Hip Hop Entices Royalty Backed Music Streaming Notes

By CultureBanx Team

  • Music notes will pay a 5% annual dividend based on royalties from song rights

  • Drake’s Scorpion album has the largest single-day streaming total on any service

Investors may have the chance to capitalize on music downloads in a new innovative way, with the popularity of platforms like Apple (AAPL +-0.23%) Music and Spotify (SPOT -0.38%) dominating streaming. Swiss-Asia Holding is attempting to raise $100 million for securities linked to royalties generated from song rights.

Why This Matters: Nearly every major hip-hop release on Apple Music pulls in more streams than Spotify, which has over 100 million extra users. Investors looking to diversify their portfolios see these music royalty notes as an opportunity to buy into alternative assets, that aren’t connected to the broader market volatility.

Investors looking to diversify their portfolios see these music royalty notes as an opportunity to buy into alternative assets

Drake’s single-day streaming record on Apple Music, with his fifth album Scorpion pulled in more than 170 million streams in its first 24 hours. On Spotify, it pulled in over 132 million streams in its first 24 hours. This made his debut the largest single-day streaming total for any album on any streaming service to date, making renting music an even more attractive option for investors.

The music notes will pay a 5% annual dividend based on royalties from song rights and 10% capital growth if the underlying stocks rise in value, according to Bloomberg. However it’s interesting that only high net worth, accredited investors are permitted to invest this product. Swiss-Asia will take a 1.5% annual fee along with a 15% performance fee on any gains.

Situational Awareness: Three of the biggest holdings that will make up the royalty backed notes include Spotify, Vivendi (VIV.PA -0.30%) and Tencent Music once it goes public. The Chinese music streaming company recently filed for a $1 billion U.S. IPO, which could value the company between $25 and $30 billion, according to its SEC filing. Also, Spotify owns a 9% stake in Tencent Music.

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