SongVest Review – Investing That Is Music to Your Ears
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When it comes to alternative investments, there are all sorts of options at your fingertips, thanks to the internet. From passive income generated from investing in a local indie film to NFTs or even art, there are a variety of unique asset classes that promise passive cash flow to savvy investors. One online marketplace worth exploring (especially for music fans) is SongVest.
SongVest is a music royalty investment platform that allows you to purchase fractional shares in music royalties. If you like making royalty income just like streaming services such as Spotify do, then SongVest may be worth exploring. Keep in mind, though, that as a startup, your investment portfolio and options to earn royalties may be limited in different ways than other alternative investment options available to you online.
If you love the music industry and the idea of using your knowledge of hit songs to guide investment decisions and earn music revenue through royalty payments, SongVest is certainly a unique option to consider. Keep reading for our full review of the platform and what you could make from banking on performance royalties.
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What is SongVest?
SongVest is the only online SEC-qualified option for music rights investing. The deals you can access via SongVest’s investment platform are made directly with rights holders. These offerings are provided to users via auctions, meaning you may bid on your favorite artists, songwriters, or record labels. Entire catalogs of music royalties are also up for auction for investors with more money to throw around in this space.
According to their website, SongVest has the mission to democratize music investing. They do this by offering SongShares, a fractional share methodology that allows fans and investors from all financial walks of life to invest in their favorite musical artists and tracks. SongVest was founded by Sean Peace, who currently serves as the company’s CEO. If the sound of investing in hit songs is appealing to you, SongVest is a platform worth exploring.
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How does SongVest work?
SongVest is focused on making it secure and simple to invest in music royalties using its platform. To that end, they source music royalties for investors by negotiating directly with the rights holders to verify that royalty stream statements are accurate. From there, users like you can browse offerings and bid on them during VIP Auction periods, allowing you to reserve your SongShares. After bidding ends, the shares will be validated with the SEC, at which point you can officially buy your shares during a VIP sale period. Royalties are paid out quarterly, and you can monitor these earnings at any time from your dashboard.
To create an account on SongVest, you’ll want to navigate to their website and click on the blue “Start Your Music Portfolio” button in the top right corner. You’ll sign up using your first and last name and email address. You can also use your mobile number, which is up to you.
Once you’ve submitted that information, you’ll input some information about yourself as an investor. This includes whether you’re an individual or an entity and whether you’re a U.S. Citizen, resident, or non-U.S. resident. You’ll also share additional personal information, like your date of birth, address, and zip code. Afterward, you’ll create a password for your account and agree to the terms of service.
When creating your account, you’ll also need to connect some way to pay for your SongShares. This may be either a US-based bank account or a credit card. Once your account has been registered, you can explore the artists and songs available for bidding on and investing in. This may involve current sales and upcoming auctions to monitor as an investor.
How much does SongVest cost?
Creating an account with the platform is completely free. When investing on the platform, how much you pay depends on how early (and during what stage) you bid on SongShares. Generally speaking, investors must meet at least $100 to invest in certain SongShares.
Prices are determined based on the VIP auction results when it comes to the offerings available to invest in through SongVest. These fees typically range anywhere from $100 a share to $250 a share. Keep in mind that the VIP Auctions offer bids to reserve shares (which you will pay for in the future) and are contingent on the auction succeeding in order actually to require payment.
SongVest features
Curated offerings
SongVest has a team of experts that evaluate offerings before allowing them to be invested in on their platform. This means that all royalty figures are confirmed beforehand so you can view and bid on them. This curation also means that when it comes time to have the SEC approve the filing for these offerings, it is more likely to be approved, meaning that your investment is secure and never in jeopardy.
Quarterly earnings
Earnings from SongVest and your investment playlist are paid out quarterly and automatically. This means you must monitor your investments over time and then wait to get paid. As passive income streams go, SongVest is as simple as possible and offers a payout frequency that many investors will appreciate.
Easy-to-use platform
The user interface of SongVest is quite intuitive and straightforward. It makes it easy to explore various SongShares that are available and bid on the ones that interest you. While SongVest doesn’t offer financial advice per se, they offer financial highlights of certain songs and artists that can be useful in evaluating how much you may earn from investing in the music royalties. All of this information makes the platform super easy to understand and operate. From account creation to bidding on offerings, SongVest has a modern, simple interface to get the job done.
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Who is SongVest best for?
Music lovers
If you love music, you’ll definitely get a kick out of investing with SongVest. Thanks to its ability to offer SEC-approved fractional shares in music royalties, you can get involved with the platform with a minimal investment. Especially if you pay attention to up-and-coming artists on social media and those topping the charts, you may feel more at home making informed decisions investing in song royalties than what can seem like the random highs and lows of other businesses in the country.
Casual investors looking for passive income
If you’re looking for passive income via fractional shares, SongVest is an easy-to-use platform to create and maintain an investment portfolio. Since your payment will come quarterly, you may see more from your yield with SongVest than other alternative investment platforms. This frequency and consistency may make SongVest a better option for those looking to use some of that passive income more frequently than what annual payments enable.
Who shouldn’t use SongVest?
Investors who value liquidity
One major drawback to SongVest is that there isn’t currently a secondary market for the platform. This means your investment has no liquidity other than your quarterly earnings, which may fluctuate up or down as the years go by. If you buy a fractional share of Google or Tesla, you have the opportunity to offload that share at a later date, even at a loss. With SongVest and SongShares, that liquidity doesn’t exist, chaining you to the platform and song performance for making any money.
Those with limited income to invest
If you have limited income to invest, it may be appealing to see that SongVest offers SEC-accredited fractional shares. While SongVest is quite legitimate, the low potential yield and risk associated with a new startup such as SongVest is something to weigh heavily. As such, it’s best to stick to ETFs, index funds, or mutual funds rather than experiment with a relatively untested (and illiquid) asset class like music royalties. Once you’ve built a solid foundation for your nest egg, playing with alternative asset classes like SongShares makes sense.
Pros and cons
Pros
- Easy-to-navigate interface. A great thing about SongVest is that it makes things easy to control and understand. The user interface is simple and intuitive, whether setting up your account, setting bidding limits, or exploring various offerings. The information provided about each offering is also clearly spelled out for you, so you can see what earnings in the last quarter were like and what you could estimate to earn from your investment.
- SEC offerings for music royalties. SongVest is the only online platform that is SEC-approved for fractional shares of music royalties. SongVest automatically files its offerings with the SEC before you purchase them after the bidding process. According to their website, “SongVest is offering securities through the use of an Offering Statement that the Securities and Exchange Commission ('SEC") has qualified under Tier II of Regulation A.” This level of legitimacy makes SongVest worth considering for investors interested in music and music royalties.
- Interesting way to earn passive income. SongVest is one of the more interesting ways to earn passive income, especially if you’re a music lover. While it’s strange to think of “fun” as a positive for an investment platform, it must be stated that you can make better, more informed decisions if you’re interested in what you’re investing in.
Cons
- Not liquid. As of this writing, investments in SongShares cannot be sold on any secondary market. This means that your portfolio on SongVest isn’t liquid, and the income derived from your playlist portfolio is solely tied to the earnings from each of your investments.
- Relatively low potential yield. You may make anywhere from 5% to 12% investing in SongShares with SongVest, which certainly isn’t bad but isn’t as high as some other alternative investments may offer. For example, real estate investing may offer a higher floor and ceiling when it comes to yield.
- Your SongShares could depreciate. While it’s possible that your investments in SongVest could appreciate a little, there’s just as much of a possibility that your investment could depreciate. Especially with how certain artists and songs go in and out of style, the risk of depreciation should be apparent even to investors with almost no investment know-how. Losing money with SongVest stings extra since there’s no secondary market to offload your low-performing investments with.
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SongVest vs. competitors
Since investing in music royalties is a relatively new alternative asset class, there aren’t many online platforms yet catering to this form of investing. SongVest and RoyaltyExchange are the two big players in this space, offering different musical investment flavors.
Service | Minimum to Invest | Potential Yield | Focus |
SongVest | $100 | 5% to 12% | Individual Songs |
Royalty Exchange | $10,000 | 1% to 15% | Song Catalogues |
Royalty Exchange
Unlike SongVest, which focuses on investing in individual songs and song catalogs, Royalty Exchange is focused specifically on larger song catalogs. The minimum amount required to invest varies drastically from platform to platform. Royalty Exchange’s minimums are $10,000, but thanks to its ability to offer fractional shares, SongVest has a minimum of just $100 to invest in a song. The potential yield ranges slightly higher with Royalty Exchange but is also a bit lower. This means that it’s higher risk and a higher reward, although it is only 3% higher than the potential yield using SongVest.
Ultimately, choosing SongVest or Royalty Exchange depends on your budget and interest in investing in a catalog.
FAQs
How does bidding work?
What are SongShares?
SongShares is a first-of-their-kind fractional way to invest in music royalties for specific songs. According to SongVest’s website, “SongVest is the first to utilize Regulation A+ of the U.S. Securities and Exchange Commission to sell music royalties in SongShares which are ‘royalty share units.’”
It may seem strange to think of “bidding” as a part of investing in any asset. On SongVest, you’ll have the opportunity to make non-binding bids on fractional shares of the royalty stream in question during the VIP Auction period. The pricing will increase as certain numbers of units are sold. Once the bidding is over and the offering has been approved by the SEC, you’ll have the chance to purchase your shares during the public offering, having already “reserved” them during the bidding process.
How do you pay for SongShares?
Once the SEC qualifies offerings, SongShares can be purchased using either a credit card or a US-based bank account. These details are provided upon account creation, and payments are processed through an escrow account operated by a business called North Capital.
When are payments paid out?
SongVest pays its investors quarterly. These payments are made automatically 45 days following the end of the quarter.
Who can invest in SongShares using SongVest?
Since SongShares are a qualified SEC security, they are available to investors in the United States and investors in foreign countries (excluding Canada). Remember that you’ll need to have a US-based bank account or credit card to purchase SongShares on SongVest, as well as a US bank account or PayPal account for disbursement of quarterly royalties payments.
The bottom line
Like Hipgnosis Songs Fund or Sean Peace’s Royalty Exchange, SongVest makes music royalties collectible and their alternative investment class. The fact that SongVest offers fractional shares for this kind of alternative investment makes it one of the more accessible ways to blend your love for music and interest in generating passive income. Best of all, SongVest uses Regulation A+ of the SEC to sell its royalties, meaning that more security and safety are invested on this platform than other alternative investment options.
While SongVest is an exciting new horizon for many investors, it does have a few drawbacks that may be reason for pause. For example, when exploring SongVest, there weren’t many current options to invest in. The Live Auctions section only had one artist (Dub P Sound Recordings), whereas the VIP Auctions only featured three songs by the same artist (KrispyLife Kidd). Additionally, since there’s no secondary market, it’s easy to get “stuck” with what you invest in.
Even with all this being said, SongVest represents an exciting investment opportunity for people who love music. Getting to bid on up-and-coming artists and seeing how their success helps you earn passive income is both fun and potentially financially beneficial. As such, whether or not SongVest is up your alley depends on a few different factors, but it could be the right platform for many.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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