By now, everyone in the music industry — and most people who pay attention to financial markets — are familiar with the growth of music catalog sales by iconic artists.

Eight and nine-figure deals for the music rights of Justin Bieber, Bob Dylan, Bruce Springsteen, and countless other iconic artists have grabbed recent headlines. At the same time, competition for music rights from institutional investors has increased, with billions of dollars of funds entering the market every quarter.

There are several reasons why finance markets are so interested in music IP right now:

• Music is a growing sector with a very rosy outlook. In the streaming era, this is a data-rich, evergreen asset class and recorded music revenues are forecast to nearly double in the next decade.
• Music is historically recession resistant and uncorrelated with stock market downturns — and judging by the robustness of paid streaming subscriptions this year, this characteristic is holding true to form.
• Finally, music prices have room to grow. Subscription pricing has stayed the same for about a decade, but in a world where the cost of everything else seems to be going up, a price hike for streaming subscriptions seems likely. This only increases the total pool of dollars available to musicians and rights holders.

Despite all this, there is something profoundly underwhelming about this music finance story. Sure, it’s interesting to read about music icons cashing out their catalog rights, but peel back the thin veneer of fame, and a fairly boring investment story is left. Mature catalogs generate stable, predictable, and recurring revenue streams, that aren’t much different economically than an investment in an electric utility or a life insurance company, with similar return characteristics that are modest, at best.

More to the point, the impact of these sales on actual musicians is muted. First, catalog sales are centered around a very small handful of iconic artists, who, with few exceptions (e.g., Taylor Swift, Metro Boomin, Justin Bieber), are typically past their prime artistic years. Most musicians, even those who can make a good living from writing, recording, and performing their music, are shut out of this big money game.

Second, these financing events don’t amount to real “investing” at all. Real investments create or produce something new or revitalize an asset so that it regains its productive use. Catalog sales aren’t considered real investments by professional economists (i.e., people who think clearly about what drives our economy), because they are just trades between multi-billion-dollar financial institutions and already wealthy counterparties. Just like a stock trade or a speculative house flip, nothing new is created when a catalog is sold, even if one of the parties ends up profiting greatly in the transaction. No new music is created or promoted in the process. These transactions don’t support artists in the most creative stages of their careers, propel an undiscovered artist to stardom or enable an artist with real traction to promote a new EP and grow their fanbase. Real music investment does this — catalog sales don’t.

Don’t get me wrong, there’s no shame in an unsexy asset purchase. Many of us benefit from a more stable retirement fund because enormous financial institutions are participating in the catalog buyout market, and there’s nothing wrong with an iconic artist cashing in at the end of their career.

But at beatBread, we think something is missing in this story. Music investing (not just IP buying) can be so much more.

• It can generate more financial upside for investors, akin to high growth sectors of the economy, rather than just being a stable, uncorrelated income stream. Music investing already checks a milquetoast box within a well-balanced portfolio, but it can do so much more than that. In any sector of the economy, growth-stage investing generates higher risk-adjusted returns than purchasing an already mature asset beyond its growth phase. This kind of growth stage investing in music does exist, but until now, most investors have been shut out by major labels and well-connected insiders.
• It will provide more opportunities for working musicians to create and promote their art. More access to capital, on better terms, creates more opportunity for more musicians.
• It will create real pressure for positive change in the music industry, and support work that promises to make the music industry more dynamic, diverse, and artist-friendly.

That’s the type of music investing we’re interested in at beatBread and that’s why we launched our third brand, sliceNote, as an extension of our mission to empower artists and enable independence.

We’ve already expanded funding options for independent artists and labels with our first brand, beatBread, which enables artists to finance their careers and maintain control of their music. We followed that with chordCash, our white label platform that enables independent labels, distributors, and artist service companies to bundle advances with their own services, within their own brand and digital environments.

sliceNote is an investor-facing platform that plugs into the considerable deal flow we generate via beatBread and our many white-label partners. Because sliceNote deals are sourced within this ecosystem, the majority of investment opportunities on the platform are for working artists, big and small, and many enable investors to fund not just catalog, but new music projects too.

Opening-up investment in working musicians not only benefits artists, but this new “asset class within an asset class” is fundamentally more exciting and attractive to music investors.

So how does sliceNote work, exactly?

sliceNote is a fractional investing platform in music rights (both existing music and unreleased music) aimed primarily at working artists. We leverage the AI and data-driven investing approach of beatBread as a foundation, but add new dynamics to bring in more subjective elements into decision-making and reward skilled service providers in the process.

sliceNote leverages data science and AI with a level of depth, detail, and precision that doesn’t exist anywhere else

beatBread has honed its investing skills with nearly one thousand investments since its inception, with a data science approach built on multiple years of data from hundreds of thousands of artists and tens of millions of songs. Our track record includes:

· Finely calibrated risk: Zero monthly cohort losses in more than 18 months and more than 90% of all deals making money for investors.

· Highly accurate predictions: Our deals have generated overall income that is within 3% of our projections generated by our book of business as of March 2023 (and we don’t just fund existing music; we make bets on unreleased music too.)

sliceNote is built on this foundation of data science. Investors can access our data and prediction tools to make their own decisions. We don’t just throw up an arbitrary prediction generated on a spreadsheet with a few simple assumptions. sliceNote investors can view streaming, social, and revenue history, how those metrics vary over time, and detailed segmentation by track, platform, and region. Investors in the platform have detailed probabilistic projections of future release predictions in high, medium, and low-performance scenarios, along with detailed financial results that would occur within the range of potential outcomes.

The benefits for investors with this approach are self-explanatory, but artists benefit too. By bringing a large number of knowledgeable investors to the table, the market for music investment grows into a more robust and sustainable system than one that relies on the whims of the moment, or the valuations set by well-placed insiders with arbitrary views on how much any given artist deserves.

sliceNote is for serious investors, not fans or crypto utopians

Right now, only music companies, financial institutions, and high-net-worth investors can participate on the sliceNote platform. Over time, we will open the platform to a broader class of investors, but our focus will always be on data-informed investing, not fan hype or the greater-fool dynamics that dominate the crypto markets.

This data-informed approach benefits artists by providing a broad pool of capital without cheapening the artist-fan relationship. Many other artist funding platforms confuse fandom with investment, and ask artists to market their next project to their biggest fans rather than serious investors. This turns their next release into a get rich quick scheme rather than an authentic artistic expression. This Frankenstein approach to investing and fan engagement has never worked, through literally hundreds of attempts.

sliceNote pairs financial investors with music insiders in ways that benefit both

On sliceNote, multiple investors can invest in fractions of as little as 1% of any given deal and can join music companies and insiders in a consortium of any given artist or independent label. This enables skilled and ethical music executives who support artists to participate in more projects and compete based on their skill at promotion, production, and artist development, rather than on the size of their checkbook.

If you are a music company skilled at developing and promoting talent, we can provide you with the financial firepower to compete with the big labels. If you are a financial institution or high net-worth investor, we encourage you to sign up and check it out. There is more financial upside in growth investing than in late-stage purchases of mature assets.

If you are an artist or independent label, we encourage you to seek funding at beatBread or one of the white label partners who leverage the chordCash platform — you will always get a transparent, flexible offer, with terms you can customize to meet your needs, and with the flexibility to choose the partners who are right for you. If you have the right characteristics, you may be able to access the sliceNote Investor Network for even more leverage in your career.

And for the rest of you, sit tight. There is more coming this year… both inside of sliceNote and within the broader beatBread ecosystem.

To learn more about the “why” behind sliceNote, keep reading part 2 here.

By Peter Sinclair, CEO & Co-Founder at beatBread

What is beatBread?

beatBread is a music funding platform with a mission to empower artists so that they can own their art and control their careers. We give more independent and unsigned artists access to funding and more choice to select the promotion, marketing, and production partners that best fit their unique needs.

Founded in 2020, beatBread brings together a team with deep experience in music, finance, artificial intelligence and machine learning to create new opportunities for artists and their managers. beatBread provides financial advances that are repaid through a limited share of revenues from streaming and airplay, over a period of the artist’s choosing.