The stock market can be mystifying. Once you start investing, you might feel like you’re profiting off companies you don’t know much about or don’t care about. But, what if there was a way you could make money from shares in your favorite music artists?
JKBX (pronounced Jukebox) is a new music investing startup that is offering the chance for people to buy securities in artists’ streaming royalties. Royalties are defined as compensation for copyrighted music. That can be paid from streaming platforms, radio, TV, film and concerts.
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Right now, JKBX has it so you can purchase the shares, but you are not able to sell them. JKBX makes money by charging customers a transaction fee. Customers will be paid royalties quarterly based on when JKBX receives royalties.
So, should you invest in JKBX and get a share of those royalties? GOBankingRates spoke to Thomas Brock, a CFA, CPA, expert Annuity.org contributor and financial professional with over 20 years of experience in investments, corporate finance and accounting.
Read on to find out what Brock’s view is on investing in JKBX and how you can start.
This Isn’t a New Concept
Brock said this might sound revolutionary, but this is not the first time cash from royalties has been offered to the public. “The first such debt issuance, commonly referred to as the ‘Bowie bonds transaction,’ occurred in 1997. It was a $55 million offering based on the royalties from 25 David Bowie albums recorded before 1990.”
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Brock said some other similar deals came to market after the Bowie transaction but mostly subsided for 20 years. Since 2021, royalty investments have been back on the table.
JKBX Isn’t Offering Company Stock
It might be confusing to understand at first, but JKBX isn’t having you invest in their company itself. What JKBX gives you access to is shares of artists’ royalties.
“JKBX markets shares of its securities as ‘royalty shares,’ but do not let the use of the word ‘shares’ confuse you into thinking the company is issuing shares of JKBX stock,” said Brock.
When you purchase shares from JKBX, you’re not getting a chunk of JKBX stock. You’re investing in royalties, which Brock cautioned are not dependable.
“Investors that buy securities from JKBX are investing in unsecured, private debt securities that can exhibit volatile cash flows and a high degree of illiquidity, which makes them much riskier than U.S. Treasury securities and investment-grade corporate bonds,” said Brock.
Make Sure to Diversify
Like any other investment strategy, it’s important to diversify your portfolio. Brock said to look into all of the options available to you before you purchase shares from JKBX.
“For an investor that likes the idea of participating in music royalties, I caution him or her to make sure any JKBX security reflects a diverse array of artists, songs and genres. Generally, this will produce more stable cash flows and predictable investment yields,” said Brock.
How to Invest in Royalties Through JKBX
To start investing through JKBX, you can first go to jkbx.com. On the website, you create an account and deposit funds into it to give you buying power. On their website, JKBX, does say you can get started for as little as $100, which indicates you need $100 minimum to start buying.
From there, you can browse songs that vary in price. For example, at the time of writing, the song “Counting Stars” by OneRepublic is priced at $31.37 per share, while “Bleeding Love” by Leona Lewis is $1.98 per share. Then, you submit your order and receive your payment when royalties are paid out to JKBX from the labels. The payout depends on how in demand the copyright for a specific song is. So, the more times a song is played on the radio, remixed, used in commercials and the like, the more that money trickles down to investors.
JKBX claims on its website that the upside of investing in royalties rather than investing in stock is that royalties are not necessarily affected by the market. Referred to as “uncorrelated assets,” music royalties are said to be mostly unaffected by changes in financial markets.
Though recent articles have referenced Taylor Swift and Beyonce as artists you can invest in via JKBX, at the time of writing this article, Taylor Swift and Beyonce weren’t artists you could buy royalty shares of. In addition to the artists listed above, Colbie Caillat, Ellie Goulding, and American Authors were other artists whose royalties you could invest in.
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This article originally appeared on GOBankingRates.com: Pop Culture Finance: Can You Invest In Taylor Swift or Beyoncé?
