April is Financial Literacy Month! To celebrate, we are launching a series of Q&A’s with experts in the financial realm of the music industry, where they give a little insight into what they do and their advice to creatives.
First up is our very own CFO, Chuck Lowe. Chuck has been with the Sound Royalties family since inception in 2014. Read more about his background and gain knowledge from his insights below! If you’re interested in learning more from other music industry professionals, read about our conversation with Victor Wlodinguer.
Tell us how you got started in the finance industry. What led you to help create Sound Royalties, and what is your current role like?
I got started in the asset-backed security sector of the finance industry. I worked for companies that aggregated esoteric, illiquid annuities and then pooled them together for investors. Initially, I did this with mortgages, which later expanded into various business sectors. I then found that similar concepts also applied to musician royalties. At the time, there was a real need for artist-friendly funding in the music industry that wasn’t being met by bank lenders or through traditional advances. Thus, Sound Royalties was born.
My current role is to evaluate the risk and likely return for a catalog of music. We then structure a plan that helps our customers/creatives meet their financial goals while retaining their copyrights and without requiring personal guarantees.
What does it mean to be financially literate to you?
In my opinion, being financially literate has two critical components. The first is having a good understanding of what you have (which is your net worth), what you are earning (your income) and what you are spending. To most of the world, what you have is what’s in your bank account and maybe the value of your house. In the music world, it’s not as simple because the value of music rights is harder to calculate.
The second is understanding what resources are available to help you get to where you want to be. Specific recommendations on how to invest available capital are typically left to financial advisors, but understanding the general categories such as stocks, bonds, or cash should be up to the individual.
The benefits and risks of how to raise money to achieve your goals are also very important. Creatives often grapple with the choice of whether to sell their rights to raise capital. At Sound Royalties, we offer an alternative that provides access to immediate capital, ongoing income with unlimited upside, and retention of their ownership.
What is the best piece of financial advice you could give a creative?
Partner with companies that are aligned with your best interests. Maintain ownership of your work. Think of your music like a child – something you want to hold on to and nurture forever.
What actions can creatives take to ensure their financial stability or become more financially literate/confident?
As simple as it may sound, don’t forget to pay your taxes, and find trusted advisors with your best interest in mind.
What is the biggest challenge you see creatives facing today, and how can they combat that?
One of the problems I see is the timing from when music is created, to when it earns money, to when that money is actually paid out. This can be longer than anyone expects, even up to a year! It’s a critical time in an artist’s development, and a lack of capital can slow the momentum, which is one of the areas where Sound Royalties can help.
For more information on Chuck and the rest of Sound Royalties, visit our Team page. Stay tuned for our next Financial Literacy Month Q&A featuring Lamont Graves of The Graves Firm!