JOBS Act Leads to Music Stock Exchange

The JOBS Act has spawned a new type of asset class—music.
By Jake Safane(2147484770)
Hedge funds are not the only ones celebrating the implementation of the JOBS Act. In addition to creating opportunities for service providers to provide marketing for hedge funds, such as with the partnership between HedgeCo and Cognito, the law has also spawned a new type of asset class—music.

With the JOBS Act lifting the ban on general solicitation of private placements, Nashville-based TweelX has launched a music stock exchange, where accredited investors can buy and sell stock in music. TweelX can market these very alternative assets to the public. In addition to trading shares of songs, investors can also profit from a quarterly distribution of royalty fees, similar to an equity dividend.

A key component of the platform is to connect music publishers, record labels and independent artists with capital, so most of the listings consist of newer and/or lesser known songs. Each song added to the TweelX exchange is divided into five shares with a minimum starting price of $500 each. The royalty split still favors the music side, with each share getting 5% of the royalty pie, meaning 75% is left for the artist or writer.

The next frontier that will emerge from the JOBS Act will be equity crowdfunding, which allows small businesses to raise capital from ordinary investors without registering with the SEC. These rules are still being finalized.