JKBX, a promising music investment platform that allows songwriters and recording artists to sell their royalties to investors, opened its doors for business on Wednesday (March 6), bringing music industry veterans and high-profile investors into the nascent world of fan-powered music financing.
Founded in 2023 by Sam Handel and John Chapman of venture capital and private equity firm Dundee Partners, JKBX had been waiting for approval from the U.S. Securities and Exchange Commission.
Its numerous investors include such companies as Spotify, Live Nation, YouTube, Red Light Management and Bertelsmann Digital Music. Additional backing came from Galaxy Digital, Valor Equity Partners and Tyler and Cameron Winklevoss, sources previously told Billboard. According to a June filing with the SEC, JKBX had raised $16.1 million since January 2023.
The company is headed by Scott Cohen, who built The Orchard into an independent distribution powerhouse and was Warner Music Group’s chief innovation officer from 2019 to 2022. Sam Thacker, a former independent singer-songwriter, is the chief operating officer. Whitney-Gayle Benta, previously the global head of artist & talent relations at Spotify, is the chief music officer. Scott Shipman, a veteran of such tech companies as eBay and Dapper Labs, is the chief legal officer.
JKBX sells royalty shares only to qualified purchasers as defined in Regulation A under the Securities Act. A qualified purchaser must satisfy one of four tests: has a net worth, or joint net worth with a spouse, exceeding $1 million (excluding the value of the primary residence, furniture and automobiles); has earned income exceeding $200,000 in each of the two most recent years, or exceeding $300,00 with a spouse’s income; has a professional certification or credentials for accredited investor status; or is a family client.
Regulation A allows JKBX to bring retail investors to an asset class that has rarely been open to anyone other than institutional investors. “Now that JKBX has secured qualification from the SEC for its offerings, the game changes substantially, and we can expect retail investors to get excited about the chance to own a piece of the music they personally connect with and gain exposure to this non-correlated alternative asset class,” Joe Gawronski, president and CEO of Rosenblatt Securities and a JKBX advisor, said in a statement.
JKBX currently lists 85 projects — 69 of which involve Ryan Tedder, the songwriter and producer best known as a member of the group OneRepublic. Tedder is a songwriter or producer on tracks by Adele, Jonas Brothers and Diplo that are offered on the platform.
At least initially, JKBX isn’t working directly with Tedder and other musicians. Instead, the company’s deals are with record labels, music publishers and catalog funds that own the copyrights behind the royalties offered on the platform. Tedder sold a majority stake in his publishing catalog to KKR in 2021 for a reported $200 million.
The current share prices produce approximately 3.5% return based on the information given on JKBX’s “offerings” web page: price per share, number of shares offered and annual royalties for either the last two or three full calendar years.
For example, JKBX is selling 200,000 shares of “Counting Stars,” written by Tedder and recorded by OneRepublic, for $31.37 apiece. The site gives royalties — songwriter royalties for mechanical, synch, public performance and other income sources — for two years: $261,497.39 in 2022 and $180,839.00 in 2021. With a share price of $31.37 and average annual royalties per share of $1.11, an investment in “Counting Stars” produces an expected annual return of 3.52%.
Share prices on JKBX are currently fixed, meaning a song’s return will fluctuate based on the amount of royalties paid out, not an increase or decrease in the price. JKBX intends to launch a secondary marketplace in 2024, according to the site’s FAQ section, that will allow investors to re-sell their shares.
