The music business is booming. Streaming revenue is up. Vinyl sales are up. CD sales are, somehow, also up. All of this is fueled by fans spending money. Now, startups are making a calculated pitch in this flush moment: Why don’t these fans get in on the action, and quite literally invest in their favorite songs?
Imagine a retirement portfolio stocked with Rihanna hits, or a college fund fueled by Taylor Swift’s 1989. In a post-GameStop, post-NFT-mania world, it sounds plausible enough. Wholesome, even.
A new music royalties marketplace, Jkbx (pronounced “jukebox”), launched this month and plans to officially open for trading later this year. It has filed an application with the US Securities and Exchange Commission and is waiting for notice that the SEC has qualified its offerings. As long as that goes according to plan, Jkbx—god, why no vowels?—will allow fans to buy “royalty shares,” or fractionalized portions of royalties, fees, and other income associated with a particular song. Prices are within reach of regular people. One share of composition royalties for Beyoncé’s “Halo,” for example, is $28.61. You could also buy a slice of the song’s sound recording royalties for the same price.
“Every time a song is played, somebody is getting paid,” Jkbx CEO Scott Cohen says when we video-chat shortly after the launch. “It might as well be you.” He’s in full-blown pitch mode, talking about how he ditched retirement because he was so damn jazzed about this concept. (He also stressed several times that he was not offering investment advice.)
Cohen definitely didn’t need to un-retire. He has a formidable music-biz pedigree. He cofounded the Orchard, a digital music distribution company, later selling it to Sony, and most recently worked in the C-suite at Warner Music. He’s taken seriously within the industry. The Orchard was ahead of its time, jumping into digital music two years before Napster existed.
Now, Cohen spins grand visions of transforming the music business once more, pushing fans to treat it like fantasy football. Buying royalty shares will, his argument goes, gamify fandom, encouraging people to cheerlead the artists they love like star quarterbacks. Maybe, he says, it’ll result in an industry-wide boom, just as the rise of fantasy helped the National Football League.
The inspiration for Jkbx came in part from the surge of big-ticket catalog deals between artists and deep-pocketed private equity and music world firms. Bruce Springsteen, for example, sold his catalog to Sony Music Group for $550 million in 2021. This past year, Justin Bieber, Dr. Dre, and Katy Perry reportedly sold catalogs for more than $200 million, to Hipgnosis Songs Capital, Universal Music and Shamrock Holdings, and the Carlyle Group–backed Litmus Music, respectively. Music management funds like Hipgnosis and Round Hill Music have showered artists with cash, ballooning the value of catalogs.
Some of these institutions liked music assets because they thought more could be done with these songs, from remixes to splashy licensing deals in movies to viral moments on TikTok. Older songs are finding new life as memes, like Fleetwood Mac’s “Dreams” (subject of a viral video) and Kate Bush’s “Running Up That Hill” (featured in Stranger Things). It’s an exhilarating time to be in the royalty game. If institutions were this hyped up about royalties, Cohen figured fans would be even keener.
Jumping into this world will require fans to take a close look at what exactly they’re buying, and how royalties work. In the music world, each song tends to generate two types of copyright holdings. There’s the musical work—the lyrics and composition—and there’s the recording of that work. A master recording is the original recording of a song, and it tends to hold a lot of value, which is why so many artists now fight to keep their masters. (Remember Taylor Swift’s conflict with Scooter Braun over her masters? Braun bought and sold the rights to her masters instead of selling them back to Swift, as she requested. As the main songwriter, she held the composition copyright, so she was able to rerecord her work to own the masters of the new “Taylor’s Version” songs.)
Because music is a collaborative field, there are often many different people who hold copyrights. So on a market like Jkbx, what you tend to be buying is a specific slice of a specific slice of a royalty stream, not the whole enchilada.