Frequently Asked Questions
WHO IS WHO AND WHAT IS WHAT?
Typically, artists are considered those who perform music, while songwriters (authors) create, but sometimes do not perform music themselves. In some cases the two roles match, sometimes they don't. Although you might hear a word "artist" a lot, Fanvestory is focused on songwriters / publishers, who hold the copyright of the songs and receive annual royalties.
Royalties are understood as payments from one party to another for the right to use the copyrighted song. Royalty payments are calculated as a percentage of the revenue generated by the use of the copyrighted song.
CMOs refer to collective management organizations. These organizations are formed or appointed by copyright holders to manage the rights of the copyrighted works. CMOs administer the licensing of rights, collection and distribution of royalties and enforcements of rights on the songwriters' / publishers' behalf. CMOs also include the related rights organizations that manage the rights of performers and producers of phonograms to obtain remuneration for broadcasting or communication to the public of phonograms.
HOW DOES THE SONG MAKE MONEY?
Synchronisation license is granted by the holder of a song to a licensee, allowing the licensee to synchronize ("sync") music with various visual media outputs, such as film, TV shows, advertisements, video games, websites, slide shows, trailers, etc. Therefore, sync fees are paid for the license holders for the use of music in various visual media productions. If a song is used in those media productions, the producer needs to obtain two licenses: a sync license (from the publisher or songwriter) and a master usage license (from the owner of the master recording). Sync also applies to the digital world, for example, when someone creates a YouTube or Vimeo video that uses copyrighted music in the background, they need to obtain a license (this process might be automated).
Every time a physical unit (CD, LP, etc.) is sold or manufactured, record companies or other entities manufacturing products with the song have to pay mechanical royalties, which are generated from the reproduction of songs. There are also digital download mechanical royalties (from "reproduction" and "distribution" copyrights), which come from the downloads in services like iTunes, Amazon, etc.
Every time a song is performed live, it generates royalty for the copyright holders. The royalty rate (percentage of the ticket fee) is negotiated between the CMO and the organizer of the concert. Royalties are collected and distributed to the copyright holders by the CMO.
Whenever the song is performed "in public" (radio, internet, TV, etc.), songwriters / publishers are entitled to performance royalties. These royalties are collected and distributed to the rights-holders by the CMOs.
Streaming also accounts as a "public performance" and streaming mechanical royalties come from the "interactive" services like YouTube, Spotify, Deezer, etc. "Interactive" means that users can choose songs, pause, go backwards, etc. It is similar to digital downloads, as copyright holders are paid royalties from the "reproduction" of copyright for every stream. Those royalties are collected and distributed for the rights-holders by the CMOs.
Collective management organizations (CMOs) make sure that copyright holders receive payments for the use of their songs. CMOs typically provide information about the revenue statistics to the copyright holders and CMO clients like publishers (including Fanvestory) 1-4 times a year. As soon as Fanvestory receives this information from the CMOs, we will make it available to fanvestors (people, who have purchased a piece of music on Fanvestory and have the right to share future royalty earnings of the song they supported).
Nobody can predict the exact lifetime value of a song, unless the copyright period has ended (usually lifetime of authors + 70 years). However, we can provide some estimates based on the statistics of the previous songs of the songwriters, which you will find in the "Statistics" section under each song. Additionally, please read the "Deal" section under the song to understand which sources of revenue are included in the deal.
WHAT SHOULD I KNOW WHEN BUYING A SHARE IN A SONG?
First, there is a possibility to earn long-term revenue, which typically extends to a lifetime of authors + 70 years. Second, songs' royalties are uncorrelated assets (for example, they are not influenced by the stock markets). Third, if the song turns out to be popular, it may earn a lot of revenue already in the very early stages. Fourth, you receive "dividends" (royalty payouts) typically 1-4 times a year.
Fanvestory offers a chance to share song authors future royalty earnings and fanvestors have the right to claim the royalties in the future according to the percentage of the song they purchased. For example, if you purchased 1%, you are entitled to receive 1% of the revenue generated by the commercial use of the song. For more information on the particular offers, see the "Deal" section under each song.
Yes, you can register your account in Fanvestory and become a holder of the desired percentage of the song as a legal person or as a private person.
You will earn royalty as long as you own the percentage that is mentioned under each project “Deal” section, but the copyright typically lasts a lifetime of author(s) plus 70 years. Usually Fanvestory deals last for up to 10 years. Payouts to fanvestors are done with 6 to 12 months intervals according to CMO payouts to authors.
It is important to remember that the success of songs depends on very many different factors, which are not under Fanvestory's control. Therefore, we advise you not to make any rapid purchase decisions in a hope of fast returns, which Fanvestory cannot guarantee. Although copyright royalties can provide a stable and consistent source of income for the rights-holders, there is still a relatively high risk involved in terms of predictability of potential returns.
Collective management organizations (CMOs) take care of the collection and distribution of royalty payouts. As soon as Fanvestory receives a payout from CMOs, it will transfer the money to the sublicense holders proportionally. In order to be eligible for the payout, you need to be the holder of the sublicense on the day of the payout at 12 o'clock. CMOs typically make payouts 1-4 times a year.
Right now you can’t sell/transfer your percentage of the song, but in 2018 Fanvestory plans to open secondary market, where fanvestors can buy/sell their part of music to other people.