File Under: Getting Licensed and Generating Royalties, Making Money With Music

As soon as you've established consistent sales and royalties from your music, a whole new revenue stream opens up for you: advances. Although only music labels used to be able to do this previously, you can generate an advance on your own by selling the rights to your future sales and royalties your music may earn to the open market through some new, innovative services. Doing so, can help you fund your next album, build out your studio, launch your next tour, or simply get out of debt.

If you can demonstrate you songs and sound recordings and can generate consistent revenues from music sales and royalties, you can now offer up the rights to all or some of your future sales and royalties. These type of advances are now possible thanks to changes in investment law and the prevalence of digital music which constantly track their sales, streams and plays. Additionally, digital music has made it easier to generate royalties from organizations like ASCAP, BMI, and SOCAN and mechanical performance rights organizations like Harry Fox and PRS in the U.K.

You can always use your sales and royalties to get funding or advances from music organizations, labels, or individual investors, you can also auction them off using innovative services like Royalty Exchange and Songvest. Both are slightly different, but work by creating a marketplace for buying and selling music with a history of royalty income.

Depending on the size and consistency of revenue your music produces (which you can improve when you get your music heard), this could generate a lucrative lump sum payment. For instance, Michael Skaggs and his band, Outline in Color, were able to generate over $40,000 by auctioning off a fifty percent stake in their first two albums' future digital sales, mechanical royalties, and YouTube synchronization and ad share revenue on their first two albums. This advance provided some needed cash flow, allowed them to pay off some debt the business accumulated, and helped to fund more music projects.

Here's how it works: taking RoyaltyExchange as an example, the service will meet with you to analyze the sales and royalty revenue your music is generating and the advance potential it could fetch in market. They then help the musicians decide which digital sales and royalty streams they're comfortable in auctioning as well as which ones to exclude, as well as the percentage share to offer to the market and whether to set a minimum reserve. Once the musician owners decide on the final offering, RoyaltyExchange then organizes and runs the auction for a cut of the proceeds.

Naturally, how you use the proceeds afterward is up to you. You can use it to invest in your music or whatever else you want to use it for. Just make sure to handle the taxes properly since it is reported as income.

Perhaps the most surprising thing about this technique is that, since the term of this type of auctioned transaction is based on copyright, what you sell in exchange for an advance is an income stream that will last your entire lifetime plus seventy years. This means you can potentially get money you would have earned for 70 years after your own death, pulling another lifetime's income from the percentage of royalties you auction off, and making it available to you today.

For even more income ideas, check out our upcoming book Making Money With Music, to be released September 4, 2018. (PRE ORDER HERE)


#money #royalties #advance

Photo credit: Bindalfrodo