Buy at 8x, sell to fans at 20x w/ Sean Peace

Sean Peace 0:00

Our target multiple is a 20X. They buy a catalog at an 8X, and they can sell 10% or 15% at a 20X. I think that's a pretty good value. The concept with SongShares is this is the coolest piece of memorabilia you'll ever buy, because you get to say you own a piece of a song, and you actually get to earn a royalty.

Patrick Sweetman 0:26

Today, I'm chatting with Sean Peace, the president and founder of SongVest. SongVest has been trusted to provide access to shares and recordings by iconic artists including Beyoncé, Queen, TLC, Cardi B, Bad Bunny, Eminem, and Mariah Carey. Sean, welcome.

Sean Peace 0:45

Thank you. Thanks for having me, Patrick.

Patrick Sweetman 0:50

Let's kick it off by talking about who is still selling songs to fans. SongVest sells directly to fans. Unlike a lot of catalog owners that hold and maintain and don't give access to the people that actually listen to music, SongVest changes that and actually allows fans to own part of some of the most iconic songs that exist. JKBX left Reg A in twenty twenty-five. Musicow US filed to exit last month.

SongVest is still listing new songs. So my question for you is, why are you still here? What did these other companies get wrong, and how have you guys been able to continue, continue with the vision?

Sean Peace 1:27

Well, I guess the biggest thing is that I have been an entrepreneur basically my whole life. So I understand that it is... Th-there is no, there is no secret sauce, you know? There is no fast path. Um, you know, Instagram and things like that are, you catch lightning in a bottle.

And when you are creating a brand-new market, just like I did when I created Royalty Exchange, you know, it's, it's hard, and it takes a long time. You know? I mean, we're trying to create a brand-new market, of which there is none, which is allowing fans to own a piece of a royalty stream. And I think one of the things that the other people got wrong... Well, I don't want to say got wrong.

I mean, it's, it's just a different approach to the market, is they wanted to sell it as an investment, as an investment class. And I do that every day, right? I mean, it's, it's hard enough to sell music catalogs to high-net-worth individuals and get them to understand the value of a long-term, non-correlated alternative asset, right? I mean, that's a lot to try and grasp and understand. And our take, and my take immediately, was, you know, don't, don't sell this.

Even though it is an investment, don't sell it as an investment, because who wants to buy a treasury bond, right? There isn't... You know, the world today is crypto. The world today is buy low, sell high. You know?

The fun of it. Um, Polymarket. You know? I mean, take your pick. It's not, "Hey, I wanna go, you know, let me go get a 5% return on a bond." And so our take on the market is not, not treat it as an investment where someone, uh, you know, we're trying to tell someone to come in and spend $5 and get $10 back in, you know, 10 years or however long it's gonna be.

It is the concept that, oh my God, I can own a piece of a song? Irrelevant of whether it pays you a dollar or a nickel or a penny, it's just that, you know, when is the last time that you bought, you know, a piece of vinyl, um, or a concert T-shirt, or if you're a super memorabilia fan, the, you know, stage-used guitar? When is the last time any of those paid you money back? Never. I mean, when you sell it, but if you've already bought it and it's a piece of memorabilia you love, like, why would you even wanna sell that?

So I think that's our take that's a little bit different. You know? We, we are promoting this, uh, as a way to have kinda the, the coolest Pokémon card you could have, except that little piece of a song that you own actually pays you royalties. And, and it gets a little bit different if, you know, we're still trying to get artists to understand this concept and how they can engage with fans, but the game really changes once the artist is involved. Because now the artist has a direct connection with their fans.

You know? Why are you selling this piece? What does it mean to you? What can it mean to the collaboration? You know, we, we call it elevating, uh, casual and super fans to invested fan.

And what does it mean to be an invested fan? Well, if the artist is there, it can mean so many different things. But we're starting with, you know, songwriters and producers, um, where they aren't the actual artist that's singing the song. And so that's, that's our difference, right? And, and the other difference is, uh, you know, I knew this wasn't gonna be a flash in the pan, right?

I knew that it was gonna take a long time. Um, and so, you know, I looked at other companies and the amount of capital they've raised, because there was another one, too. Exceed, uh, Exceed Cap or Exceed Talent. You know, they came along and did the same thing, right? I mean, so th-that's our difference.

We know we're here for the long haul, and eventually it's gonna catch fire, and it, it really, uh, I mean, from our standpoint, it's doing exactly what we thought it was gonna do. Um, so we're gonna keep doing what we do and, you know, continue to grow the market.

Patrick Sweetman 5:29

Personally, I love that there's an accessible option to retail. This actually leads into the fewer, bigger buyers. we know that Sony closed on the former Hipgnosis catalog in July of this year, twenty twenty-six. And this September, BMG and Concord merged. So there's now fewer bigger buyers.

These buyers are now rolling up into bigger conglomerates, bigger syndicates. Where does a mid-sized catalog owner find a price nowadays with there being fewer larger buyers?

Sean Peace 5:58

Yeah. So the, you know, we do, um Not only do we do song shares, but we do catalog sales. Uh, meaning helping producers, uh, songwriters, and even artists sell their catalog in that mid-tier. And that mid-tier could be anywhere from a small sale of $50,000 to a 10, $15 million catalog. Um, there's actually a lot more mid-tier buyers that keep coming into the market.

Um, I would say some of them are sophisticated and some of them are not. Meaning, you know, it's It takes a long time to understand the value of a catalog, uh, and understand the value of what you're purchasing. Um, and then even to understand how you can maximize that value, you know? Primary Wave's the best company, without a doubt, in taking a catalog and extracting the most value they can out of that particular catalog. Um, so there's a I, I see more and more in the mid-tier.

Where it's still harder is in that sub-2 million or sub-million, um, spot, because there you have to really rely on, um, high-net-worth individuals. So you have to go to a platform like SongVest or Royalty Exchange to get the mass amount of buyers to get the value. Um, but in that mid-tier, um, we've seen a lot more success in actually getting higher and higher multiples than you would've normally gotten just, like, two, you know, three years ago. So, um, so I think there's a, there's a growing market in that mid-tier size.

Patrick Sweetman 7:28

So if I'm hearing you right, maybe the barbell ends are getting smaller. The biggest guys, there's fewer of them, and the smaller, there's not too much opportunity. But this mid is actually where the opportunity lies. Am I hearing you right?

Sean Peace 7:38

Yeah. Yeah, I think so. I mean, it again, I, I think that folks are getting higher multiples in that million to, say, 10 million range than they were before. Uh, sub-million, um, you The problem is, um, legal costs, right? Due diligence and legal costs.

So any, any true-up fund, um, it's really hard for them to transact under a million dollars, uh, just because they have a certain kind of set legal cost associated with every catalog. So it's hard for them to scale below a million. Um, but again, I think in that sweet spot, a million to 15 million, um, at least the way that we run, you know, um, our sales, meaning getting a, a catalog, analyzing it, and getting it out to those buyers. Um, the way that we do it, we've seen higher multiples than we have in the past. Yeah.

And, and at the higher end, you know, I mean, those guys are still gonna fight over, you know, 25, 20 to 50 to $100 million catalogs. I mean, even though that space is getting more narrow, um, it's actually still growing, 'cause now Sony has a bigger pot of money that they can buy where they normally weren't buyers in the marketplace. You still have people that are coming into that particular arena. Um, so you're still gonna, you know, continue to have good multiples at the high end just because people want those bigger catalogs.

Patrick Sweetman 9:04

Let's talk about those multiples. Last October, so one year ago, you wrote that publishing multiples had tightened to about 12 to 13x. Since then, Duetti released a survey that found more people saw multiples fall rather than rise. And this month, or I guess last month in September, the Fed raised rates. What number would you defend today in terms of multiples?

Sean Peace 9:27

so it's hard to defend any kind of multiple because every catalog is different. So if you look at, for example, like Shot Tower, you know, they put a great report out every year. Um, I think they were in line as well saying that, uh, you know, larger catalogs are at that 12 to 13x range, uh, again, when you're buying publishing. But every catalog's different. I mean, Duet traditionally has played in masters.

I think they're doing more now with, uh, some writers sharing publishing. Um, but they're buying You know, because they have so much money, they have to buy at scale. Uh, so they're buying catalogs at three, four, 5x, right? I mean, just because those songs are newer. Um, so date, you know, how old the catalog is, is the main driver of how much that catalog is worth.

Um, and then after that, you're gonna look at specifics on the catalog. You know, are these larger songs that are, that are flat or slowly declining? You know, um, what, what does the longevity of these songs look like? Where's the income coming from? Is it a master?

Is it a writer shares? Is it publishing? So, um, so it's really all over the place. And then again, we have the tiers. So is it in that small range, sub-million?

'Cause that's a different multiple from the 2 to 20 million, which is a different multiple from the 20 to the 100 million. Um, so there's a lot of factors that go into it, and that's the art, right? Because if you're buying at scale I mean, look at what Hipgnosis did. That's a perfect example. You would think, "Oh, well, they have, you know, hundreds of millions of dollars.

They're the adult in the room. They're valuing their catalogs correctly." Well, no, they weren't, right? Just because you have a ton of money doesn't mean that you're smart about value, valuing the catalogs. But the whole industry knew it. They were like, "Oh my God, either they know something we don't or they're substantially overpaying for their catalogs." And then the other issue is what is the value of a catalog?

I mean, what is it? No one knows. I mean, there's not, like, a comp out there, you know? You have a couple people that value catalogs and try and tell the bank how much that catalog is worth, but you even saw it. I mean, uh, you know, Hipgnosis had one valuation here, and then another company came in and said, "Well, no, I think it's really valued here." Based on what?

I mean, it's whatever that I mean, it's not 'Cause there's not a secondary market, you know? So you can't, you can't go, "Well, this is what we think it's at." You know? It, it's The, the, the catalog is whatever someone's willing to pay for it, right? Uh, and, and there is no tracking to be able to tell, "Hey, a normal Chris Brown song that's you know, six years old should sell for X multiple." Um, so, so it's, it's more of a dark art, but it can certainly get you in trouble, you know, just like, just like happened with Hipgnosis. Yeah, and, and I'll give you, and I'll give you one perfect example, right?

Larry Mestel and Primary Wave, okay?

They could pay a much higher multiple for a catalog. And you might say, "Well, they overpaid," or, or the value They, they overpaid for what the value of that catalog is. But the catalog may be sold to somebody else, um, could have one particular value, but because Larry bought it at Primary Wave, it has a totally different value, because they have this whole infrastructure to monetize that catalog. To take that catalog that was maybe making $10 million a year, let's say $1 million a year. Primary Wave buys it, that catalog is now making $1.5 million a year, because they know how to maximize the value out of it.

So they increased that multiple by 50%. But another person that buys that exact same catalog, maybe you're passive, okay? So they don't do anything to the catalog but collect royalties. So that million dollars actually went down to $900,000 in two years, right? So it's more than just what is it, what you paid for it.

It's what are you gonna do with the catalog and what kinda value is it gonna generate, you know, long term? So, so again, that's where you go, "Well, did they overpay?" You know, like, what was the real value of that multiple, whether Or of that catalog? It's like, well, you know, I mean, it's what you can do with the catalog afterwards as well. So, uh, so anyway, just, just a little sidebar.

Patrick Sweetman 13:53

And interesting about what people pay. The share in your 2026 offering circular earned $12,637 in the year to June 2025. The seller gets $252,750, which is about 20 years of those royalties. Fans are paying $318,000, so about 25 years of those royalties with SongVest's fee on top. So who's buying at that price and how long do you tell them it takes to get their money back?

Sean Peace 14:23

Even if you go out to the website right now, you know, we, we, we kinda make a play on it, you know? It's, you know, your concert T-shirt was $75, you know, your ticket was $150, you know? You know, a a cup of coffee at Starbucks is $6. Um, you know, when is the last time any of those things paid you a royalty back? Well, never, right?

Um, so that, that's, that's our concept with SongShares. The concept with SongShares is this is the coolest piece of memorabilia you'll ever buy, because you get to say you own a piece of a song, and you actually get to earn a royalty. Irrelevant of whether that royalty is, is a penny or five cents or $2 or $10, you know? It's just the concept of, you know, I mean, why does somebody buy a Pokemon card, you know? I mean Or, or, you know, a baseball card that never pays you anything back.

Well, they buy that baseball card 'cause hopefully they like that particular person, you know? They love Michael Jordan and it's a Michael Jordan card, or they love Pikachu and it's, you know, whatever. Um, they love the Ferrari, you know? I mean, um, so, so that's, that's what we're building here, you know? We're building the, the opportunity for fans to participate in something they've never been able to participate in before, um, and actually earn some, some money doing it.

Um, but it is not for, you know, for someone to come in and go, "Oh, this is a great way for me to park, you know, 10 or 15 or $20,000 of my investment." Um, is it? Yeah, actually it is. You know? I mean, you know, uh, it's, it is an alternative investment, you know? The, the returns are like buying a treasury bond.

Um, that's not what we're about, but it is a real investment, you know? I mean, and, you know, I If someone wants to come in and park that kinda money, they certainly can, but we think it's more fun, you know, to build out your music portfolio and own, own a whole bunch of songs that you like, right? Um, so, uh, so anyway.

Patrick Sweetman 16:23

Let's talk about the payouts and getting paid. I know that's not the focus, but it, it is one aspect that I'm sure fans get excited about hearing about this new opportunity. Hit the Quan, um, really popular song, really had its moment, has paid fans back about ninety-one percent of what they put in since twenty twenty-one, and later offerings have paid back less so far. There's no secondary market, which is something you mentioned earlier. I'm sure that that impacts the liquidity.

What should a buyer expect, and when can they sell?

Sean Peace 16:56

Yeah, sure. So, um, so we collect... We're, we're really a pass-through, right? So whatever royalties we collect, we take in an admin fee, and then we pay out to the buyers. Um, and we do that on a quarterly basis.

Um, one, one thing that is, is difficult, I think, for new buyers is that the assignment process can take a while, you know? I'll give you an example. Um, we sold a Sony catalog in January, January of this year. The assignment still hasn't processed, right? It's crazy.

I mean, it... Which, which is fine from Sony perspective because it's not like we're paying them to do it. It's not like... You know, this is just a hard cost to them, right? So it's, it's not, it's not any fault to them.

I mean, would we love for it to happen faster? And sometimes it does happen faster. Um, but, you know, that's a huge lag, right? So if we put a song share on the market, and we have an assignment that follows that up, you know, we try... Not we try, we pay out quarterly, but we can only pay out the royalties that have come in.

So sometimes there's a frustration on a buyer's side that, "Okay, how come, you know, the payment hasn't come in yet?" Well, it's because the assignment, you know, still hasn't been processed. So there's, so there's little quirks that I would love changed because it affects the buyers in going, "Well, I haven't been paid yet." Well, actually, you are accruing those royalties, and when the royalties come in, you know, you'll get paid those back royalties as well. Um, so that's a frustrating piece. But we do pay out quarterly, right? It's, it's, it's a lot of stuff, you know, making the sausage in the back end is, uh, is really fun and complex.

But, um, you know, our, our goal is whatever comes in that particular quarter, we pay out. And we pay out into a wallet, and then they can remove those funds whenever they want to from that wallet. Um, "Hit The Quan" was great. Actually, it was a song I owned, so I put up my own song as our first song to actually sell on the marketplace, um, which was, uh, not a good investment choice for me bec- because that song's done really well. So, um, but it's great for our fans, right?

I mean, it's... It probably is... I, I would assume it's our best performing song. Um, and then what was the second part of the question? 'Cause I...

Then there was another thing I was gonna say on top of that. It was the returns.

Patrick Sweetman 19:21

When can they sell?

Sean Peace 19:23

Oh, yeah. So really important thing. Secondary market. Um, secondary market we could turn on tomorrow. The, the problem is it's super expensive.

Um, so, you know, the, the government and the SEC, when they did the Jobs Act, they did a really good job of reducing the cost and allowing people, um, to fractionalize things, whether it's ownership in a company, et cetera. What they didn't do is follow the secondary market piece to make that just as easy and just as accessible. Um, so unfortunately, to do a secondary market, um, there's a huge regulatory hurdle that we have to, to get over, um, and then just from filings to the states and everything else. But the biggest thing is just from a, from a, um, trading perspective, for us to turn it on, it costs... I don't even know what it costs now.

I mean, it was a couple hundred dollars per offering. Um, and then you can't... You know, everyone is used to free trades, right? I mean, you go to any brokerage now, and to trade something, it's free. Well, I mean, it's not free to us, right?

It costs us every time. It costs us a lot of money to even have it listed. So there is no way for us to recoup it except to say, "Okay, you're gonna have to pay $2 or $3 a trade." Um, because we don't have margins in there that we can eat. Like, it... Like, we have to charge something.

Um, and then that comes down to, well, how many trades do you think you're gonna have? Well, people are buying this for memorabilia. They're not buying it to buy low and sell high. So across the board, secondary markets for Reg A+ or in the environment we're in is very light. Like, people, you know, aren't trading Wefunder shares and companies, um, or even, like, Rally Road or Masterworks, right?

So secondary market as a whole is very light. Um, so if the regulatory environment were to change and we could do it more effectively, then we would. If there was a huge outcry from our users to say, "Hey, we, you know, we really wanna trade this," then we would seriously look at it or maybe turn it on for, you know, certain offerings. Um, but right now, it just doesn't make economic sense. It's not, it's not a...

You know, if I could, I would turn it on. I think it would be great, but, uh, we just can't afford to at this point.

Patrick Sweetman 21:39

Sounds like music markets have a lot more inefficiencies compared to equities markets. Do you think that these market inefficiencies are gonna change over time?

Sean Peace 21:46

I mean, I, I would hope that, um, there's some smarter people who want, you know, easier liquidity in the secondary market that are pushing the SEC to make these changes, right? Um, because I think it will take some regulatory easing, um, to allow the secondary market to flow more. Um, and that's irrelevant of music, right? Um, you know, uh, so, so my hope is that as costs come down, that, that we'll be able to implement something like secondary markets. Um, I would think at some point it will, you know, just because things continue to change for the better, not necessarily for the worse.

Um, and you know, I-- if I were to wave a magic wand and go, "Where are we in five years from now?" You know, um, in five years from now, I could see that, okay, we, we grow outside of where we are today, and look at some real interesting kind of Robin Hood-ish buy low, sell high engagement, where once artists start to come to the platform, you know, maybe you hook up with, you know, another partner that is heavily engaged with new and upcoming bands, right? Where you could, you know, buy some royalties in a newer band, you know. And then there it's more of a, you know, a Robin Hood speculative play where you buy low, sell high, you know. Um, but anyway, even doing that though is, is complex on the back end because again, you, you have to make sure you nail down those rights, you know, who has those master rights ownerships, what platform is it on, you know what I mean? There's a lot of stuff that would have to happen.

But, um, where I would see secondary trading being kind of exciting would be, you know, newer artists. Um, but we're still years away from, you know... We, we need to get reg- you know, artists just on the platform now, much less, you know, up-and-coming artists.

Patrick Sweetman 23:41

So getting more efficient markets is still a ways out. Something that's not a ways out is AI fraud and the royalty pools. A Munich court ruled in July that Suno needed licenses to train on GEMA songs, and AI is now over half of Deezer's daily uploads. When AI companies pay to train on a song, does a song shareholder see any of that money or only the one royalty that they initially bought?

Sean Peace 24:06

Uh, so it depends on what we purchased, right? Excuse me. Meaning, what, what do we own of that particular song that we are selling the that we're selling the royalty stream to? Um, so yes, if that, you know, if it's a piece of a songwriter share, um, or a piece of that publishing, then, you know, and that gets paid out, then yes, we would get paid out that. So it just depends on the right.

Like, our rights are not, like, cordoned off. We have a right to a particular royalty stream, whether it's a writer share, a piece of the master, a piece of the producer share. So whatever, if, if that trickles down into whatever piece of ownership we have, then yes, our, our fans are, are getting the benefit from that. Um, you know, AI is certainly an, an, an interesting animal. Um, I come from the analytics world, so I know all about building models.

Um, and to build a model, you know, you have to have source data. So, you know, the, the AI can't create a song from nothing. It has to, it has to use some kind of songs as the base. Um, so, you know, I think that, uh, music owners are going to get more forceful about, um, AI and what's driving those model. Or, no, sorry, AI and whether their content is driving those models to then create those songs.

Um, but I don't think the payouts are gonna be big because you're gonna say, "This AI song sampled, you know, 250 other songs." I mean, the payout already is so small for a song to stream. I mean, now you're gonna get, like, poi- you know, everyone's gonna have to adjust this, like, Y2K all over again. Everyone's gonna have to adjust the you know, the decimal place 20 times over so that you get your, you know, 1/250th of a, you know, fraction of that song. So who benefits from that? You know, Sony does, Universal does.

You know, people that are gonna go, "Hey, this is great. I'll give you my whole catalog," and, you know, they'll make another $100 million on it. But the actual owners are gonna go, "Wow. I mean, I didn't see a bump in my royalties," and they probably won't, right? 'Cause it's so insignificant.

Patrick Sweetman 26:28

If I'm hearing you right, The real people that are gonna be interested in talking and negotiating on these AI training deals are gonna be the bigger owners who are gonna be getting more of the lion's share.

Sean Peace 26:38

Yep. Yep.

Patrick Sweetman 26:39

And then the other part of that question, how do you check a song streams are real before you list it? If an AI s-song is out there and getting a ton of streams, but they're being run by a bot farm, in your due diligence, are you-- how are you checking for fraud or how are you validating the streams? Or do streams not even come in as relevant when you're thinking about listing a song on SongVest?

Sean Peace 27:02

Yeah, certainly they are relevant, but at the end of the day, we look at the royalties, right? So we look at the actual income coming in, um, and that's what we base our, you know, our multiples on. Um, almost all of our songs, as you see on the site, are all hit songs. So it's not like we have to go, "Is Rain On Me really still streaming well?" Yeah, of course it is. Um, so, so most of the songs that we list, um, are songs that, um, you know, again, are, are with, you know, major artists.

Uh, or even if they're a mid-tier artist, it's real easy to, um, to go to, for example, like Chartmetric. Um, that's the, the solution that we use. Uh, and I can easily go out there and look at, you know, Spotify streaming. It has, you know, way too much information that I can consume. Um, but there's like a million data points I can look at on any Chartmetric page for the artist and the song and go, "Yes, this all looks good." Uh, and then it's easy, real easy for us to just do a chain of title and just make sure that, "Hey, this songwriter has...

actually is listed at BMI, and it does have ownership. You know, they have ownership of this particular X percent of the writer's share, or the producer, you know, does have that Sony contract, so they are getting a split from that particular song." Um, so all of those things are things that we've been doing since, you know, or I've been doing since 2008. Um, so it's real easy for us to make sure that the, the, you might say, providence is there, that, that they actually own what they say they own.

Patrick Sweetman 28:38

Let's wrap up with a couple quick-fire questions. I've got four questions here. Let's see if we can keep this last section under five minutes, maybe a minute per question. What's the song you'd most like to list on SongVest?

Sean Peace 28:49

Well, actually, it's already there. I mean, I think Under Pressure is probably one of, for me in our generation, just such an iconic song. So being able to list that, uh, is just incredible. Um, and then Go Crazy with Chris Brown is just a fan favorite of mine, so the, the fact that we were able to list that as well... In fact, I, I participated in, in acquiring that particular song, because I was like, "I want this on the platform." So I would say those are our two...

Uh, and then Rain On Me, of course, was just a, a favorite song of mine as well. I mean, Lady Gaga, Ariana Grande, I mean, I think that's, like, super cool as well.

Patrick Sweetman 29:27

What's one thing a catalog owner gets wrong when selling to fans?

Sean Peace 29:31

I don't think they get anything wrong per se. I mean, I think they should do it more. I mean, what they get wrong is they should be doing more, right? I mean, anyone that has a large catalog, and we have some very forward-thinking people on the platform today, I think every, every catalog owner, as long as it fits within their model, uh, should look at monetizing a piece of that with fans. Because, you know, our, our target multiple is a 20X.

They buy a catalog at an 8X, and they can sell 10% or 15% at a 20X. I think that's a pretty good value.

Patrick Sweetman 30:03

What's the first song you'd buy for yourself? You mentioned that you owned "Hit The Quan" personally before you brought it into SongVest.

Sean Peace 30:09

well, those three songs that we just talked about. I don't own every song on the platform, but I have purchased song shares personally.

Patrick Sweetman 30:15

Last question, where can people find you?

Sean Peace 30:17

Uh, you can find us at songvest.com. And, uh, and yeah, I mean, we're all over the place. At least I think we are.

Patrick Sweetman 30:23

Thank you, Sean.

Sean Peace 30:25

Thank you.