WHAT IS A ROYALTY INTEREST?
A royalty interest is the right to collect a stream of future royalty payments, often used in the oil industry and music industry to describe a percentage ownership of future production or revenues from a given leasehold, which may be divested from the original owner of the asset.
HOW DO I REGISTER TO BID?
Click on the upper right of the screen to register and fill in the online registration form.
HOW DO I BID ON A SONG?
Once you have registered for an auction, you are ready to bid. There are a number of ways that you can bid on a song:
Telephone bids must be booked by emailing email@example.com at least 24 hours in advance by filling out a Telephone Bid Form that includes your credit card details, proof of identity, and contact telephone and fax numbers. You will be given a unique number to call 30 minutes before the live event begins. Once contacted, a Royalty Exchange representative will act as your proxy and make bids at your request.
In the event you are unable to attend a live event in person, or bid via telephone or the Internet, with your written permission The Royalty Exchange will act as your representative to secure a song for you at the lowest possible price. Simply complete an Absentee Bid Form that provides your price limit for any specific song. This should be the maximum hammer price that you are prepared to pay, remembering to take into account the additional buyer’s premium. An absentee bid can be made up to 30 minutes before in-person bidding begins via telephone, fax, or e-mail. The e-mail address is firstname.lastname@example.org.
You may place bids in real time from anywhere in the world via the Internet at theroyaltyexchange.com.
When bidding on a single item, at time of bid, you have the option to put in a Proxy Bid. This type of bid allows you to put in the highest bid you are willing to place. Only the minimum bid will be placed for you. If someone outbids your minimum bid, then the system will automatically increase your bid. This will happen until your either the bidding closes or someone outbids your proxy bid.
WHAT IS THE 15 MINUTE RULE?
The 15 Minute Rule makes online auctions as fair as possible to all bidders by allowing everyone an equal opportunity to place their best bid. In some online auctions where bidding ends exactly at a given time, some bidders will hold their bids until the very last second. This practice is referred to as ‘sniping’. The 15 Minute Rule gives all bidders an equal opportunity to place their best bid on an item before the item closes. This way, no bidder loses an item to sniping.
Our auctions are more like a live auction where bidding continues until no one wishes to place another bid. The auctioneer does the ‘going once, going twice’ routine, and if someone places a bid – the bidding resumes. Since all persons bidding on an auction are connected by the Internet (which can be slow and cranky at times), we feel 15 minutes is a reasonable amount of time to overcome any slowness or technical problems.
Specifically, here’s how it works: If a bid is placed in the final 15 minutes of the auction on a song, that song and only that songs auction will stay open an additional 15 minutes. This process will continue until no bids are placed within a 15 minute time span on that song. The auction will officially end when the SongVest homepage indicates “The auction is closed.”
- There is no limit to the number of times an auction can be extended. Therefore, we recommend that you check back often as an auction nears closing time.
- The Royalty Exchange makes every effort to ensure system availability. However, we reserves the right to close an auction prior to, or extend it beyond, the posted closing time. This may be done at our discretion and without warning.
- The Royalty Exchange is not responsible for incomplete, failed, garbled, scrambled, delayed or misdirected computer transmissions due to technical computer hardware or software failures or other errors or problems of any kind, whether mechanical, human, electronic or otherwise, which may limit a user’s ability to bid in any auction.
IS MY BID BINDING?
All bids placed with The Royalty Exchange are legally binding. By registering and bidding at an auction, you are entering into a legal contract. If you are the highest bidder on a song, you are legally required to pay for it.
WHAT IS THE BUYER PREMIUM?
The buyer’s premium is a percentage of the final bid price of a lot that the buyer pays to The Royalty Exchange in addition to the final bid price. The premium is an industry standard outlined in the buyer’s agreement in the terms and conditions of the website. The percentages are as follows:
2.5% – $1 and above
WHAT ARE THE STANDARD BID INCREMENTS?
The Royalty Exchange will increase bidding in the following increments:
- $0 – $499: by $20
- $500 – $5,000: by $50
- $5,001 and up: by $100
WHICH CURRENCY IS USED FOR BIDDING?
All bidding is done in US dollars only
HOW DO I PAY?
All high bids must be paid 24 hours upon winning. All major credit cards, PayPal, money orders, and cashier’s checks are accepted. For high value items, special banking arrangements can be made.
*For PayPal and Credit Cards a 3% fee will be charged in addition to the 10% buyers fee.
WHAT AM I BUYING?
Each royalty item has a unique value and right. In the details of the auction item, it will clearly state what type of royalty and the revenue stream associated with that item.
For Music, follow this link to an overview what comprises a song and the different types of rights that are offered. Lee Ann Obringer. “How Music Royalties Work”. May 24, 2003 http://entertainment.howstuffworks.com/music-royalties.htm (November 15, 2007)
In addition to the reassignment of the royalty revenue stream, you will receive a certificate that you can frame, to certify your purchase. If you want a larger tangible item for your purchase, we can arrange for one-of-a-kind Gold or Platinum album, Movie, TV or Book award plaques that will be customized with your name.
These one-of-a-kind awards are provided at an additional cost to the buyer.
CAN I BUY MULTIPLE AWARD PLAQUES?
Yes. Once you win the auction, we can work with you on special requests like additional plaques and other items for a fee.
HOW LONG DO I OWN A ROYALTY STREAM?
Unless specified in the auction description, there is no end date on the life of your purchase, but be advised that the United States Copyright Laws (and the laws of other territories) provide for certain termination of the transfers involving copyright. Here is a good link to help you understand US Copyright Laws.
The Copyright Term Extension Act (CTEA) of 1998 extended copyright terms in the United States by 20 years. Since the Copyright Act of 1976, copyright would last for the life of the author plus 50 years, or 75 years for a work of corporate authorship. The Act extended these terms to life of the author plus 70 years and for works of corporate authorship to 120 years after creation or 95 years after publication, whichever endpoint is earlier. Copyright protection for works published prior to January 1, 1978, was increased by 20 years to a total of 95 years from their publication date.
The Graph below is good reference point that shows you when a song was copyrighted how long the royalties should last.
You should consult with your legal advisers regarding such matters to insure that you fully understand any question you might have in this regard before you make a purchase.
HOW DO I KNOW WHAT A ROYALTY IS WORTH?
Numerous factors will influence whether the revenue stream of any song, TV, movie or book will go up or down so there is no guarantee what the revenue will be. We provide financial information about the item’s past royalties and feel free to ask as many questions as you like about the royalty history of the items at auction.
HOW AND WHEN DO I RECEIVE ROYALTY CHECKS?
Royalties are paid on a quarterly or biannual basis, so the next quarter will usually be your first royalty recognition. To ease royalty distribution for our buyers and the industry, The Royalty Exchange acts as the clearinghouse for all payments. This ensures that you will receive every dollar your item earns. It also keeps you from having to manage all the intricacies of the industry and chasing down slow payers.
DOES THE ROYALTY EXCHANGE CHARGE A MANAGEMENT FEE?
Yes. The Royalty Exchange charges a small percentage of 5% to manage the royalties for you (see the Buyer’s Agreement for details). You will be able to view all transactions online and keep track of all your purchases and royalties through your own “Royalty Investment” dashboard.
WHAT IS A RESERVE PRICE AND WHO SETS IT?
The reserve is the minimum hammer price a song may be sold at. The current royalty owner and The Royalty Exchange mutually agree upon an appropriate reserve price.
MAY I LICENSE THE ITEM PROVIDING THE ROYALTY STREAM ONCE I BUY IT?
No. You only have the royalty rights to the item, not the actual (copyright) rights to the item.
HOW LONG WILL I BE ASSURED OF WHAT I’M BUYING AND THE LEGALITY OF THE TRANSACTION?
We do an initial check of the royalty and its ownership, but we rely heavily on the owner of the item for this information and our due diligence. For further information, please refer to the terms and conditions of the website and the associated detailed information that is posted with the item for auction.
DO I NEED TO HIRE A LAWYER?
Not for the legal transaction if you choose not to. You are always encouraged to retain counsel to represent yourself not only in the transaction, but also to provide additional due diligence on the items you are interested in purchasing.
IS THERE ANYTHING ELSE I SHOULD REGARDING MY LEGAL RIGHTS WHEN BUYING A ROYALTY STREAM?
Unless otherwise expressly stated herein, the recording artists, record labels, studios, producers, actors, publishers, or any other third party related to the items(s) being used by The Royalty Exchange in connection with the The Royalty Exchange website and/or this The Royalty Exchange auctions, are not affiliated with, endorsing and are not otherwise connected with, The Royalty Exchange, The Royalty Exchange website, and/or The Royalty Exchange auction. All rights in and to any materials, including, without limitation, intellectual property rights related to the musical compositions, names, and likenesses connected with the items(s) being auctioned on The Royalty Exchange website, shall remain the property of those persons and/or entities who lawfully own such rights.
WHAT EXACTLY CAN I SELL IN RELATION TO MY ROYALTY STREAM?
This is totally up to you! You can sell any percentage of your royalty stream. In the case of music, it can be a percentage of a song or an entire catalog. The combinations are almost limitless! The Royalty Exchange will work with you on what you want to accomplish and how best to present your royalties.
WHO SETS THE MINIMUM BID AND RESERVE PRICE?
The reserve price/minimum price will be mutually determined by you and The Royalty Exchange management. We want to give you complete control of your items, as well as, provide you with the best scenario for your royalty stream to sell.
WHAT CHARGES CAN I EXPECT IF I SELL MY ROYALTIES THROUGH THE ROYALTY EXCHANGE?
The great thing about The Royalty Exchange is there are no charges to list your items! The Royalty Exchange is completely free to post your items, and we only collect 12.5% if your item sells. Items over $100K can have a reduced fee.
WHAT KIND OF BACKGROUND CHECK DOES THE ROYALTY EXCHANGE CONDUCT REGARDING MY ROYALTY STREAM?
The Royalty Exchange has a very easy and simple process for anybody wanting to post items. There are no credit checks, and we only require the past 2-3 years of your item’s royalty statements including the last statement available to ensure there is no encumbrance on the payments.
HOW WILL I LEARN THE SALE PRICE OF MY PROPERTY?
If you are not present at the auction events, a Royalty Exchange representative will contact you within 24 hours of the auction’s close.
WHEN WILL I RECEIVE PAYMENT FOR MY SALE?
If your auction sells, you will receive your payment within 48 hrs after the final signed paperwork and payments are received by The Royalty Exchange.
WHAT HAPPENS IF MY ITEM FAILS TO SELL?
If your item fails to reach the reserve price, you have the option to have The Royalty Exchange negotiate on your behalf with the high bidders to see if a deal can be made. Otherwise, there is no sale or cost to you.
WHAT DO YOU NEED TO PROVIDE US TO LIST YOUR PROPERTY?
To have your item listed on The Royalty Exchange, you will need to provide us with the following information (items with an asterisk (*) refer only to entertainment royalties):
- What are you looking to sell?
- *For music, performance and/or mechanical royalties?
- *Who is currently paying your performance and/or mechanical royalties?
- AT LEAST three years of royalty statements
- If you are able to access your statements online and download them in a CSV/Excel format, The Royalty Exchange would prefer this method.
After we review your data and verify your royalty stream, we will discuss:
- What percentage of your royalty stream do you want to sell?
- *Which songs in your catalog do you want to sell and what percentage?
- What is your reserve price? A reserve price is the minimum price you would accept for a sale on our marketplace. If the price isn’t met, then there is no sale.
- How we can best promote the auction? The Royalty Exchange will handle most of the promotion but any outlets that you can provide will increase the possibility of selling your item. Here are a couple of examples:
- Social Media
- Personal Industry Network
HOW QUICKLY CAN I SELL MY ROYALTIES?
Once we have all of the previous years royalty statements, we can usually do an auction as soon as 30 days.