• Clement S. Sealy, Jr.

Wall Street Is "Making It Rain" On The Music Industry

Hard Money

While major labels are struggling to regain control over music industry and lurking in the darkness waiting for the independents to foster a miracle, the industry's old business model is being picked to the bones. Financial trends in the music industry are appearing everywhere from creators reinventing capital by leasing beats to production companies and artists wrenching every drop of coin from royalties on the stock market. With publishing companies, streaming services, and label service firms maintaining and growing at a faster rate it is shown that the only financial bread and butter in the industry is royalties and Walls Street has taken notice.

Sound Royalties a West Palm Beach firm started within Dinan’s York Capital Management. Jamie Dinan an American investor and hedge fund manager has strategically positioned his company in the music industry. Sound Royalties, proudly claims itself as a “artist friendly” firm that offers cash advances for royalties in the music industry. Musicians, artists and creators often need to wait months for royalties to arrive. Sound Royalties provides a quick and easy, no credit, hassle bank free alternative to get your money fast.

Sounds good? Well hears the catch.

Its called a cash advancement not a loan.

This lending practice is structured as an advancement instead of a loan and are not subject to usury (the illegal actions or practice of lending money at unreasonably high rates of interest) state laws. In court filings and interviews with ex-employees and industry insiders say that the fees are usually higher than the leading industry 4 percent and with some artist paying rates of 30 percent or more.

Except for actual superstars, people in the music industry live paycheck to paycheck for months at a time and many face trading their rights to financing their careers. Hedge funds and private equity firms are looking for sounder finances to gain big profit.

In 2017, Sound Royalties extended $100 million of cash advances which helped bring royalty financing into the mainstream. Pamela Armstrong, a spokeswoman for Sound Royalties, says “Sound Royalties proudly provides valuable access to a broad spectrum of customized funding solutions which ensure that creatives retain their copyrights.” Sound Royalties’ advances, ranging from $5,000 to $10 million, and are proven to be popular. The demand for royalty financing is growing.

It is imperative that creators and musicians seek financial advice before getting advancements on their royalties. Yes those advancements can help in various scenarios but at what cost. why purchase a couch that will last you a year and pay it off for thirty years. Just my thought.

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