The #1 Reason Why Most Music Investment Companies Fail
There have been many companies who have tried and failed in the area of music investing. These companies explored a couple different ways to create a deeper connection with fans and artists through fans owning portions of the artists songs. The problem of music creators not making enough money is a great one to try and solve. Here is the main reason most music investment companies tried and failed to solve this problem.
1. You Cannot Solve A Problem By Creating A New One
The idea of helping music creators make more money is a terrific one. The reason these companies failed is the fact that if the artist already doesn't make enough money, how can fans expect to receive a return on their investment. If there isn't enough money to go around in the first place, why would this be any different? The direction with this is simple.
How It Worked
Artist makes a song
Artist let's fans buy a portion of that songs revenue
Artist receives the cash and the fan receives the portion of the revenue
In concept this sounds like a win win all around. The flaw in this strategy is the fact that the artist isn't making enough money off of the song to begin with. The lack of return on the song therefore trickles down to the fan receiving less than what they paid for losing money in the process. This can work in some cases. The artist will have to be generating at least hundreds of thousands of plays on their individual songs and even then is it still a stretch to have the fans and artist both come out ahead.
Songs As Investments
If you are banking on this one song to become a hit in a sea of 50,000 new song uploads each day that cannot be a wise investment for your money. Songs in general have short lifespans. An investment is to be looked at through a long term lense, not a quick turnaround. A song has traction for some time, but eventually it subsides and a new one takes its place. For example look at the song Old Town Road by Lil Nas X. That song had a lifespan of about a year. It set records and created a tour and whole movement. Now it is in the past and new songs have since taken its place. The song will remain forever but the revenue from it eventually decreases just like your return would have.
The idea of helping music creators make more money is at the center of these ideas. It is the primary reason for our existence. When it comes to solving the actual problem doing things that already make money and will continue to make money is at the very least a direction worth exploring. This direction is investing the money you already have into stocks of reputable valuable companies. That will be here for your entire life and after.