The music industry has always been about creativity, passion, and connection. These are the lasting threads that unite our global industry. Yet recently, the money that supports the music lifecycle from creation to consumption has shifted dramatically. We know, because at Sound Royalties we’ve been a leader at the forefront of this evolution.
When we entered the music financing market a decade ago, the industry was dominated by restrictive funding models that left artists with limited options for accessing capital. The main vehicles available to creatives to access a royalty advance were primarily on a 100% recoupable model, in addition to relinquishing at least a percentage of publishing or master rights.
The few additional alternative financing options that did exist often resembled predatory lending practices, with some firms charging interest rates, adding copyright foreclosure clauses if loans weren’t repaid on time, and including “rights of first refusal”, potentially keeping them prisoner to the deal if the creative tried to pay them off. The institutional banking sector offered little relief. Entertainment-focused banks were rejecting approximately 85% of music deals that crossed their desks—and this was only those artists who had the credentials, documentation and willingness to provide personal guarantees to approach traditional banking institutions in the first place.