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Royalty Flow Rides Towards Impressive IPO On Eminem’s Coattails

By Alex NewmanStock MarketsNov 28, 2017 09:13PM ET
www.investing.com/analysis/royalty-flow-rides-towards-impressive-ipo-on-eminems-coattails-200268920
Royalty Flow Rides Towards Impressive IPO On Eminem’s Coattails
By Alex Newman   |  Nov 28, 2017 09:13PM ET
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Royalty Flow, a music-centric startup, hit the markets on Monday with an impressive IPO that aimed to ride the hype surrounding rap-sensation Eminem. Royalty Flows Inc. (NASDAQ: RLTY) intended to raise some $11 million with its IPO, with which it hopes to capture more soon-to-be-hot media hits that could generate financial returns for years to come. If the company plays its cards right in the coming years, backing the right musical horses in a race towards the top of the charts, it could end up reaping investors serious dividends for a long time to come.

Pairing up with Eminem

Royalty Flow hasn’t masked its musical ambitions; the company’s made it clear that it intends to leverage the financial capital generated from its mini-IPO to purchase the intellectual property rights of songs offered by some of today’s hottest musicians, chief amongst them the rapper-sensation Eminem. The startup has already clarified that it’s hoping to partner up with the Bass Brothers production team, purchasing some IP to pick up some of its hits that are dominating today’s leading music catalogues.
Royalty Flow’s ambitious plan includes offering investors a slice of Eminem’s royalties, as it seeks to cash in on the wildly successful The Marshall Mathers LP and The Eminem Show. The Bass Brothers earned some $5.1 million from tracks on these albums last year, giving investors a ball-park figure as to what they should expect from Royalty Flow’s buying into Eminem’s music.
Eminem alone consistently brings in some 18 million listeners a month on Spotify, a figure which should alleviate concerns that over-reliance on one artist could spell disaster. With the work of such massive industry giants in its portfolio, Royalty Flow could soon come to reap the financial rewards of a music industry that is increasingly finding itself focused on online music streaming platforms.
Eminem isn’t the only artist Royalty Flow is interest in, however; like any good company, it will need to diversity its assets, acquiring a broad range of vocals and music from all genres if it intends to remain profitable in the long-term. Royalty Flow is thus perfect for investors with an ear for music, as those financial-backers familiar with the various artist the company buys into will be the most well-informed as to whether it will succeed.
Given that Royalty Flow Inc.’s so-called mini-IPO is using Regulation A+ of the JOBS ACT, it will have to cap the total it’s raising at $50 million, which shouldn’t be a problem given the company was originally aiming for $11 million. The company was offering packages of 300 shares for $2,250, or $7.50 a share, to raise the money needed for its future expansion into the scene of musical intellectual property.

A healthy industry and a bold plan

The music copyright industry is enjoying something of a grow period currently, meaning investors cautious to throw their full-weight behind companies like Royalty Flow have little reason to expect things will turn south anytime soon. Nonetheless, it doesn’t command as much respect as other property development industries, and investors buying into Royalty Flow’s artist-centric approach towards market success shouldn’t expect overnight millions, but instead slow, steady returns on their investments as dedicated listeners return to their favorite songs over and over again.
Royalty Flow’s reliance on artist could give some investors cold feet, however, given the fickle nature of Hollywood and pop culture in general. Eminem’s ongoing spat with President Trump, for instance, grabs many headlines and could turn sour the stomachs of investors looking for quiet investments that don’t grab too much attention and potentially endanger themselves with PR firestorms.
Few should expect outspoken pop culture icons like Eminem to remain silent, however; indeed, the fiery personalities of the artist who produce the content Royalty Flow aims to capitalize on could very-well be centric to its business model. Many investors with an eye on the entertainment industry may be wise enough to realize that, for companies like Royalty Flow with holdings in major pop culture figures, no publicity is bad publicity.
With music industry revenues expected to increase to some $41 billion by 2030, investors looking for long-term, entertainment-focused investments shouldn’t look much further than Royalty Flow. The way consumers everywhere listen to their favorite artist is rapidly changing, and companies like Royalty Flow which exploit the digital-pivot to streaming services stand to benefit for years to come.

Royalty Flow Rides Towards Impressive IPO On Eminem’s Coattails
 
Royalty Flow Rides Towards Impressive IPO On Eminem’s Coattails

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