If you are looking to diversify your assets, you may want to add Jennifer Lopez or Frank Sinatra to your portfolio. Retail and professional traders can earn money off these bankable stars buying and selling their music royalties on the Royalty Exchange, a central marketplace for investors to buy, sell and bid on intellectual property.
Jonathan Hoenig, of CapitalistPig.com, who also advises the Royalty Exchange board, explains how it works. “These are income producing music royalties not based on any type of economic, stock market or bond market fluctuation but based on the usage of this particular property whether its a song, or a film.”
Intellectual property, such as music and film royalties, are considered alternative assets which investors can use to diversify their portfolio. Not a bad idea with the S&P 500 (^GSPC) at a record high, interest rates near zero and the benchmark 10-Year note yielding just over 2% (^TXN).
Hoenig also notes royalties have become more accessible to investors as “multi-unit auctions that let anybody own income producing music royalties, some yielding as much as 20% for $4,000, $5,000 to $6,000 a pop.”
While the investment concept is in its infancy, Hoenig predicts this new class of alternative assets will explode in popularity. “What REITs were to the 90s and gold and commodities were to the 2000s intellectual property, in particular music royalties, will be to this generation.”