Songwriters file publishing copyrights to protect the harmony, melody, and lyrics of their songs. When a song is recorded, a recording copyright is also created. Music royalties are generated when copyright holders--songwriters, composers, recording artists--license their ownership rights in a musical work to a third party for reproduction and distribution.
Each time a licensed musical composition is consumed or played or duplicated, copyright holders collect royalties.
We believe the recent renaissance of music royalty securitization is related to technology. File sharing/piracy caused a long downcycle, but music streaming brought the industry back to life, stabilizing cash flows and making music royalty assets more suitable for securitization.
While the consumption of music is not considered to be cyclical, the music industry faces complex risks outside of those posed by the larger economy. Generally, a music catalog with diverse genres and a high concentration of seasoned artists/songs carries less credit risk.
