to the use of an asset. The asset can be virtually anything — from tangible assets like minerals and oil to intellectual property like songs, brands and patents. Royalties are usually paid as a percentage of revenues, gross or net, yielded from the use of the asset.
WHAT AM I BUYING?
SongVest offers the opportunity to purchase future royalty revenue generated by music. Details about the royalty stream you are purchasing and the asset which generates it will be available in the auction listing you are viewing — simply click “financial data” to view them.
DO YOU PROVIDE REVENUE DATA FOR EACH ROYALTY STREAM?
Yes. At least 2-3 years of royalty revenue history will be made available for each listing.
HOW LONG DO I OWN A ROYALTY STREAM?
Each listing will explicitly state the length of investment for the royalty stream at auction. There are many types of royalties for many different assets, so lengths of ownership vary.
WHEN DO I RECEIVE ROYALTY PAYMENTS?
Royalties are paid on a quarterly or biannual basis. An investor’s first royalty payment for a recently purchased royalty stream will disperse on the quarter following the reassignment of the stream. The reassignment process takes longer for some listings than others, depending on the payment company, but is generally completed within 1 month if not sooner. If this process takes longer than a quarter, the first distribution will include payment for all distributions that would’ve occurred during the waiting period.
HOW DO AUCTIONS WORK?
The first step to participating in auctions is to register. Once registered, you can place a bid simply by entering the amount you’d like to bid and clicking “Bid Now”. Our unique auction widget will keep track of bids in real time and notify you of other investors’ bids.
All bids are binding and must be placed online before an auction closes.
WHAT HAPPENS AT THE CLOSE OF AN AUCTION?
SongVest uses the Five Minute Rule for auctions, whereby if a bid is placed in the final five minutes of an auction the listing will stay open for an additional five minutes. There is no limit to the number of times an auction can be extended, so we recommend that bidders check back often as an auction nears closing time. When the auction has officially come to a close, the listing will indicate “Auction is Closed”.
SongVest makes every effort to ensure system availability. However, we reserve the right to (in rare cases) close an auction prior to, or extend it beyond, the posted closing time. This may be done at our discretion and without warning.
SongVest is not responsible for incomplete, failed, garbled, scrambled, delayed or misdirected computer transmissions due to technical computer hardware or software failures or other errors of any kind.
WHAT HAPPENS WHEN I WIN AN AUCTION?
Buyers are obligated to wire closing funds to SongVest within 48 hours of winning an auction, although we understand there are situations where it might take longer. Once closing funds are received, the entity currently paying royalties will be contacted to put payments for that royalty stream on hold while closing contracts are generated. The length of time needed to generate contracts can vary depending on the specific assignment.
The royalty payer can take anywhere from 1 – 2 months following the submission of contracts to begin distributing royalties to the royalty stream’s new owner. The royalty stream will be on hold during this processing time — a buyer’s first royalty statement(s) will include all royalty revenue generated during this time.
ARE THERE FEES ASSOCIATED WITH BUYING ROYALTIES?
HOW DO I PAY?
Winning bids must be paid within 48 hours following the close of an auction, although we understand there as situations where it might take longer. PayPal, wires, and cashier’s checks are accepted.
WHAT IS A RESERVE PRICE?
A reserve price is a hidden minimum selling price set by the seller and SongVest — it is the lowest price that a seller is willing to accept for an item. If no bids meet reserve price when an auction ends, the seller is not required to sell the item. If there is a reserve price for an auction it will be noted on the listing.
MAY I LICENSE AN ASSET ONCE I PURCHASE ITS ROYALTY STREAM?
The answer to this question depends on the purchase. An investor who owns only the rights to the royalty revenue generated by an asset and does not own the asset itself, or the rights to license the asset, will not be able to license the asset for further use. However, full ownership of an asset will occasionally be posted for auction, in which case an investor may license the asset as desired.
HOW DO I VERIFY THE LEGITIMACY AND LEGALITY OF A TRANSACTION?
WHICH TYPE OF ROYALTIES CAN I SELL?
SongVest can sell any type of music royalty stream.
CAN I SELL ONLY A PORTION OF MY ROYALTY REVENUE?
This is totally up to you! You can sell any percentage of your royalty stream. The options are almost limitless! SongVest will work with you on your ideal auction and how best to present your royalties.
HOW QUICKLY CAN I SELL MY ROYALTIES?
Once we have your previous years’ royalty statements, we can usually conduct an auction in as few as 30 days.
WHAT KIND OF BACKGROUND CHECK DOES SONTGVEST CONDUCT REGARDING MY ROYALTY STREAM?
SongVest has a simple verification process for sellers. There are no credit checks, and we only require the past 2-3 years of your item’s royalty statements, including the last statement available, to ensure that there is no encumbrance on payments.
WHAT DOCUMENTATION DO I NEED TO PROVIDE IN ORDER TO SELL?
To have your royalty stream listed on SongVest, you will need to provide us with the following information:
What you’d like to sell i.e. for music: songwriter’s share of performance royalties, mechanical royalties, production royalties
The person or entity paying your royalties
AT LEAST three years of royalty statements
Digital statements in CSV/Excel format are preferred, as this allows us to provide a more sophisticated analysis of your royalty stream
After we review your data and verify your royalty stream, we will discuss the following questions:
What percentage of your royalty stream do you want to sell?
Streams can also be divided by other criteria, such as by song or by licensor.
Do you want to use a reserve price?
A reserve price is the minimum price you would accept for a sale on our marketplace. If this price isn’t met, there is no sale.
How can we best promote your auction?
SongVest handles most of the promotion for auctions, but any outlets that you can provide us will increase the probability of your item selling. Some examples include social media accounts, websites and personal industry networks.
WHEN WILL I RECEIVE PAYMENT FOR MY SALE?
If your listing sells, you will receive payment three to five days after the final signed paperwork and payments are received by SongVest. Paperwork can take one to four weeks to process depending on the complexity of your sale.
WHO SETS THE MINIMUM BID AND RESERVE PRICE?
The reserve price and minimum bid will be mutually determined by you and SongVest management. We want to give you complete control of your listings, as well as provide your auction with the best possible probability of success.
WHAT CHARGES CAN I EXPECT IF I SELL MY ROYALTIES THROUGH SONGVEST?
One of the great things about SongVest is that there is no charge to list an auction on our platform, so you’ve got nothing to lose! We only collect a 12.5% fee if your item sells.
CAN I PRIVATELY SELL MY ROYALTY STREAM?
Yes. We value your confidentiality and can list your royalty stream privately if that’s your preference. A private listing will be advertised only to our investor community, not to the public.
WHAT HAPPENS IF MY ROYALTIES DON’T SELL?
If your auction fails to reach its reserve price, you have the option to have SongVest negotiate on your behalf with the highest bidders to strike a deal. Otherwise, there is no sale. SongVest charges no fees for auctions that fail to sell.
IF I CHOOSE NOT TO SELL MY ROYALTIES, ARE THERE OTHER OPTIONS?
Yes. Our Royalty Advance Program allows you to receive up to a five year advance on your royalties. To qualify for this program, a royalty stream must have booked an average of AT LEAST $10,000 in revenue over the past three years. To learn more about this program, please fill out the contact us form.
If you have any further questions, feel free to Contact Us and ask!