Acquisition #14: Eminem 1999-2013 Albums
This Private Syndicate investment opportunity, arranged by a collaboration with Royalty Flow, LLC, features a passive interest in producer sound recording royalties from Eminem’s recordings and releases from 1999 through 2013.
These royalties are derived from all of Eminem’s albums from 1999’s Slim Shady LP up to and including 2013’s Marshall Mathers LP 2. Three of the albums included are among the top 20 longest- charting albums of all time, with one – Curtain Call – recently named longest-charting hip-hop album in history.
The offering also includes earnings from Eminem’s side projects, including works with Jay-Z, Akon, Tupac, 50 Cent, and others. In addition, royalties from Eminem’s music videos from the works he released from 1999 through 2013 are included in the catalog.
According to IFPI, Sound recording royalties industry-wide increased 8.1% in 2017, and 5.9% the year before. Driving this music business rebound are streaming revenues, which increased industry- wide 60.4% in 2016 and another 41.1% in 2017.
As noted earlier, the Eminem catalog is already outperforming these growth trends and has been growing by an annualized rate of 11.39% over the last three years. That’s because this catalog benefits from the industry’s streaming growth trend in several ways:
Sound Recordings: the streaming format benefits sound recording royalties over composition royalties. If Spotify pays 70-cent of every dollar on music rights, 60-cents of that goes to the sound recording copyright (which the labels splits with the artists based on this contract agreement), while the remaining 10-cents goes to the composition copyright.
Record labels are seeing significant benefits as a result. According to an analysis of publicly-stated financial results by Music Business Worldwide, labels Universal, Sony and Warner jointly turned over $6 billion – approximately $1 billion a month- between them in the first half of 2018 on a global basis. Streaming contributed over half this totaql, with over $3 billion in the same period.
Streaming contributes over 76% of this catalog’s earnings in the last 12 months. This means you as an investor will benefit from the industry macro trend of rising label streaming royalties.
Catalog Music: Proven older hits, like that of the Eminem catalog, drive streaming activity.
According to a BuzzAngle Music report released last year, over half of the music streamed via services like Spotify is classified as Deep Catalog music...music released more that three years ago. When combining both audio-only and video streams, that percentage increases to 65.9%.
While streaming platforms may be a great discovery vehicle for new music, their foundation remain timeless classics like this. This puts the owners in a powerful position to negotiate higher rates in the future 9which as an investor you too would benefit from).
Hip-Hop & Streaming: Hip-Hop overtook rock in 2017 as the most popular genre of music, their foundation remain timeless classics like this. This puts the owners in a powerful position to negotiate higher rates in the future (which as an investor you too would benefit)
This catalog is the perfect example of these two trends: hip-hop’s and streaming’s growth worldwide. This catalog is driven by streaming and these streaming earnings have been consistently growing just above 27% annually from 2015 to today.
Continued Relevance: Eminem has sold more than 172 million albums worldwide, making him the second best-selling male artist of the last 25 years and the best-selling hip-hop artist ever. He’s been nominated for 43 Grammy Awards and won 15, included six for Best Rap Album. Any new activity from a popular artist like Eminem tends to drive fans to streaming platforms to revisit old favourites or learn more about the source of older music recently discovered.
• New Eminem Album: Eminem released a new album in 2018. While these works are not part of the offering, new music tends to drive interest in back catalog.
• Eminem Tour: Eminem recently announced dates for his upcoming New Zealand/Australia tour in 2019. These performances will almost certainly include his older works featured in this catalog, breathing renewed interest among existing and new fans alike.