Welcome to Fear and Greed Sunday feature Michael Thompson. Today's interview basically has it all. It's got music, it's got huge money, one hundreds of millions of dollars. Some very very astute business people. This is Sean Aylmer speaking with Stefan von Imov from ALTS dot co back in October of twenty twenty three. I hope you enjoy it.

Welcome to Fear and Greed Sunday feature Michael Thompson. Today's interview basically has it all. It's got music, it's got huge money, one hundreds of millions of dollars. Some very very astute business people. This is Sean Aylmer speaking with Stefan von Imov from ALTS dot co back in October of twenty twenty three. I hope you enjoy it.

Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. We've spoken on a couple of occasions now to Stefan von Imoff, your co founder of alternative investing community fund ALS dot co. He's taken us through a few unusual asset classes, vinyl records, domain names, even a guy to investing in art, from emerging artists to buying a tiny portion of a household name. Today it's all about investing in music. Of course, it all goes without saying that this is general information only. You should always see professional advice before making investment decisions. Stefan von Imoff, welcome back to Fearing. Great.

Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. We've spoken on a couple of occasions now to Stefan von Imoff, your co founder of alternative investing community fund ALS dot co. He's taken us through a few unusual asset classes, vinyl records, domain names, even a guy to investing in art, from emerging artists to buying a tiny portion of a household name. Today it's all about investing in music. Of course, it all goes without saying that this is general information only. You should always see professional advice before making investment decisions. Stefan von Imoff, welcome back to Fearing. Great.

Hey, thank you, it's great to be here.

Hey, thank you, it's great to be here.

Okay, firstly, how has music streaming changed the industry in the way artists are paid a fairly obvious question. I'd like your take on it.

Okay, firstly, how has music streaming changed the industry in the way artists are paid a fairly obvious question. I'd like your take on it.

So, as we know, the vast majority of music today is consumed through streaming services such as Spotify, which is the biggest, and Apple Music, and then some of the less popular platforms Google Play, band Camp and stuff like that. Now everyone knows, or I should say, a lot of people have heard that artists don't earn much per stream, and that's true. The artists really don't earn a lot on a per stream basis. It's less than one half of one penny per stream. That's what Spotify plays. However, what streaming has produced is a consistency, a remarkable consistency in the number of streams that are streamed per year. So what used to happen in the old days is that artists would come out with an album and there would be a huge spike when it was first released, and then it would kind of taper off into, you know, into nothing over the coming years. With streaming though, what we're seeing though is it's just remarkably consistent. It's stable, and that's what has gotten people, you know, to take notice that stability can be securitized and turned into an investible asset.

So, as we know, the vast majority of music today is consumed through streaming services such as Spotify, which is the biggest, and Apple Music, and then some of the less popular platforms Google Play, band Camp and stuff like that. Now everyone knows, or I should say, a lot of people have heard that artists don't earn much per stream, and that's true. The artists really don't earn a lot on a per stream basis. It's less than one half of one penny per stream. That's what Spotify plays. However, what streaming has produced is a consistency, a remarkable consistency in the number of streams that are streamed per year. So what used to happen in the old days is that artists would come out with an album and there would be a huge spike when it was first released, and then it would kind of taper off into, you know, into nothing over the coming years. With streaming though, what we're seeing though is it's just remarkably consistent. It's stable, and that's what has gotten people, you know, to take notice that stability can be securitized and turned into an investible asset.

Okay? Are all artists on board? I seem to remember people like Neil Young, for example, refusing to go on Spotify at at some point. I'm thinking Taylor Swift even might have at one point not wanted to go on Spotify. It could one hundred percent wrong there, Stefan. But are most artists on board with this?

Okay? Are all artists on board? I seem to remember people like Neil Young, for example, refusing to go on Spotify at at some point. I'm thinking Taylor Swift even might have at one point not wanted to go on Spotify. It could one hundred percent wrong there, Stefan. But are most artists on board with this?

Most artists have definitely succumbed to the almighty streaming lords. Yes, there are definitely some that don't and haven't, but it's pretty much.

Most artists have definitely succumbed to the almighty streaming lords. Yes, there are definitely some that don't and haven't, but it's pretty much.

The vast majority of artists that have. Yeah, okay, And is it the owner of the rights to the music? Is it the singer, the songwriter? Who else actually gets some sort of income from this? Okay?

The vast majority of artists that have. Yeah, okay, And is it the owner of the rights to the music? Is it the singer, the songwriter? Who else actually gets some sort of income from this? Okay?

So music rights are extremely complicated, And just want to preface with what's saying that this is a very complex world. There's all sorts of different types of rights. The biggest is what's known as a mechanical license or mechanical rights, and this is the most relevant, the most lucrative. This is any form of reproduction, whether that be CDs, vinyl records like we talked about earlier, or digital which is you know iTunes, but of course streamed through Spotify. Mechanical royalties are basically where most of the streaming money is made. Now, those royalties can be split in all sorts of different ways. Sometimes the record label gets the lion's share, sometimes the artist gets all of it. There's all sorts of different situations. But mechanical rights are kind of the name of the game here.

So music rights are extremely complicated, And just want to preface with what's saying that this is a very complex world. There's all sorts of different types of rights. The biggest is what's known as a mechanical license or mechanical rights, and this is the most relevant, the most lucrative. This is any form of reproduction, whether that be CDs, vinyl records like we talked about earlier, or digital which is you know iTunes, but of course streamed through Spotify. Mechanical royalties are basically where most of the streaming money is made. Now, those royalties can be split in all sorts of different ways. Sometimes the record label gets the lion's share, sometimes the artist gets all of it. There's all sorts of different situations. But mechanical rights are kind of the name of the game here.

Okay, Now, before we get into having vestis could get involved, we have to take a little historical listen involving David Bowie and I kind of remember these. But what Styve Bowie got to do with all.

Okay, Now, before we get into having vestis could get involved, we have to take a little historical listen involving David Bowie and I kind of remember these. But what Styve Bowie got to do with all.

David Bowie aside from being a rock god.

David Bowie aside from being a rock god.

Was Stephen I a great David Bowie I think is my old time favorite individual artist.

Was Stephen I a great David Bowie I think is my old time favorite individual artist.

Wow, that's so bold, that's awesome. God rest his soul. But he was also super innovative when it came to music as an asset class. So he was the very first artist to actually conceive of selling his catalog and basically securitizing his catalog.

Wow, that's so bold, that's awesome. God rest his soul. But he was also super innovative when it came to music as an asset class. So he was the very first artist to actually conceive of selling his catalog and basically securitizing his catalog.

And he did this.

And he did this.

He teamed up with a gentleman named Pullman, and they together they created what are known as Pullman bonds, are more appropriately known as Bowie bonds. And so this was basically a basically a fixed income product where you basically, as an investor, you would get I think it was about a twelve percent return from investing in David Bowie's catalog. And that was the first kind of example, first big example of music rights securitization, and it was it was actually before streaming that this happened too. Now there's been all sorts of activity in that space since then, but he was the first.

He teamed up with a gentleman named Pullman, and they together they created what are known as Pullman bonds, are more appropriately known as Bowie bonds. And so this was basically a basically a fixed income product where you basically, as an investor, you would get I think it was about a twelve percent return from investing in David Bowie's catalog. And that was the first kind of example, first big example of music rights securitization, and it was it was actually before streaming that this happened too. Now there's been all sorts of activity in that space since then, but he was the first.

Stay with me. Stephan will be back in a minute. My guest this morning is Stefan von Imoff, co founder of alternative investing community fund allstot Co. So I've seen some big sunes in recent years. Justin Bieber apparently sold his catalog for about two hundred million dollars, Bob Dylan about three hundred million dollars in the US, of course, I think Bruce Springsteen was about half a billion dollars. How does that work?

Stay with me. Stephan will be back in a minute. My guest this morning is Stefan von Imoff, co founder of alternative investing community fund allstot Co. So I've seen some big sunes in recent years. Justin Bieber apparently sold his catalog for about two hundred million dollars, Bob Dylan about three hundred million dollars in the US, of course, I think Bruce Springsteen was about half a billion dollars. How does that work?

So, I mean, these are huge, huge sales, and as artists get towards the end of their life, they realize like they have an opportunity to you know, cash out at.

So, I mean, these are huge, huge sales, and as artists get towards the end of their life, they realize like they have an opportunity to you know, cash out at.

You know, hold on, hold on, Bob Dylan and Bruce Springsteen. I get Justin Bieber, come on, how Eldy. He must be like Brendi's or something, isn't it.

You know, hold on, hold on, Bob Dylan and Bruce Springsteen. I get Justin Bieber, come on, how Eldy. He must be like Brendi's or something, isn't it.

So he's not towards the end of his life, but he's towards the end of his useful musical life, right right, So I think they realized. So Katie Perry just sold her catalog as well, and so I think they realized, like as they're starting to hang up the boots, you know, like it does, it makes more financial sense for them to cash out than to hang on. And so they're able to sell. And you may be asking who's buying. I mean, there's huge numbers. So there's a lot of private equity involved in this, a couple of hedge funds, but the biggest is a fund called Hypnosis, and Hypnosis was co founded by Nile Rogers from chic and so this is the biggest music rights investment fund in the world. And so they've bought hundreds upon hundreds of artists and thousands of tracks, and they kind of were the first to realize what a lucrative opportunity this can be. And they're the biggest buyer by far.

So he's not towards the end of his life, but he's towards the end of his useful musical life, right right, So I think they realized. So Katie Perry just sold her catalog as well, and so I think they realized, like as they're starting to hang up the boots, you know, like it does, it makes more financial sense for them to cash out than to hang on. And so they're able to sell. And you may be asking who's buying. I mean, there's huge numbers. So there's a lot of private equity involved in this, a couple of hedge funds, but the biggest is a fund called Hypnosis, and Hypnosis was co founded by Nile Rogers from chic and so this is the biggest music rights investment fund in the world. And so they've bought hundreds upon hundreds of artists and thousands of tracks, and they kind of were the first to realize what a lucrative opportunity this can be. And they're the biggest buyer by far.

So is that a group that someone could invest in in Hypnosis songs.

So is that a group that someone could invest in in Hypnosis songs.

Hunt, Yeah, you can invest in Hypnosis as a regular every day investor. Absolutely. I mean they've got a whole bunch of they've got Hypnosis Songs Management, they've got Hypnosis Songs Fund, so I mean there's all sorts of ways you can invest in them. But now what's happening which is really interesting, is that there's all these new platforms coming up which have taken the securitization a step further. And so these platforms are now allowing basically anybody, not just accredited investors or not just sophisticated investors, but anybody with you know, one hundred bucks to invest in songs that they like, which is a really cool and fairly recent development.

Hunt, Yeah, you can invest in Hypnosis as a regular every day investor. Absolutely. I mean they've got a whole bunch of they've got Hypnosis Songs Management, they've got Hypnosis Songs Fund, so I mean there's all sorts of ways you can invest in them. But now what's happening which is really interesting, is that there's all these new platforms coming up which have taken the securitization a step further. And so these platforms are now allowing basically anybody, not just accredited investors or not just sophisticated investors, but anybody with you know, one hundred bucks to invest in songs that they like, which is a really cool and fairly recent development.

Okay, just before we leave Hypnosis, So the idea is that they've got the rights to thousands of songs, they're confident that people will keep using Spotify or whatever and will there will be a stream of money there. So I invest into ignisis now they n the song and they'll get half a penny every time it's played, So there's your income is So that's kind of right what I'm saying there.

Okay, just before we leave Hypnosis, So the idea is that they've got the rights to thousands of songs, they're confident that people will keep using Spotify or whatever and will there will be a stream of money there. So I invest into ignisis now they n the song and they'll get half a penny every time it's played, So there's your income is So that's kind of right what I'm saying there.

That's basically right, But then you're also betting on your ability to resell that securitized asset in the future. So you're basically betting on an artist, right, You're betting that this person is not just relevant today, but they will stand the test of time. Now, that's a lot easier to do with bands that you know, like Springsteen for example, or Pink Floyd's trying to sell their cat right now. And you know, I don't want to be biased, but I believe the Pink Floyd will continue to be relevant twenty eight years from now.

That's basically right, But then you're also betting on your ability to resell that securitized asset in the future. So you're basically betting on an artist, right, You're betting that this person is not just relevant today, but they will stand the test of time. Now, that's a lot easier to do with bands that you know, like Springsteen for example, or Pink Floyd's trying to sell their cat right now. And you know, I don't want to be biased, but I believe the Pink Floyd will continue to be relevant twenty eight years from now.

Right, what about justin data?

Right, what about justin data?

Well, I don't know.

Well, I don't know.

I don't know.

I don't know.

It's a good question. If you want to make that bet, go for it, you know.

It's a good question. If you want to make that bet, go for it, you know.

Right, So tell me about the one hundred dollar idea. That the idea that I've got one hundred dollars and so this is the next step in securitization. I don't totally understand that. Pot. So what a lot of.

Right, So tell me about the one hundred dollar idea. That the idea that I've got one hundred dollars and so this is the next step in securitization. I don't totally understand that. Pot. So what a lot of.

Companies have started to do, I shouldn't say a lot. There's been a handful of companies that have started to use something called Regulation A in the US, which was a law passed about seven or eight years ago. It made it easier to securitize all sorts of different assets and let anyone invest in those assets, and so this reggae has been used to securitize everything from collectibles to real estate to all sorts of different things. Now music is kind of like a perfect fit for this because music's so emotional and personal and people really you know, they love you know, like Beyonce, but they have literally no ability until these platforms have come long, they have had literally no ability to invest in on a slice of Beyonce songs. Well now they can and all in the past couple of years, some big names have come together in the music industry to launch a number of different platforms that allow basically anyone to invest in in songs that they love. And they have some good ones on there too, which is really really cool.

Companies have started to do, I shouldn't say a lot. There's been a handful of companies that have started to use something called Regulation A in the US, which was a law passed about seven or eight years ago. It made it easier to securitize all sorts of different assets and let anyone invest in those assets, and so this reggae has been used to securitize everything from collectibles to real estate to all sorts of different things. Now music is kind of like a perfect fit for this because music's so emotional and personal and people really you know, they love you know, like Beyonce, but they have literally no ability until these platforms have come long, they have had literally no ability to invest in on a slice of Beyonce songs. Well now they can and all in the past couple of years, some big names have come together in the music industry to launch a number of different platforms that allow basically anyone to invest in in songs that they love. And they have some good ones on there too, which is really really cool.

Okay, so let's bring this back to investing, particularly around the risks here. So it's all fun and it sounds great to do it individually or through a fund, but of course having the right artists, selection and quality must be a big part of this.

Okay, so let's bring this back to investing, particularly around the risks here. So it's all fun and it sounds great to do it individually or through a fund, but of course having the right artists, selection and quality must be a big part of this.

Selections huge, and I think that was the challenge that a lot of these platforms faced, is how do you get the good stuff right? How do you get the how do you avoid getting the stuff that hypnosis didn't want? To the big funds didn't want, right and so you know, it just kind of took time. And so I think the platforms have largely solved the selection problem. Now there's some really great investable songs out there, stuff that we would all recognize. I think the bigger risk is not that any of this stuff is going to lose popular larity. That's you know, streaming isn't going anywhere. It's that an individual artists may not be as desirable in the future, or may not be as loved in the future. That's something that you know, I don't have a crystal ball. I think that's you know, there's only so much research you can do on that. Ultimately, it's kind of a belief, right we don't We don't really know what the future is going to hold, you know, thirty years from now.

Selections huge, and I think that was the challenge that a lot of these platforms faced, is how do you get the good stuff right? How do you get the how do you avoid getting the stuff that hypnosis didn't want? To the big funds didn't want, right and so you know, it just kind of took time. And so I think the platforms have largely solved the selection problem. Now there's some really great investable songs out there, stuff that we would all recognize. I think the bigger risk is not that any of this stuff is going to lose popular larity. That's you know, streaming isn't going anywhere. It's that an individual artists may not be as desirable in the future, or may not be as loved in the future. That's something that you know, I don't have a crystal ball. I think that's you know, there's only so much research you can do on that. Ultimately, it's kind of a belief, right we don't We don't really know what the future is going to hold, you know, thirty years from now.

Right, But David Bowie will always be loved stiff and you know, I think so.

Right, But David Bowie will always be loved stiff and you know, I think so.

I think so that's why you want to stick to the blue chip stuff if you can, right. So, I think personally Beyonce, you know, I think she's pretty timeless, right, So, I think you want to stick to the big names.

I think so that's why you want to stick to the blue chip stuff if you can, right. So, I think personally Beyonce, you know, I think she's pretty timeless, right, So, I think you want to stick to the big names.

Liquidity. Can you get in and out easily.

Liquidity. Can you get in and out easily.

Okay, So as of today, that's a little less easy than it could be and should be. But I know these platforms are working very hard to increase that liquidity and to basically bring market makers into the scene, which will guarantee a buyer for every seller. Now that this isn't live yet, these haven't happened yet, but I know for a fact that these these from working very hard to do exactly that, and once they do, that will give these these marketplaces, these platforms, that much needed liquidity. So you know, you can sell it basically anytime. That doesn't really exist today, but it certainly will and can in the future.

Okay, So as of today, that's a little less easy than it could be and should be. But I know these platforms are working very hard to increase that liquidity and to basically bring market makers into the scene, which will guarantee a buyer for every seller. Now that this isn't live yet, these haven't happened yet, but I know for a fact that these these from working very hard to do exactly that, and once they do, that will give these these marketplaces, these platforms, that much needed liquidity. So you know, you can sell it basically anytime. That doesn't really exist today, but it certainly will and can in the future.

What about regulation? Is there enough? Is there too much? Is it kind of is it fit for purpose regulation in this stuff?

What about regulation? Is there enough? Is there too much? Is it kind of is it fit for purpose regulation in this stuff?

So again, the regulation A the regae as it's called a reggae plus as it's known, that basically created the framework for all of this, and that's been in place now for a little under a decade, so we're well established there.

So again, the regulation A the regae as it's called a reggae plus as it's known, that basically created the framework for all of this, and that's been in place now for a little under a decade, so we're well established there.

Yeah, Hikay Steffan, before we go, we've talked previously about tequila nothing to do with music, Well maybe they go well to get a little bit Yeah, yeah, you've recently made some moves in the space is that.

Yeah, Hikay Steffan, before we go, we've talked previously about tequila nothing to do with music, Well maybe they go well to get a little bit Yeah, yeah, you've recently made some moves in the space is that.

Right, Yeah, where tequila is North America's fastest growing spirit and it has so many of the same properties as wine and whiskey, but you don't have to wait as long for the maturity. You know, you're talking about three to four years for tequila to become an aho or extra a n ahole as opposed to wine ten years whiskey it can be up to forty.

Right, Yeah, where tequila is North America's fastest growing spirit and it has so many of the same properties as wine and whiskey, but you don't have to wait as long for the maturity. You know, you're talking about three to four years for tequila to become an aho or extra a n ahole as opposed to wine ten years whiskey it can be up to forty.

Right.

Right.

So we're big fans of tequila as an alternative US and so you know, as the world continues to develop a teaste for it and as people realize how delicious it can be, not just you know, the really bad quervo stuff we all had in Uni, but you know, it can be really really nice on the high end. Again, it still has that it can be quite endurable on the high end. It took me a while to realize that, but yeah, I think this. You know, the numbers don't lie. This is a great spirit to consider investing in. And our fund has invested in a couple of barrels in Tequila, Mexico, the city of Tequila, Mexico.

So we're big fans of tequila as an alternative US and so you know, as the world continues to develop a teaste for it and as people realize how delicious it can be, not just you know, the really bad quervo stuff we all had in Uni, but you know, it can be really really nice on the high end. Again, it still has that it can be quite endurable on the high end. It took me a while to realize that, but yeah, I think this. You know, the numbers don't lie. This is a great spirit to consider investing in. And our fund has invested in a couple of barrels in Tequila, Mexico, the city of Tequila, Mexico.

Fantastic, Stephan, Thank you for talking to Fear and Greed.

Fantastic, Stephan, Thank you for talking to Fear and Greed.

Always great to be here. Thank you.

Always great to be here. Thank you.

That was Stefan von Imoff, co founder of alternative investing community fund ALTS dot Co. That's a l T S dot Co CEO. This is the Fear and Greed Business Interview. Remember this information is general in nature and you should see professional advice before making any investment decisions. Join us every morning for the full episode of Fearing Greed, Australia's best business podcast. So I'm Suan Alma. Have a great day.

That was Stefan von Imoff, co founder of alternative investing community fund ALTS dot Co. That's a l T S dot Co CEO. This is the Fear and Greed Business Interview. Remember this information is general in nature and you should see professional advice before making any investment decisions. Join us every morning for the full episode of Fearing Greed, Australia's best business podcast. So I'm Suan Alma. Have a great day.