SZA + Rihanna: Publishing Royalties

Description

Up for bid is an exciting R&B catalog that boasts sizable publishing royalties from critically-acclaimed and widely popular artists SZA and Rihanna.

As the winning bidder, you’ll collect from three royalty types: mechanical, public performance, and sync. Streaming is the primary revenue stream, with over half of historic earnings coming from streaming mechanicals and streaming public performance royalties. Mechanical royalties (which include downloads and on-demand streaming) themselves account for 61% of last year’s earnings. This is noteworthy as this catalog’s income mix follows the industry trend of rising streaming revenue.

The foundation of this offering is R&B artist SZA’s debut studio album Ctrl. This catalog features seven tracks from the Platinum-certified album. Released in 2017, Ctrl was critically and commercially successful, landing four Grammy nominations and topping Billboard charts at No. 1 Top R&B/Hip-Hop Albums and No. 3 on the Billboard 200.

Accounting for 22% of last year’s income is the track “Drew Barrymore.” Released as the lead single from Ctrl, the Gold-certified song has nearly 80 million spins on Spotify to date. Other notable titles from the album include “Supermodel,” “Go Gina,” and “Normal Girl” — all certified Gold — and bring in a collective 35% of last year’s revenue.

Not to be overlooked, this catalog features “Consideration,” performed by Grammy-winner Rihanna and featuring SZA. The song was released in 2017, hit No.1 on Dance Club Songs, and charted well overseas. “Consideration” accounts for 19% of last year’s earnings and has over 125 million spins on Spotify today.

Key Drivers

Income Mix. The winner of this auction can receive income in various ways:

• Mechanical: Royalties paid to songwriters and artists when music is sold (think CD or vinyl) but also when music is streamed (streaming mechanicals) “on-demand” (like Spotify).

  • The US Copyright Royalty Board recently raised the rates digital music services must pay for mechanical royalties by nearly 44% over the next 5 years. This catalog has earned the majority (61%) of its revenue in the last year from mechanical royalties. As the winner of this auction, you will benefit from the mechanical rate increases over the next five years.

• Performance: Royalties paid to songwriters when music is performed publicly. Music played over the radio, in a restaurant or bar, or over a service like Spotify or Pandora is considered a public performance.

• Synchronization: Royalties paid to songwriters and publishers for the licensing of a song in music for a movie, TV show, or commercial.

Featured Artists. SZA is a rising star with both critical and commercial success. She was nominated for five Grammy Awards in 2018, including one for Best New Artist. Impressively, she received the most nominations of any female artist at the 2018 Awards and was the fourth most nominated artist in total. Her neo-soul style blend elements of hip-hop for a unique alternative R&B sound. She’s also collaborated with some of music’s biggest names like Rihanna, Kendrick Lamar, The Weeknd, and Cardi B to name a few.

Often recognized as a pop icon, Rihanna is one of the best-selling music artists of all time, with 280 million records sold worldwide. She has won nine Grammys and has a total of 31 Top 10 singles on the Billboard Hot 100 to her name.

Rihanna is set to release a highly-anticipated new album in 2019 and SZA’s sophomore album is also set to drop sometime this year. While the new songs are not included in this auction, new releases can help boost an artist's back catalog. The release of new music draws discovery among first-time listeners and re-engages existing fans.

Diversity in Song Income Mix. Revenues are also widely distributed among this catalog. The single highest-earning song — “Drew Barrymore” — only accounts for 22% of last year’s collective incomes. This means the catalog’s earnings are not tied to the success of a single track and provides built-in diversification for you as an investor.