Valuing Music Royalties

How can investors estimate the value of musical assets as an alternative investment? In their January 2025 paper entitled “Pricing Music Royalty Assets”, Luis Villalobos, Yuao Peng, Ananya Mohapatra, Caroline He, Tiffany Filawo, Sasha Stoikov and Umu Cetin develop a royalty decay model to predict revenue streams for music assets. They then apply a discounted cashflow model to estimate the fair multiplier of a music asset in terms of the age of its songs. Using quarterly and annual royalty data from Crescendo Royalty and deals data from Royalty Exchange for 3000 songs at least two years old by more than 300 unique artists, they find that:

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