The Luxembourg start-up ANote Music, which has developed a platform to invest and exchange music rights, is launched in France by announcing a first partnership with the publishing house EL Éditions, which manages in particular the author-songwriter rights of the singer Vianney.
The ANote Music platform allows artists and musicians in the music industry to raise funds by assigning part of their rights, transforming intellectual property rights into negotiable securities. Laura Pausini is also among the artists available on the platform.
Invest in Sacem’s rights for the next 10 years
Specifically, the platform negotiates the transfer of part of its catalog, generally around ten percent for ten years, transforms it into an instrument that represents a right to future income (for example, 10% of Sacem’s rights to this catalog a for the next 10 years) and offers an exchange where these securities can be resold.
To be able to be auctioned, the music catalog must be at least three years old and generate at least 10,000 euros in royalties per year. In France, EL Editions thus sold 5% of the rights to its catalog, for 60,000 euros, to a few hundred subscribers.
Sacem rights are generated when a work is used for public distribution or reproduction. Therefore, they are more or less variable and regular. ANote Music determines the catalog price by analyzing the rights history and offering a multiple of that historical income, so investors can get a return.
An average yield of 7.5%.
It takes between 10 and 15% of the amounts raised by the artists and 4% of the ordinary income distributed to investors. The titles are awarded through a so-called “Dutch” auction system, which consists of adjusting demand to supply using the price variable. The entire platform works on a chain of blocks.
For artists, ANote Music can, for example, “make it possible to finance a new project by raising money, or by repurchasing rights they do not have,” explains Steve Sabatier, who works in asset management and is a strategic advisor to L’Usine Digitale. the platform in France and a shareholder of the company. “It is a cash tool.”
For investors, ANote Music presents itself as “a fun savings tool protected from global financial crises” and a means to “make the music industry accessible to the general public.” Historically on the platform, the lowest offer that allowed access to a share was 6 euros. The company reports an average profitability since the beginning of its activity, in mid-2020, of 7.5% on all the values of the platform.
Blockchain, an inexhaustible source of financial creativity
What is blockchain doing in this story? It is everywhere where there is decentralized finance, and the ANote Music offering is an investment and financing product. Its co-founders, who launched the company in 2018, come from the world of finance. In a way, every rights catalog auction is a small ICO. Thanks to the blockchain, the service works with a single intermediary, the platform in this case, instead of multiple financial players. The traceability of the blockchain is there to offer the guarantees that the bank or the securities depository, in the world of traditional finance, are not there to offer on the platform. The blockchain serves as a custodian.
In addition to avoiding the multiplication of intermediaries to record property titles, the blockchain also allows the creation of these property titles from any intangible asset. The start-up also sells its technology to other companies in order to adapt it to other sectors. In Japan, Royalty Bank will use it to do the same as ANote Music, but in manga publishing.
In this case, we are talking about property titles of financial products that are not fully-fledged financial instruments, such as stocks, bonds or participations in collective investment institutions. They are not regulated as such. The shares traded on ANote Music are dematerialized debt rights on future royalties.
From there, the question arises of presenting investments on the platform as a savings product. “It’s a savings product in the sense that it regularly generates cash flow,” explains Steve Sabatier. It remains to be seen how the AMF will react if this type of product continues to multiply.
ANote Music, already present in Italy and Poland, has 8,000 clients, all of them private. The company has raised 1 million euros since its inception. Since its launch, it has already enabled the music industry to raise more than 600,000 euros and aims to reach one million euros by the end of the year. In addition to its activity as an exchange platform, it also acts as an intermediary for the sale of rights catalogs between professionals.