JKBX, pronounced like ‘jukebox’, might be a sport changer for the music funding markets. Fairly than providing low-yield music catalogues from second-tier artists, JKBX sells revenue participation rights to royalty streams from helpful catalogues, corresponding to that housing the songs of OneRepublic frontman Ryan Tedder. By doing this, JKBX hyperlinks the billion-dollar music rights market with the idea of fragmented music rights on funding marketplaces. Solely time will inform whether or not this idea will finally achieve the long run. On this a part of the weblog sequence, we study JKBX’s enterprise mannequin and company construction in additional element.
Music Funding Marketplaces – Half 4: JKBX – the Sport Changer?*
The Basis of JKBX
Jukebox Know-how LLC was based by the music trade veteran Scott Cohen in addition to Sam Hendel and John Chapman of UK-private fairness agency Dundee Companions in 2023 headquartered in Culver Metropolis/California. In September 2023, Jukebox Know-how launched the fractionalised music royalty platform http://www.jkbx.com on the Web.[1] Scott Cohen co-founded with Richard Gottehrer the digital music distributor The Orchard in New York Metropolis in 1997, which was acquired by Sony Music Leisure in two tranches in 2012 and 2015 for a complete of US $300 million.[2] In 2019, Cohen left The Orchard to develop into Chief Innovation Officer at Warner Music Group,[3] earlier than becoming a member of Sam Hendel and John Chapman to kind Jukebox Know-how.
Dundee Companions collaborates with Chord Music Companions, owned by the PE firm Kohlberg Kravis Robert & Co. (KKR), to purchase the KMR Music Royalties II fund for US $1.1 billion[4] in addition to the music catalogue of the One Republic frontman and songwriter Ryan Tedder.[5] Dundee can also be a associate of the PE firm Francisco Companions and MUSIC, which bought the Swedish Kobalt Music Group for US $750 million.[6] Subsequently, Dundee Companions was concerned within the acquisition of three giant music catalogues.
The Construction and Functioning of JKBX
JKBX is just not the innovator of fractional music royalty marketplaces however is nonetheless a sport changer. In contrast to a lot of the music funding marketplaces that promote participation rights in artists royalty income streams, JKBX targets giant music rights house owners that need to monetize their catalogues.[7] Rightsholders can provide components of their music catalogues (publishing and grasp rights) as royalty shares on the JKBX platform. Subsequently, Jukebox Know-how based the Delaware registered firm Jukebox Hits Vol. 1 LLC on 3 April 2023, which secured US Securities and Alternate Fee (SEC) approval as a Regulation A providing[8] in March 2024.[9] The Providing Round describes Jukebox Hits Vol. 1 LLC as “(…) restricted legal responsibility firm established to facilitate and handle traders’ financial publicity to the Firm’s contractual proper to obtain a portion of the royalties, charges, and different revenue streams (“Earnings Pursuits”) associated to or derived from musical songs, compositions, sound recordings, portfolios or catalogs (“Music Belongings”).”[10] Subsequently, Jukebox Hits Vol. 1 enters into buy agreements with so-called revenue curiosity house owners, a synonym for music catalogue house owners. The music belongings are break up up into so-called Royalty Shares which are issued in sequence, associated to a selected music asset corresponding to a composition, a sound recording or a portfolio of songs. As Jukebox Hits Vol. 1 is a SEC registered firm, the music belongings are offered like shares. The patrons of the Royalty Shares are entitled to obtain a portion of the royalty income generated by the underlying licenses. Nevertheless, the Providing Round clarifies that the issued Royalty Shares “are unsecured restricted obligations”, which “don’t confer any voting rights on the holders thereof.”[11] This makes it clear that the acquisition of royalty shares doesn’t set up possession of the traders within the firm Jukebox Hits Vol. 1 nor within the underlying music belongings. Buyers in JKBX royalty shares solely purchase contractual rights to earned royalty streams. The contractual rights are bought as Royalty Shares on the web-based platform http://www.jkbx.com, which is owned by Jukebox Know-how LLC.[12] Whereas Jukebox Hits Vol 1 LLC is managed and administered by the Delaware registered firm Double Platinum Administration LLC.[13]
Determine 1: The JKBX conglomerate
Supply: After Jukebox Hits Vol. 1 LLC, “Providing Round”, March 1, 2024, p. 19.
At the moment the one catalogue proprietor that has entered a purchase order settlement with Jukebox Hits Vol. 1 LLC on 5 November 2023 is the Coda Songs LLC,[14] which is a 100 per cent affiliate of Inkling Capital LLC. The only proprietor of Inkling Capital, nevertheless, is John Chapman, who’s a co-founder of JKBX.[15] Subsequently all of the underlying publishing and grasp rights for the Royalty Shares are owned by a senior govt of JKBX. The data spotlight that Jukebox Hits Vol. 1 LLC paid US $43 million in money to Coda Songs LLC to accumulate the revenue pursuits within the music belongings.[16] The acquisition worth needs to be refunded by the sale of the Royalty Shares, that are supplied to so-called “certified purchasers”.[17]
The Financial Potential of JKBX
Determine 2: The highest 10 performing Royalty Shares by yield
| Title | Re-lease Date | Rights sort | Royalty sort | Songwriterrecording artist producer | 2023 royalty revenue | Worth per share | No. of shares | Yield |
| All people Loves Me | 2009 | Sound recording producer | Associated rights Digital | Producer Ryan Tedder | $685.16 | $16.00 | 25 | 171.29% |
| If I Lose Myself | 2013 | Sound recording producer | Associated rights Digital | Producer Ryan Tedder | $8,884.61 | $1.84 | 50,000 | 9.66% |
| Wings | 2013 | Sound recording producer | Associated rights Digital Royalty participant | Producer Ryan Tedder | $4,777.47 | $31.00 | 2,000 | 7.71% |
| Ghost | 2014 | Compo-sition Songwriter | Public perfor-mance | SongwriterRyan Tedder | $25,440.05 | $3.34 | 100,000 | 7.62% |
| Wings | 2013 | Compo-sition Songwriter | Public perfor-mance | SongwriterRyan Tedder | $17,921.20 | $2.38 | 100,000 | 7.53% |
| Counting Stars | 2013 | Sound recording producer | Associated rights Digital | Producer Ryan Tedder | $22,559.59 | $3.23 | 100,000 | 6.98% |
| Welcome to New York | 2014 | Sound recording producer | Associated rights Digital Royalty participant | Producer Ryan Tedder | $3,008.46 | $45.00 | 1,000 | 6.68% |
| Good Life | 2009 | Sound recording producer | Neighbouring Digital | Producer Ryan Tedder | $5,551.65 | $1.55 | 60,000 | 5.97% |
| All of the Proper Strikes | 2009 | Sound recording producer | Neighbouring Digital | Producer Ryan Tedder | $9,636.64 | $1.65 | 100,000 | 5.84% |
| Counting Stars | 2013 | Compo-sition Songwriter | Public perfor-mance Sync Mechanical Different | SongwriterRyan Tedder | $345,190 | $31.37 | 200,000 | 5.50% |
Supply: JKBX, “All Listings”, n.d., accessed: 2025-03-27.
Determine 3: The ten worst performing Royalty Shares by yield
| Title | Re-lease Date | Rights sort | Royalty sort | Songwriterrecording artist producer | 2023 royalty revenue | Worth per share | No. of shares | Yield |
| Diploma-tico | 2018 | Sound Recording Grasp | Gross sales Sync Digital |
Label: Third Pardee Data | $5,807.43 | $3.47 | 100,000 | 1.67% |
| Make It Sizzling | 2019 | Sound Recording Grasp | Gross sales Sync Digital |
Label: Third Pardee Data | $3,640.77 | $2.35 | 100,000 | 1.55% |
| Brighter Than The Solar | 2011 | Sound Recording Producer | Associated rights Digital Royalty participant | Producer: Ryan Tedder | $851.30 | $55.00 | 1,000 | 1.55% |
| Each Breaking Wave | 2014 | Sound Recording Grasp | Associated rights Digital Royalty participant | Producer: Ryan Tedder | $1,576.65 | $1.80 | 60,000 | 1.46% |
| Blow That Smoke | 2018 | Sound Recording Grasp | Gross sales Sync Digital |
Label: Third Pardee Data | $3,999.92 | $2.79 | 100,000 | 1.43% |
| Track For Somebody | 2014 | Sound Recording Producer | Associated rights Digital Royalty participant | Producer: Ryan Tedder | $2,284.66 | $1.66 | 100,000 | 1.38% |
| Connec-tion | 2018 | Sound Recording Producer | Associated rights Digital | Producer: Ryan Tedder | $1,215.65 | $2.02 | 50,000 | 1.20% |
| Specific Style | 2018 | Compo-sition Songwriter | Public perfor-mance | Songwriter: Ryan Tedder | $266.05 | $24.00 | 1,000 | 1.11% |
| Specific Style | 2018 | Sound Recording Producer | Associated rights Digital Royalty participant | Producer: Ryan Tedder | $0.78 | $50.00 | 3 | 0.52% |
| Burn | 2012 | Sound Recording Producer | Associated rights Digital | Producer: Ryan Tedder | $0.00 | $10.00 | 100 | 0.00% |
Supply: JKBX, “All Listings”, n.d., accessed: 2025-03-27.
The SEC Regulation A providing of Jukebox Hits Vol. 1 LLC stipulates that solely “accredited traders” can purchase Royalty Shares. These are pure individuals with an revenue of greater than US $200,000 in every of the 2 current years and so-called Excessive Web Price People (HNWIs) with a internet wealth increased than US $1 million.[18] Subsequently, solely comparatively rich traders can purchase JKBX Royalty Shares. Therefore, JKBX has the proper to evaluate and settle for but in addition reject a subscription to purchase Royalty Shares.[19] The JKBX music funding market, subsequently, solely permits restricted entry to its merchandise. The preliminary providing worth of the Royalty Shares are decided by Double Platinum Administration on an arbitrary foundation.[20] JKBX factors to the danger, that the precise worth of the funding, subsequently, could also be lower than what traders pay.[21] The Royalty Shares are offered on the www.jkbx.com platform on the Web to “certified traders” and the proceeds from the providing are used to fund the acquisition prices of the Royalty Rights and to pay overhead, worker prices, utilities and expertise prices, which incur by the administration firm.[22]
Though JKBX plans to launch a secondary market to commerce Royalty Shares, there isn’t any intention to commerce Royalty Shares on a inventory alternate. At the moment, nevertheless, no different buying and selling system is obtainable on the JKBX webpage.[23] It’s because Royalty Shares are unsecured restricted obligations of Jukebox Hits Vol. 1 LLC, whose commerce is related to a excessive danger.[24] Jukebox Hits Vol. 1 LLC has issued 97 Royalty Shares with completely different underlying composition and recording rights.
Regardless of its potential for innovation, JKBX is at the moment a gross sales platform for contractual rights to earned royalty streams and restricted to rich traders. It’s neither a buying and selling platform for music rights nor a inventory alternate for music shares. Moreover, JKBX solely has a single music catalogue, acquired from Coda Songs for round US $43 million. This funding should first be recouped by the sale of Royalty Shares. It stays to be seen whether or not additional music catalogues shall be obtainable for the sale of Royalty Shares sooner or later.
Endnotes
[1] Billboard, “Wish to Make investments In Your Favourite Track? JKBX Bets Followers Will Deliver Billions to Market”, August 25, 2023, accessed: 2025-03-25.
[2] Billboard, “Sony’s Orchard Acquisition, By the Numbers and Behind the Scenes”, March 19, 2015, accessed: 2025-03-25.
[3] Music Enterprise Worldwide, “Official: Warner hires Scott Cohen, co-founder of The Orchard, as Chief Innovation Officer, Recorded Music”, March 6, 2019, accessed: 2025-03-25.
[4] Music Enterprise Worldwide, “Confirmed: Kobalt sells catalog to new KKR enterprise, Chord, for $1.1 billion”, October 19, 2021, accessed 2025-01-15.
[5] Music Enterprise Worldwide, “KKR buys majority stake in Ryan Tedder catalog, marking funding large’s return to music rights possession“, January 11, 2021, accessed: 2024-12-11.
[6] Music Enterprise Worldwide, “Kobalt Music Group offered to US-based personal fairness agency Francisco Companions”, September 7, 2022, accessed: 2024-12-11.
[7] In September 2023, JKBX additionally launched its Creator Program for artists, who need to promote a share of their royalty income streams; see: Music Enterprise Worldwide, “JKBX, launching this week, confirms it should pay songwriters and artists direct by way of ‘Creator Program’ – even when they don’t personal their rights”, September 11, 2023, accessed: 2025-03-25.
[8] A Regulation A providing is a sort of mini Preliminary Public Providing (IPO), which permits to supply and promote securities to the general public by way of a course of that’s much like, however much less in depth than, a registered providing; see: US Securities and Alternate Fee (SEC), “Regulation A”, November 14, 2024, accessed: 2025-03-25.
[9] Music Enterprise Worldwide, “Music royalties buying and selling platform JKBX launches – with regulatory approval from the SEC”, March 6, 2024, accessed: 2025-03-25.
[10] Jukebox Hits Vol. 1 LLC, “Providing Round”, March 1, 2024, p. 1.
[11] Ibid.
[12] Ibid., p. 2.
[13] Ibid., p. 1.
[14] Ibid., p. 16.
[15] Ibid., p. 45.
[16] Ibid., p. 61.
[17] Ibid., p. 13.
[18] Ibid., p. 49.
[19] Ibid.
[20] Ibid., p. 25.
[21] Ibid., p. 34.
[22] Ibid., p. 14.
[23] Ibid., p. 2.
[24] Ibid., p. 34.
This weblog submit relies on the report IP Finance within the Music Business, which was commissioned by the World Mental Property Rights Group (WIPO).