The Value of IP Rights Tokenization

Coda is emerging with a unique and compelling opportunity that is capturing the attention of savvy investors: music intellectual property (IP) rights. Once the exclusive domain of record labels and publishers, Coda Exchange has opened up access to IP rights ownership to a broader audience, offering a diverse range of benefits, and making IP rights an attractive and valuable addition to any investment portfolio.

The Rise of Music Royalties

The music industry, once plagued by piracy and declining physical album sales, has experienced a resurgence thanks to the proliferation of streaming services. This shift has transformed the way music is consumed, creating a stable and recurring revenue stream through royalties. Every time a song is streamed, downloaded, or used in various media such as films, TV shows, or advertisements, the owners of the music IP rights receive payments. This model ensures a predictable and long-term income stream, uncorrelated with traditional market fluctuations.

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Investing in music IP rights offers a unique opportunity for portfolio diversification. Unlike stocks or real estate, music royalties are not tied to macroeconomic performance, providing a hedge against market volatility. This stability is particularly appealing in uncertain economic times, as the demand for music remains relatively constant. Whether the economy is booming or in a downturn, people continue to listen to music, ensuring a steady flow of royalties.

Long-term Value

When it comes to the financial allure of music IP rights, the returns and yields are of significant interest. Music royalties offer a compelling combination of stability and potential for high yields, making them an attractive addition to any investment portfolio. With industry average yields over 11%, this far outpaces traditional financial instruments such as 10-year Treasury notes and S&P 500 dividend yields, which currently hover around 1.6% and 1.4%. These returns are not only high but also more stable and predictable, similar to a quasi-annuity. Music royalties provide consistent, recurring cash flows over extended periods, often spanning decades or even the lifetime of the rights, which can be up to 100 years.

Active Value Creation

Getting involved in music IP is not only for passive observers; investors can actively increase the value of their investments. By identifying and developing emerging artists and songwriters, investors can access new music IP that has the potential to generate significant returns. Additionally, supporting creative marketing of music IP and promoting artists and music, investors can unlock new revenue streams and generate wider visibility and discoverability for the music IP they own. For instance, getting music visible on social media, and putting it in front of sync agents and movie producers, or video games creators can significantly enhance the return on investment.

Tokenization and Liquid Markets

The advent of Coda introduces a new era of transparency, efficiency, and accessibility. By tokenizing IP rights, Coda enables fractional ownership, increased liquidity, and automated royalty distribution through smart contracts. This means that investors can now purchase a fraction of the rights to a song or album, reducing the barriers to entry and making it possible for smaller investors to participate in the market.

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Historically, investing in music IP has been a complex and often inaccessible process. These entry barriers have been significantly reduced, with investors now able to access music IP rights starting at just a few dollars, making it feasible for any investor to get on board, and with passive interest management in music catalogs, investors can collect ongoing distributions without the need for active management.

Supporting the Creator Economy

Music IP rights ownership is not just about the financial returns; it also helps support the creator economy. By providing artists with the opportunity to access previously untapped financial streams, investors enable them to continue creating music without the constraints of traditional funding models. This support empowers independent creativity, promotes cultural diversity, and ensures that artists maintain control over their work. The story of Taylor Swift, who had to re-record her early albums to reclaim ownership of her music, highlights the importance of artists having control over their IP.

Market Growth and Future Prospects

With the global music industry projected to reach $145 billion by 2025, driven largely by the growth of streaming services. This expansion creates a fertile ground for music IP investments to flourish. As more artists and songwriters produce content, the potential for new and lucrative licensing opportunities increases, further enhancing the value of existing music IP rights. IP rights can also benefit from the projected 15% annual growth in streaming services that is expected to boost royalty revenues, and regulatory changes aimed at reducing music piracy and improving royalty collection transparency are anticipated to further enhance returns.

Summary

Investing in music IP rights offers a compelling combination of stability, diversification, and growth potential. With the ability to generate uncorrelated revenue streams, support creative artists, and benefit from the efficiencies of tokenization and liquid markets, tokenized IP rights are poised to attract a wide range of investors. Whether you are a seasoned investor looking to diversify your portfolio or an individual seeking a unique investment opportunity, music rights present a promising avenue for long-term yields and market growth. As the music industry continues to evolve, one thing is clear: investing in IP is a harmonious blend of financial prudence and creative support.

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