Now You Can Own a Financial Stake in Your Favorite Song
Wednesday, December 17, 2008
From Tech Journal South comes this fascinating piece:
CARY, NC - So you always wanted to be in the pop music business? SongVest, an online auction site, lets music fans bid for a percent of songwriter ownership in tunes such as the Monkees' "Last Train to Clarksville," or the theme to the TV soap opera, "Days of Our Lives."
Sean Peace, founder and CEO, a tech-savvy computer expert with grew up in Henderson, NC, just 45 minutes north of Raleigh. He attended UNC Wilmington as well as UNC Chapel Hill, where he majored in economics. Upon graduation, Peace started three technology companies, one of which helped integrate technology into classrooms via wireless networks and connected teachers with common educational tools.
Peace tells TechJournal South the idea for SongVest evolved after he had a conversation with Tia Sillers, a former teacher at the University of North Carolina at Chapel Hill. He met Sillers while he was a student there and she harbored dreams of becoming a songwriter, which she later fulfilled. They reconnected talked about the music business.
"She mentioned that at some point when she retired she would sell her catalog," says Peace. A songwriter's catalog packages the royalty interest in all of an artist's work for sale to investors. Buying the Beatles' song catalog kept pop star Michael Jackson financially afloat for years and he once called it "the best investment I ever made."
"People buy catalogs based on a financial multiple of how much it made over the last several years," Peace explains, "paying 10 or 20 times the royalty stream."
Light bulb!
"It occurred to me that by selling a whole catalog, songwriters missed two options and were not optimizing their revenue streams," says Peace. "First, why sell the whole catalog? Sell just one song to someone who really wants to own it as memorabilia with an associated revenue stream.
"Second, why even sell a whole song when you can sell a percentage of the song." That even allows the songwriter to retain a portion of royalty stream, in case it ever ends up in a film score or other major revenue producing use, Peace says.
This is the first time buyers can get memorabilia with an attached revenue stream, which can range from nothing or a nickel to tens of thousands of dollars a year.
Those who purchase their share of song royalties receive a personalized plaque denoting their new status as song co-owner, along with a one-of-a-kind, RIAA-certified gold or platinum album award, handwritten lyrics, and other collectible items.
The company, founded three years ago and active the last two, raised about $270,000 from a friends and family round. It is looking for from $500,000 to $750,000 to build momentum and bring on more fulltime help at the 3-person firm.
Peace says that while the company would work with venture capitalists, those in the know say it needs angel backers. "We would like to find angels with an affinity for the music industry, who would invest to become a part of this industry business model change," he says.
Peace notes that while the concept has not yet received wide acceptance in the music industry, many are keeping an eye on the firm's current auction of several Monkee's songs. It could produce a new and lucrative income stream for songwriters and publishers.
The company held its first auction last year, selling two songs by the heavy metal band Stryper for $12,500 each.
"We act like a normal auction house," says Peace. "We take a buyer and seller commission and a percentage of the royalties associated." The royalty payments flow through SongVest. The firm's commissions are tiered, with larger commissions on smaller sales. Sellers pay from 10-15 percent, buyers from 15-25 percent.
The company taps into fan enthusiasm even for unsigned, untouring artists. It auctioned a 25 percent share in an unsigned artist's song for $2,500 recently.
In the future, Peace says SongVest will add Web 2.0 features such as a page dedicated to specific songs, "with a mashup of pictures of the band, discussion of the song or band, everything connected to it," says Peace.
He also sees a large potential market in auctioning pieces of the many "B-sides," songs that were never hits, but that many individual music lovers might buy into.
"A lot of folks like songs that have been on an album but never on a single," he says. "One of my favorite songs, 'Aluminum' by the Bare Naked Ladies, has never even been cut as a single. I think that's a huge market for songwriters and artists."
CARY, NC - So you always wanted to be in the pop music business? SongVest, an online auction site, lets music fans bid for a percent of songwriter ownership in tunes such as the Monkees' "Last Train to Clarksville," or the theme to the TV soap opera, "Days of Our Lives."
Sean Peace, founder and CEO, a tech-savvy computer expert with grew up in Henderson, NC, just 45 minutes north of Raleigh. He attended UNC Wilmington as well as UNC Chapel Hill, where he majored in economics. Upon graduation, Peace started three technology companies, one of which helped integrate technology into classrooms via wireless networks and connected teachers with common educational tools.
Peace tells TechJournal South the idea for SongVest evolved after he had a conversation with Tia Sillers, a former teacher at the University of North Carolina at Chapel Hill. He met Sillers while he was a student there and she harbored dreams of becoming a songwriter, which she later fulfilled. They reconnected talked about the music business.
"She mentioned that at some point when she retired she would sell her catalog," says Peace. A songwriter's catalog packages the royalty interest in all of an artist's work for sale to investors. Buying the Beatles' song catalog kept pop star Michael Jackson financially afloat for years and he once called it "the best investment I ever made."
"People buy catalogs based on a financial multiple of how much it made over the last several years," Peace explains, "paying 10 or 20 times the royalty stream."
Light bulb!
"It occurred to me that by selling a whole catalog, songwriters missed two options and were not optimizing their revenue streams," says Peace. "First, why sell the whole catalog? Sell just one song to someone who really wants to own it as memorabilia with an associated revenue stream.
"Second, why even sell a whole song when you can sell a percentage of the song." That even allows the songwriter to retain a portion of royalty stream, in case it ever ends up in a film score or other major revenue producing use, Peace says.
This is the first time buyers can get memorabilia with an attached revenue stream, which can range from nothing or a nickel to tens of thousands of dollars a year.
Those who purchase their share of song royalties receive a personalized plaque denoting their new status as song co-owner, along with a one-of-a-kind, RIAA-certified gold or platinum album award, handwritten lyrics, and other collectible items.
The company, founded three years ago and active the last two, raised about $270,000 from a friends and family round. It is looking for from $500,000 to $750,000 to build momentum and bring on more fulltime help at the 3-person firm.
Peace says that while the company would work with venture capitalists, those in the know say it needs angel backers. "We would like to find angels with an affinity for the music industry, who would invest to become a part of this industry business model change," he says.
Peace notes that while the concept has not yet received wide acceptance in the music industry, many are keeping an eye on the firm's current auction of several Monkee's songs. It could produce a new and lucrative income stream for songwriters and publishers.
The company held its first auction last year, selling two songs by the heavy metal band Stryper for $12,500 each.
"We act like a normal auction house," says Peace. "We take a buyer and seller commission and a percentage of the royalties associated." The royalty payments flow through SongVest. The firm's commissions are tiered, with larger commissions on smaller sales. Sellers pay from 10-15 percent, buyers from 15-25 percent.
The company taps into fan enthusiasm even for unsigned, untouring artists. It auctioned a 25 percent share in an unsigned artist's song for $2,500 recently.
In the future, Peace says SongVest will add Web 2.0 features such as a page dedicated to specific songs, "with a mashup of pictures of the band, discussion of the song or band, everything connected to it," says Peace.
He also sees a large potential market in auctioning pieces of the many "B-sides," songs that were never hits, but that many individual music lovers might buy into.
"A lot of folks like songs that have been on an album but never on a single," he says. "One of my favorite songs, 'Aluminum' by the Bare Naked Ladies, has never even been cut as a single. I think that's a huge market for songwriters and artists."
posted by Chris and Frank at 3:38 PM
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