MR MONEY MAKER: Log in today to increase your income tomorrow, says JUSTIN URQUHART STEWART
Wwhat is happening ?
Normally, I don’t like fashions, as they tend to lead to disasters next year. However, I am ready on this occasion to find some exceptions.
One of them is the sale of record catalogs, in which the value of nostalgic music can outweigh the fashion embarrassments of the day – where did I leave those flared pants?
In song: In 1997, British musician David Bowie (pictured) sold ‘Bowie Bonds’, which gave investors a share of his future royalties for 10 years
Why is it important?
There is nothing new about artists selling access to their creativity folio. After all, you might remember the enthusiasm for “Bowie Bonds” when the late Starman raised money from future earnings from his music.
The success of such structures, however, is based on the quality and longevity of the music or any art form sold.
The other factor is the control of the rights to this music. With the free download so mundane, the effective measure of your potential income is vague to say the least, although there will undoubtedly be litigation and other actions to try to ensure that artists don’t lose out to biters. .
What should I do?
In 2018, a company called Hipgnosis was formed precisely to address this market and raised funds to release and repurchase catalogs of works, including those by Neil Young, Debbie Harry, Chris Stein and Beyonce.
Technically this company is an investment trust, so it trades like any other standard stock, although you should always watch out for the discount value these trusts tend to have relative to their underlying assets. .
You might think that such a company is a “banker” and what could go wrong? Well for starters, your stars from yesterday may well become unplayable.
More importantly, let’s assume that all of those clubs, pubs, and other outlets that play music are forced to close for some reason. Seems familiar?
This company returned to the markets to raise more money with the direct intention of doing more. It’s a simple model and one that I like.
The share price hasn’t been that spectacular, but it offers a decent return, currently at 4.27 percent, which is better than any Main Street deposit account I can see.
The concept of listening to music and making money appeals to me the most, although I think I would be happy to avoid Barry Manilow.
However, there is one passive fund that can be a good alternative, and that is the Invesco Dynamic Media ETF, although it focuses on US media companies.