The arrival of song royalties trading platform, JKBX, is shaping up to be one of the most intriguing – and, potentially, financially significant – launches for the music business this year.
The company, pronounced ‘jukebox’, has this week confirmed that it will officially launch on Tuesday, September 12.
At launch, JKBX will enable investors to ‘reserve’ shares in royalty streams from hundreds of songs, including hits such as Bleeding Love performed by Leona Lewis, Sucker performed by the Jonas Brothers, Counting Stars performed by OneRepublic, Welcome To New York performed by Taylor Swift, Lean On performed by Major Lazer, Rumour Has It performed by Adele, and Halo performed by Beyoncé.
That’s ‘reserve’ rather than ‘buy’… for now – because JKBX is in the process of seeking regulated approval from the US Securities and Exchange Commission (SEC) to sell music royalty streams to investors as a ‘Regulation A offering’.
JKBX is also likely to be seeking regulatory approval for a secondary market, enabling those who’ve bought royalty streams to then trade them with fellow investors.
The people behind JKBX are familiar to the music business. The company was founded by Sam Hendel and John Chapman of venture capital / private equity firm Dundee Partners.
Dundee Partners is a minority shareholder in Kobalt Music Group, having come together with Francisco Partners (now 90% owner of KMG) and Matt Pincus’ MUSIC last year to acquire the firm.
Dundee (via the Hendel family) also teamed up with KKR in 2021 to acquire a bundle of rights from Kobalt Capital, for around$1.1 billion.
That rights portfolio, now known as Chord Music, contained 62,000 copyrights, including a string of hit songs written by Ryan Tedder amongst others.
London-based Cohen said of JKBX’s impending launch: “JKBX is not only going to benefit recording artists, songwriters, fans, investors, and rights holders, it will also transform how the investment world views new, alternative asset classes.”
“JKBX is not only going to benefit recording artists, songwriters, fans, investors, and rights holders, it will also transform how the investment world views new, alternative asset classes.”
Scott Cohen
Big numbers are already floating around JKBX, which said in a press release issued today (August 29) that it’s aiming to “become a transformative force in music and investing”.
The company raised USD $16 million in January from investors, according to a new Billboard cover article, with backers including Mike Novogratz’s Galaxy Digital, Valor Equity Partners, plus Tyler and Cameron Winklevoss.
Billboard’s sources also suggest that the likes of Spotify, Live Nation, YouTube, Red Light Management, and Bertelsmann Digital Media, have also invested in JKBX.
In February, a Bloomberg article reported that JKBX already had “about $1.7 billion in music rights ‘exclusively secured'”, and expected to launch its platform with more than $4 billion of rights in its platform.
Now we’ve talked about big money… we should also talk about the finer details of how JKBX plans to work with large-scale music rightsholders to fuel its platform.
The songs listed on JKBX – in which investors will potentially be able to buy slices of royalty income streams – will actually be offered by the company’s affiliate, Jukebox Hits Vol. 1 LLC.
This LLC (“Hits Vol. 1”) will work with music rightsholders, says JKBX, to “identify income-generating songs and determine which songs to offer on the [JKBX] platform”.
Willing rightsholders will then sell a percentage of their income interests from these songs to the Hits Vol. 1 LLC – before Hits Vol.1 subsequently sells separate portions of these income streams to fans and investors via JKBX.
Before that can happen, though, Hits Vol.1 is seeking to qualify the offering – i.e. the royalty shares to be sold via JKBX – with the SEC, pursuant to Regulation A under the Securities Act of 1933.
The early adopters who ‘reserve’ their ownership of royalty streams after JKBX launches in September won’t initially have to put any money down.
Instead, these reservations will be nonbinding while JKBX awaits final approval from the SEC to make its offerings available to purchase for investors.
Earlier this year, JKBX announced it had partnered with electronic market maker GTS Securities LLC.
“A handful of private equity firms, multinational corporations and major labels control the most valuable music rights in the world. JKBX’s platform will allow these entities and other significant rights holders to unlock the true value of these assets by offering them to retail investors to buy and sell in a regulated marketplace.”
Scott Cohen, speaking in February
At the time, Scott Cohen said: “A handful of private equity firms, multinational corporations and major labels control the most valuable music rights in the world.
“JKBX’s platform will allow these entities and other significant rights holders to unlock the true value of these assets by offering them to retail investors to buy and sell in a regulated marketplace.
“This innovative approach enhances current global music business revenue streams and adds a multi-billion-dollar opportunity on top. We look forward to working with GTS and revolutionizing the ownership of royalties.”Music Business Worldwide
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