- Copyrights protect original works.
- The payments associated with copyrights reward the people who make original works with monetary incentives — the opportunity to make money.
- There are multiple income types associated with any copyrighted work. But having a basic understanding of them should help make browsing listings easier.
The JKBX platform will give investors the opportunity to buy Royalty Shares — the right to receive income generated by copyrighted music. Simply put, that means that when the music makes money, so do you. But where is that money coming from and what does that mean for you as an investor?
This article will provide a high-level overview of music copyright, so you can:
- Understand the difference between the two distinct types of music copyrights — compositions and sound recordings
- Learn how music generates income
- Use that foundational knowledge to help you better understand Royalty Shares as a potential investment opportunity
The absolute basics
At its simplest, a copyright is a form of intellectual property meant to protect original works. It affords the copyright owner the exclusive right (and right to permit others) to reproduce, create derivative works, distribute, perform, and display the work.
These exclusive rights exist to create economic incentives for creators and those who invest in their works. Essentially, by owning the copyright to an original work, a rights holder has the opportunity to earn income when someone else uses that work.
The two copyrights you should know about
There are two distinct categories of music that can be protected by copyrights.
- Refers To: The underlying elements of a piece of music, like melody and lyrics.
- Often Called: A ‘song,’ or ‘publishing.’
- Example: Bob Dylan wrote the lyrics and melody to All Along the Watchtower. He created an original composition.
- Refers To: A particular recorded performance of a composition.
- Often Called: A ‘track’ or ‘master.’
- Example: Jimi Hendrix recorded a version of All Along the Watchtower. He created an original sound recording.
The owners of those copyrights receive royalties and other fees
Music royalties are payments made to the creators or rights holders of music copyrights for the authorized use of their work.
There could be a number of rights holders who own or control a piece of a composition or recording’s copyright — and with that, the various fees that they may receive from entities or people that use their work. Here’s a quick summary of the payments owed to the owners of compositions and sound recordings.
Royalties and fees for use of a composition
Royalties and fees for use of a sound recording
Royalty Shares entitle you to a piece of those income streams
It’s important to fully understand what you’re investing in. When you buy Royalty Shares on the JKBX platform, you’re buying the right to receive a portion of the income generated by the types of income streams detailed above, depending on what type of royalty underlies your Royalty Share.
When you explore listings on the JKBX platform, there are a few details you’ll want to familiarize yourself with. That way you can better understand what kind of copyright is associated with your investment, who owns it, and how the owner gets paid.
1. Rights Type
- What will be shown here?: Either ‘Composition’ or ‘Sound Recording.’
- Why is it useful to know?: It indicates which type of copyright the underlying income associated with the Royalty Share is generated from. Each rights type entitles the rights holder to different sources of income — and you’re considering whether to invest in that income.
2. Sub-Rights Type
- What will be shown here?: ‘Songwriter,’ ‘Artist,’ ‘Master,’ or ‘Production.’
- Why is it useful to know?: There are often many people who own a copyright, own part of it, or receive some income associated with it. This distinction provides further detail about the original owner or controller of the share of the income associated with this Royalty Share.
3. Relevant Creator or Rights Holder
- What will be shown here?: The name of a ‘Songwriter,’ ‘Artist,’ ‘Record Label,’ or Producer” ’.
- Why is it useful to know?: Sometimes, completely different songs have the same name — these details are here to help make sure there are no mix-ups.
4. Income Types
- What will be shown here?: A list of all the different types of royalties and fees underlying the Royalty Share. It tells you, more specifically than any other detail, how the composition or sound recording makes money.
- Why is it useful to know?: If you invest in this Royalty Share, these will be the types of income that are included in your Royalty Share.
Keep learning and exploring
If you’re exploring the JKBX platform for the first time, hopefully this article has answered some of your burning questions and cleared a few things up. But it’s important to keep in mind: people literally write textbooks on this subject. We invite you to continue learning about royalties, copyrights, and the other factors at play on the JKBX platform.
Note: Always consult with financial professionals before making any investment decisions.
JKBX (pronounced "Jukebox") unlocks shared value from things people love by offering consumers access to royalties as an asset class.
The short: JKBX is a platform where you can invest in Royalty Shares of hit songs.
The long: JKBX is a platform for investing in shares of the income generated from music royalties by purchasing Royalty Shares. If you’re a music superfan looking for a deeper connection with the music you love, now you can turn your playlist into a passive income stream.
For every piece of music, there are two copyrights: one for the composition and another for the recording of that composition. Music royalties are payments made to the creators and rights holders of music — the people who created or own the copyrights — for the authorized use of their work. These royalties and fees serve as compensation for the use of copyrighted music. They’re typically paid by entities such as streaming platforms, radio stations, television networks, film studios, and live performance venues.
Music royalties play a crucial role in supporting songwriters, artists, publishers, and labels by providing them with ongoing income for their creative works and resources to invest in creating new works. Investors can acquire music Royalty Shares, which entitle them to a portion of royalty income.
There are several sources of income interests generated by the use of copyrighted music. They include:
- Mechanical: These royalties are paid to songwriters, publishers, and administrators for the reproduction and distribution of their compositions. They are generated from physical and digital sales and streaming of the composition.
- Public Performance: These royalties are collected by performance rights organizations (PROs) and paid to songwriters, publishers, and administrators. They’re earned when a composition is performed publicly or broadcasted, including on radio, TV, live performances, and certain streaming platforms.
- Synchronization: These fees are earned when a composition is synchronized with visual media, such as movies, TV shows, commercials, and video games. The rights holders receive payment for the use of their music in these visual productions.
- Other: This could include income generated by print, karaoke, or social media, or other income generated by a composition that doesn’t fit clearly into any of the above categories.
- Remix: Some compositions include rights associated with related remixed versions of such composition. The rights associated with remixes generally accrue royalties from the various income interest sources described above in this list.
- Sales: These royalties are generally paid to record labels from the sale of records in all formats (physical, downloads, and streams).
- Synchronization: These fees are earned when a sound recording is synchronized with visual media, such as movies, TV shows, commercials, and video games. The rights holders receive payment for the use of their music in these visual productions.
- Neighboring Rights/Digital Performance: These are public performance royalties paid to the owner of the recording of the song performed and to the performers whose performance was recorded. They are generated by exploitations outside of the United States or when their recordings are played over digital and satellite radio in the US, such as Pandora, Sirius, and iHeartRadio when they collect similar “digital performance royalties.”
- Other: This includes income generated by social media and or other income generated by a recording that doesn’t fit clearly into any of the above categories.
- Royalty Participants: These royalties generated by the various exploitations of the sound recording are paid to producers, artists, engineers, and other key stakeholders. These royalties accrue from the various income interest sources described above in this list.
- Remix: Some recordings include rights associated with related remixed versions of such recording. The rights associated with remixes generally accrue royalties from the various income interest sources described above in this list.
Royalty Shares are the securities offered by issuers on the JKBX platform. They represent a contractual right to receive a specified portion of royalties, fees, and other income streams contained in the income interests the issuer receives that relate to royalty rights for a specific music asset or a compilation of music assets.
For the sake of clarity, by purchasing Royalty Shares you will not receive any equity interest in JKBX, any of its affiliates, or any other party, additional rights or licenses, including but not limited to copyrights, trademarks, voting rights, or commercial/personal usage rights, or any physical products. The Royalty Shares offered on the JKBX platform are not the same as shares of any company’s stock.
We are open to international investors that meet their applicable securities regulations, however JKBX is currently optimized for US-based individuals. At this time we only offer English-language customer support in US time zones, and not all product functionality may be available internationally.
Additionally, it's important to note that regulatory and legal requirements may differ between countries, so international investors should ensure compliance with the applicable laws and regulations in their respective jurisdictions.