Why digital music revenue?

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*Past performance is not indicative of future results

As stated by Goldman Sachs, the music industry is broken down into its main components: Recorded Music, Publishing, and Live Music. While publishing refers to the revenue generated from the use of the musical composition of the songwriter, recorded music is the revenue generated from the use of a song’s master recording of the recording artist. The Recorded Music industry includes the following revenue sources, as shown by IFPI above: Streaming, Physical, Performance Rights, Digital Downloads, and Synchronization. AmplifyX offerings generally focus on royalty revenues generated by these digital segments: streaming, both interactive and non- interactive, and digital download revenue.

 

According to the IFPI, streaming has grown from $1 billion (2012) to $11.4 billion (2019) per year in global recorded music revenue. Streaming revenues refers to money generated by digital music platforms such as Spotify, Apple Music, Pandora, Tidal, etc. Streaming has two different components: (1) interactive streaming or on-demand streaming; and (2) non-interactive streaming and satellite radio.

 

Interactive or On Demand represents a situation where the listener or subscriber is able to select any song in the digital platform’s database and listen to the song whenever he or she wants to, with the ability to fast forward, rewind, etc. These are known as premium services such as Apple Music, Spotify Premium, etc.

 

Non-interactive streaming refers to ad-supported music services such as free Spotify, free Pandora and/or satellite radio. In this form, the listener is not able to select the precise music, just the genre. This is what it used to be like to listen to the radio. You never knew when they were going to play the song you wanted to hear, and you would have to listen to advertisements while you were waiting.

 

Most artists on AmplifyX are expected to, particularly in the beginning, raise money by selling a portion of their potential future digital streaming and digital downloads revenue from specific music that is assigned to the respective offering. Please refer to specific offerings for their respective deal terms, as important details regarding the respective risks of investing, including the potential for loss and the uncertainty of payments, are included within the offerings.

How do royalties work?

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*For illustrative purposes only. The potential for the generation of royalties is variable and uncertain.

1. Artist uploads music and other relevant information to their Digital Distributor.

2. Digital Distributor then distributes the music to the Digital Service Providers (DSPs). These are the digital streaming and sales platforms available to consumers.

3. Artist’s music is then available to be streamed or purchased on the DSPs, resulting in potential streaming and digital download revenue generation *

4. DSP’s periodically distribute any earned royalty revenue to the Digital Distributor. The more a song is streamed or sold, the more potential revenue may be generated.

5. Artist’s Digital Distributor collects the digital music royalties and allows the artist to distribute directly to their bank account. **

As the generation of revenue is variable and uncertain, there that no guarantees that revenue could be generated for a given piece of music.

 

** For information on how investors potentially get paid, please see individual issuer offering materials, which also includes details on the respective offering terms and risks of loss.

How much do streaming platforms pay per stream?

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January 2020 Source: Ditto Music

Payouts per stream vary by service and typically vary from period to period. Above are average payouts per stream for a few of the most popular services in market according to Ditto Music