Royalty Exchange Takes New Tactic to Royalties Investments With Cage the Elephant's Publishing Catalog

Neil Krug
Cage the Elephant

The company has tapped the private placement market to acquire a co-publishing share in Cage the Elephant's catalog, which spans the band's songs of their first four studio albums.

Royalty Exchange is pulling another financing tactic into its deal portfolio to acquire music publishing and recorded masters catalogs, or their income streams.

The company has tapped the private placement market to acquire a co-publishing share in Cage the Elephant's catalog, which spans the band's songs of their first four studio albums: Cage the Elephant, Thank You, Happy Birthday, Memophobia and Tell Me I'm Pretty, which won the 2017 Grammy Award for best rock album. Terms of the deal were not disclosed.

According to Royalty Exchange, under private syndicates the company is able to create special purpose vehicles designed to hold music catalogs like that of Cage the Elephant. Accredited investors can then buy shares of that entity, which grants them a proportional share of the royalty income it generates. 

Those accredited investors, per the U.S. Securities and Exchange Commission, may include Wall Street financial institutions like a bank, investment bank, insurance fund or investment advisors; a pension fund; a charitable organization, trust, or corporation with assets exceeding $5 million; or an individual with a net worth of more than $1 million, excluding the value of that person's home.

"Cage the Elephant is a band in their prime with a long career still ahead of them," the band's manager Cliff Burnstein of Q Prime said in a statement. "Private syndicates give artists a strong financial foundation for both their personal and professional future, and shows Royalty Exchange can deliver results for any artist ... from a single song to multimillion dollar catalogs. Financially empowering artists is the key to creative control, which is the most important factor to achieving true longevity."

Currently, the band's catalog is administered and publishing is co-owned by Sony/ATV, which is expected to continue in that role.

"We expected strong demand for this incredible catalog, but we were taken aback by how fast investors reacted," Royalty Exchange CEO Matthew Smith said in a statement. "More than 40 individual and institutional investors participated, attracted by the potential for double-digit yield (based on the catalog's five-year compound annual growth rate, industry growth projections, and other factors) and the catalog's strong cash flow."

Looking ahead, Smith added, "We expect other artists who share their vision of creative and financial freedom to follow their example."

This investment approach comes on the heels of Royalty Exchange's failed effort to use Regulation A+ crowdfunding efforts to finance music asset acquisition. Last year, the company chose to go that route in purchasing an income stream from Eminem recorded masters royalties. But that offering was withdrawn and the company instead used other undisclosed funding to pay 25 percent of the royalties from those recordings for $18.75 million. That acquisition was subsequently sold to a private equity company earlier this year, according to sources.

This time out, Royalty Exchange appears to believe it has a winning formula. Looking ahead, Smith added, "We expect other artists who share [Cage the Elephant] vision of creative and financial freedom to follow their example."

Through its auctions and other investment vehicles, Royalty Exchange claims it has now raised nearly $40 million for music creators in just over two years, with plans to do it next Private Syndicate offering in the weeks ahead. 


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