Letter: Will profits from music royalties strike a bum note?

On the conveyor belt of asset classes, there is a new product going around: music. Music’s lucrative power and cultural significance triggers conflicting reactions when it is referred to as an “asset”. Some individuals see it as a “sickening” land grab, while others are more welcoming. Low interest rates and the post-Covid bull market have the private equity industry thinking the latter.

In a yield-chasing world, the article by Anna Nicolaou and Antoine Gara — “Song lyrics strike a chord with private equity” (Report, October 28) — offered the insight that current low interest rates make royalties from music an attractive opportunity for investors.

Thanks to stock market optimism pushing up the value of risk assets, coupled with investors’ need for product diversification, music royalties offer an opportunity to spread risk, strengthen returns and capture new investment markets.

Certainly, we should not underestimate the public’s unwavering love for streaming music. But if investors are looking for double-digit returns, the attempt to profit from music royalties may disappoint.

The verdict of whether or not this is a sustainable asset class will be known if it stands the test of time alongside Shiba, alt-coins and the like.

Martina Castellanos
New York, NY, US