A startup launched by an entrepreneur in Raleigh allows people to buy a “share” of a song from a hit artist, from Beyonce to Cardi B.
SongVest, the brainchild of serial music entrepreneur Sean Peace, has launched what it’s calling SongShares – allowing fractional ownership of music royalties from hit songs.
The idea for SongVest actually predates Royalty Exchange, the startup Peace helped create that sold to a group of investors back in 2015. Royalty Exchange is a licensing auction house. It obtained and auctioned rights to songs such as Coolio’s “Ganga’s Paradise,” and raised $4 million in outside capital before being sold.
“SongVest was actually the first iteration of it,” Peace said. The original SongVest launched just before the market crash in 2008. It never really took off, Peace said. “What we had were songwriters.”
Its failure to take off came down to the value proposition – a circumstance that’s changed in SongVest’s favor over the past decade, Peace said.
“Artists were making a lot more money back in the heyday of 2008,” Peace said. “We couldn’t scale that part of the business because we couldn’t get all the artists interested.”
So Peace moved onto other projects, putting SongVest on the back burner. Then several things happened – the biggest of which was the passage of the Jumpstart Our Business Startups Act, which included crowdfunding provisions.
“I said, if I’m going to jump back into this, I need to do what I always planned on doing,” he said. “The goal that I always had … was to allow fans to buy small shares in music royalties.”
Peace said SongVest was able to raise about $500,000 to kickstart the company and launch SongShares. SongShares prices start at $20.
“As people bid on those shares, the price goes to $21, or $22 or $23,” Peace said. “We are allowing the investors to set the price of what the asset is actually worth.”
A shareholder will be able to brag about owning a piece of a song by their favorite artist. But Peace said there’s a strategy play here, too.
"Every time a song is streamed, they’re making some money, depending on what they purchased," he said.
It’s a big bet. Peace said that for SongVest to work, “We still have to prove this out.” And that means selling the model to artists.
He’s bullish that when the auctions start, “fans will actually pay a higher premium,” which could get hit makers on board.
“Investors are going to say, 'Hey, I just want to own a piece of this,'" Peace said. "And this will allow sellers to get a higher premium than they would if they sold it to one single investor or one single company.”
And if he’s right, artists may see the platform as a good option to monetize their catalogue.
Right now, SongVest is a team of five, but Peace said the plan is to expand in the next 60 to 90 days. He anticipates doing a fundraising round in the next few months through a crowdfunding platform.