Why You Should Invest in Music Royalties
It is widely acknowledged that alternative investments play a crucial role in a well-rounded portfolio. These investments not only offer the advantage of limited correlation to traditional assets like stocks and bonds but also possess the potential to generate income. By incorporating them into a portfolio, one can reap substantial diversification benefits over time, resulting in superior risk-adjusted returns. However, when investors usually look for alternative investments, their options are quite limited. Only a few include what some believe is the most genuine alternative investment: royalty income generated from intellectual property. For the moment, let’s concentrate on music royalties and examine how rightsholders receive their payments. A rightsholder refers to a company or individual who possesses a legal entitlement to the income derived from the use of intellectual property, specifically in this case, music. Rightsholders encompass various parties such as songwriters, recording artists, labels, publishers, producers, and more. Several entities can hold the legal claim to future income, which is determined by streams, downloads, physical album sales, and other forms of usage, depending on the specific type of royalty they possess. Ultimately, royalty payments are driven by the consumption of music, and this consumption remains unaffected by fluctuations in interest rates or shifts in stock market sentiment.
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