SongVest: Do You Really Own The Song?

by Tamera H. Bennett
Posted October 14, 2008

SongVest describes itself as “music memorabilia with royalty checks.”

Add this to your collection—the music rights to your favorite song. SongVest is a music auction breakthrough that connects fans with the songwriters behind the music they love. Highest bidder at our song auctions owns a share of the rights, including a nice chunk of the song royalties that come streaming in every time it gets played—plus a one-of-a-kind gold or platinum record with handwritten lyrics.

What is SongVest and does the average “fan” really know what is going on? SongVest is “auctioning” off partial income streams to musical compositions. There is no purchase of the copyright of the song, even though there seems to be a lot of media out there making that assertion.

Songs are protected by copyright law. When a songwriter assigns the copyright of her song to a music publisher, the publisher becomes the copyright owner and the songwriter is an income participant. This is usually set forth in either a single song agreement or an exclusive songwriter agreement. In those agreements, in exchange for the copyright, the music publisher will then pay the songwriter typically 50% of all the income the music publisher collects for mechanical royalties (physical CDs and downloads), print (sheet music) and synchronization (song in a movie or commercial) and other sources of income. Public Performance royalties, earned when songs are played on the radio and at concerts (and other outlets), are divided before they reach the publisher.

When we talk about royalties for songs we usually talk about the “publisher’s share” and the “writer’s share.” When you add the two together you get 100% of the income for the song, even though the publisher owns 100% of the copyright.

If you are a fan of the The Monkees Theme Song, you could purchase, via auction, 50% of the seller’s writer’s share of future royalties for the song. Now, did you think you were bidding on 50% of the song? No, in this case the seller only has a 12.5% interest in the Writer’s Share. The actual wording on SongVest is We are selling 50% of the sellers writers share, highlighted in the above pie chart. So, that tells me the income stream is 6.25% of the Writer’s Share. The minimum bid is $50,000.00 and the auction closes on October 18.

SongVest does provide royalty income information, but you must sign a non-disclosure agreement prior to viewing any of this confidential information.

My question stands, how is a “fan” going to know how to look at past earnings and determine a reasonable purchase price for an income stream?

Also SongVest recieves a broker’s fee. This I am okay with. They also will continue to “administer” the buyer’s income stream and take a percentage for this service. I wonder if you told SongVest, I’m buying the income stream, here’s your broker’s fee, now step out of the picture, I can administer my on income stream, if there would be push back?

In the end, songwriter’s or their heirs are basically receiving an advance against future earnings that never has to be paid back. The buyer is taking the risk that they will recoup their investment and begin to make money.

I have not had much time to consider how SongVest interacts with termination rights under the 1909 and 1976 Copyright Acts. Could an heir that reclaims ownership of the copyright pursuant to termination, that was not involved in auctioning the income stream, trump the rights of the purchaser of the income stream and claim future royalties after the date of termination and cut off the buyer’s income stream? Let me ponder that more.

Good article from The Tennesseean.

About Tamera Bennett

Tamera Bennett, nicknamed by her clients as the IP quarterback, develops strategies to protect and leverage each client's intellectual property. She works closely with her clients to implement customized brand management programs. Her clients range from rock star to leadership coach and financial guru to custom motorcycle designer. Prepared with an undergraduate degree in Recording Industry Studies and a law degree from Texas Wesleyan University School of Law, Tamera represents clients throughout Texas and Tennessee in entertainment, trademark and copyright law related matters View all posts by Tamera Bennett

2 responses to “SongVest: Do You Really Own The Song?

  • Michael Kassing

    It is truly inspiring to see what diverse business models are out there. Who knew?

    Michael

  • investor

    They are definately aware that they are profiting from your your bad investment via management fees, legal transfer fees, contract and memorabilia markup.
    Your agreement can be terminated and all your revenue as well.

    Its a Bad investment.

    Your Return on Investment is less than what you make in a bank savings account without principle secured, no insurance, or legal protection.

    Here is a copy of their online agreement…

    YOU EXPRESSLY AGREE AND ACKNOWLEDGE THAT (WITH THE EXCEPTION OF MEMORABILIA OR SIMILAR ITEMS THAT MAY BE OFFERED FROM TIME TO TIME) THE AUCTIONS PROVIDED ON OR THROUGH THE SITE ARE FOR FUTURE REVENUE STREAMS THAT MAY RESULT FROM THE EXPLOITATION OF A COPYRIGHTED SONG (THE “REVENUE STREAMS”), AND THAT THE SELLER IS NOT OFFERING FOR SALE AN INTEREST IN THE UNDERLYING COPYRIGHT INTEREST TO THE WORK. UNLESS EXPRESSLY PROVIDED TO THE CONTRARY, SELLER WILL RETAIN SELLER’S COPYRIGHT INTEREST IN THE WORK, INCLUDING ALL PUBLISHING AND OTHER EXPLOITATION RIGHTS THEREIN. IN ALL EVENTS, SONGVEST SHALL HAVE NO LIABILITY FOR ANY EXPLOITATION OF THE UNDERLYING COPYRIGHT TO THE WORK TO WHICH THE REVENUE STREAMS RELATE.

    YOU EXPRESSLY ACKNOWLEDGE THAT UNITED STATES COPYRIGHT LAWS PROVIDE FOR CERTAIN TERMINATION OF TRANSFERS OF COPYRIGHT, AND THAT THESE LAWS COULD POTENTIALLY IMPACT THE REVENUE STREAMS AND/OR RIGHTS THAT ARE THE SUBJECT OF THE AUCTIONS THROUGH THIS SERVICE. ADDITIONALLY, OTHER NATIONS’ LAWS MAY PROVIDE FOR SIMILAR TERMINATIONS OF TRANSFERS. SONGVEST IS NOT LIABLE FOR THE IMPACT OF ANY SUCH LAWS UPON THE VALUE OF THE ITEMS PLACED FOR AUCTION THROUGH THIS SERVICE, AND YOU SHOULD CONSULT WITH YOUR COUNSEL REGARDING SUCH MATTERS.

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