In our efforts to make available as much music business information as possible for Alabama music artists, Alabama Music Office.com has asked music business professionals from all over the world to share their knowledge and experiences.
Last July, songwriter Priscilla Renea, who has co-written hits for Mariah Carey, Fifth Harmony, Madonna and Pitbull -- including his 2013 No. 1 Hot 100 hit "Timber" -- found herself in a tough spot. Recently married, in the midst of remodeling her home and with the constant pressures that come with needing to come up with another hit to keep money coming in, Renea felt trapped behind the scenes, unable to stake her claim as a recording artist in her own right.
"As a songwriter, people in other areas -- A&Rs, managers, executives -- want to keep you at a certain [level] because they need you to keep writing songs for people," said Renea. "They don't want you to try and go and be successful as an artist, because then you don't have time to write songs for their people. It's just constantly running around, making everyone happy, meet the needs of everyone except for yourself -- they feel like they're just a disposable resource, that if they don't cooperate the industry is just gonna move on to the next hot writer."
Around the same time, Renea's mother was contacted by Sound Royalties, a company started by investor Alex Heiche in 2014 which specializes in providing advances on future royalties for songwriters and musicians who often resort to selling parts of their publishing or songwriting rights to earn short-term cash in exchange for long-term profits, thus surrendering financial control of their creative work."We provide advances that aren't based on 100 percent recoupment, so that enables an artist or a songwriter to keep money flowing in, which means they have a higher percentage chance of success rather than being set up for failure and needing to sell," Heiche says. "Secondly, we don't buy copyrights. We only use their music as collateral, because it's non-credit-based, but we don't buy and we don't own."
Now, Sound Royalties is doubling down on their strategy, pledging to pour $100 million in advances into the music industry over the next 24 months, a figure Heiche feels is reasonable after the company self-funded a $10 million pilot program last year helping artists such as Renea navigate uncertain financials while being able to keep their copyrights. In a music industry that is only now recovering monetarily from a 15-year revenue decline, Sound Royalties is one of several companies providing different options for songwriters and artists who have seen lower advances from traditional labels and publishers over the past several years.
Essentially, Sound Royalties works by calculating future royalty earnings for songwriters and fronting a percentage, gradually earning back its investment over an extended years-long period, allowing artists to take a chunk of future earnings right away and continue to earn during the set agreed-upon period. Where banks and other lenders may take a hard line on bad credit or high interest rates, Heiche claims Sound Royalties is artist-friendly, allowing songwriters flexibility in their needs. Generally, he says, artists fall into three tiers: the largest, between $10,000 and $100,000; a smaller number of artists in the $100,000 - $500,000 range; and a smallest pool in the seven figure realm.
"[The goal is] to get where any songwriter or artist knows that they have options available to them without having to sell their music or their rights," Heiche says. "It happens more than you know; either they have no clue they have options available to them and they're struggling, or they know that they can sell."
While there are some downsides to selling copyrights and publishing royalties, that particular option is not always the end of the world for songwriters; selling a portion of royalties can diversify an artist's income, for example, while royalty auction companies such as Royalty Exchange can lead to large windfalls. Likewise, investors dealing in royalty advances are under fewer regulations than traditional banks with less oversight, opening up the possibility of inflated interest rates and other shady practices. Renea, however, hasn't seen Sound Royalties in that light: "Sometimes you feel like people are leaving something out, or a dot isn't connecting -- it wasn't like that with [Sound Royalties].
"It's important for people to understand that this is not about somebody giving you a check so you can go buy a car or whatever," she says. "This is about giving you the room to breathe so that you can create the scenario that you want to operate in. If I'm experiencing these struggles at the level of songs that I'm putting out, how much worse is it for somebody else?"