Frequently Asked Quostions (FAQs)

We did our best to reply to the most asked questions! However, if you cannot find what you are looking for, please contact us!

what are music rights?

For every piece of music, there are many different licenses that could be required in order to set up a single use. Among the main types we have mechanical, public performance, synchronization and print music royalties.

To make it easy to understand, here at ANote Music we like to compare this with having shares in a company. When someone owns shares of a company, they will earn money through dividends that get distributed. For the Music Industry this is not so different. Instead of ‘owning shares’, you would own Music Rights, and instead of earning money through dividends, you’d generate income through Music Royalties.

WHAT ARE MUSIC ROYALTIES?

Music Royalties are payments that Artists, Songwriters, Labels and Publishers (and, generally, whoever owns a part of a music recording) get paid for the right of use of their assets and intellectual property.

On ANote Music platform we offer shares of music rights which generate royalties over time. We focus on established catalogue, which proved a solid track record in the previous, at least, 3 to 5 years.

WHAT IS AN INITIAL ROYALTY OFFERING (IRO)?

For Catalogue Owners (Creators, Record Labels, Publishers etc.) an Initial Royalty Offering (IRO) is the process of selling Royalty rights of their catalogues to Investors.

On the ANote Music platform, during an IRO, Investors may submit bids to purchase shares of the offered catalogue (Auction phase).

At the end of an IRO, if the amount raised is matching the requirement of the seller, a primary market transaction occurs between purchasing Investors and the original Catalogue Owners. At this point, the shares of the catalogue are transferred to the Investors’ portfolio. Furthermore, if the Investors want to increase their position or simply want to resell their shares of the catalogue, this trade can be conducted on the Exchange (ANote Music’s Secondary Market)

HOW DO AUCTIONS WORK?

When dealing with orders in the Primary Market, we employ the “Dutch Auction Model”. 

For each IRO, after all the bids are submitted and the Auction-period expires, our systems gathers all standing bids and orders them by price.

The final price is set as the minimum allowing all the shares to be allocated.

In other words, the shares are assigned to bidders from the top order down, until all available shares are assigned. However, the price that each bidder pays is based on the lowest price of all the allotted bidders, or essentially the last successful bid. Therefore, even if you bid €500 for 100 shares, if the last successful bid is €450, you will only have to pay €450 for your 100 shares.

HOW DOES THE SECONDARY MARKET WORK on anote music?

While the Primary Market (Auction phase) is about exchanging funds and catalogues between the original Owners and Investors, ANote Music’s Marketplace (Music Exchange) is where Investors can trade catalogues they already own (transactions between Investors).

Any Investor may buy and sell shares of a catalogue on the specific catalogue page. 

At any moment, a new market price is determined and a transaction is recorded whenever bid and ask price match.

LENGTH OF INVESTMENT

On ANote Music we offer different kinds of investment lengths. They can range from a term of investment of 10 years, or, even they could be for the lifetime of the Music right itself.

In the first case, the shares of rights offered on ANote Music entitle the Investors to receive the economic benefit of owning a Music right: Royalties, which in practice are pure cash flows. At the end of the investment term, the shares of rights expire, and the Investor stops receiving Royalties from the Music right. By the same token, the original right Owners get back the full ownership (and Royalties) of their Music rights.

In the second case, we are offering a full ownership of a Music right which, for instance, also gives access to decision power on how to manage the Music rights and how to exploit them. The length of this investment is limited to 70 years after the death of the last author of the song included in a catalogue. After this period, the songs return to the public domain and are not protected by copyrights anymore.

VALUATION OF A CATALOGUE

In order to assess the value of a catalogue source, the stability and consistency of the earnings over the years should be considered. Clearly, music trends and habits of music consumers have an impact on how a certain right will keep generating Royalties over the years.

The popularity of the Artists and the Songs’ Writers included in the catalogue surely plays an important role, yet, it’s not the sole indicator, since a couple of Hits do not necessarily make one’s repertoire valuable. In order to have a taste of how songs are trending, it is necessary to understand the geographic reach of the songs, as well as the number of plays on streaming platforms or traditional radio channels.

WHO MANAGES the MUSIC RIGHTS you buy on anote music?

Music rights need to be actively managed and promoted. This is exactly what Record Labels and Publishers do. However, investing in Music rights via ANote Music gives access to a passive investment. Passive in what sense? The original right Owner always keeps a majority stake of the rights and continues managing them, keeping them active and performing. In addition, in the case of the 10 years investment, he will get back full ownership after the effective date of the investment term. Therefore, it is in his best interest to keep the catalogue performing well.

WHO COLLECTS THE ROYALTIES ON BEHALF OF THE OWNERS?

Royalty collection is currently done by a national Collective Management Organization (CMO) such as SIAE, SACEM, GEMA, SGAE, etc, depending on the country.

Their job is to collect money from the different content providers, on behalf of Songwriters and Publishers.

CMOs are those organizations who collect Royalties from bars, restaurants, shops, events, radio and TV channels, and, nowadays, even from online sources as well. The key concept is that every time a song is played, it is generating a tiny flow of Royalties to compensate the Songwriters and Publishers for the reproduction of their songs.

When a legitimate right Owner sets up an Initial Royalty Offer (IRO) on ANote Music, we take care of communicating the change in ownership to the CMO. In this way, we ensure that ANote Music will receive the legitimate amount of Royalties, in order to transfer them to the Investors who purchased the rights.

BLOCKCHAIN: HOW CAN IT HELP TRANSACTION BE MORE SECURE?

Trust in transactions

When you issue a regular bank transfer, let’s say, on the online platform of your bank, or directly on a payment terminal, the bank that issued your card identifies you. In such cases you also identify your bank (directly, with HTTPS that you can verify on a website, indirectly, as the only entity capable of letting you know precisely the balance of your account). 

But the real flaw comes in the fact that the bank is technically capable of generating and processing transactions without you involved. Isn’t this already happening with your account’s annual fees? As an end user selecting a bank over another, you must have some blind trust in the bank not to debit your account and then hide their actions; actually we wouldn’t be able to tell if that were to happen to us.

Any transaction requires trust between parties. It’s been a long time bank have our de facto trust, but it is much harder for smaller businesses. Blockchain allows us to create trustful transactions without the need for huge two-way audits beforehand.

A general reminder on Blockchain

So what’s Blockchain anyways? To keep it short, we can stick to the fact that it is a series of blocks, linked together, containing information every (well, most) of the players involved agree upon. The algorithm allowing to reach this consensus is out of scope here, but even if we see it as a blackbox, we might be interested in its inputs/outputs: a bunch of data, whatever it is, is submitted by an actor to be added to the chain, after review by all the peers, it is cryptographically linked to the previous end of the chain, making it unchangeable. 

At first, this technique was solely used to exchange money on the chain, recording direct transactions between actors. As the time passed, engineers found other ways to exploit this feature, nowadays known as smart contracts: smart contracts are entities on the chain, such as physical actors, to which one can send messages to alter their state. As such, they represent a distributed database that no one can alter – but everyone can read too.

Today, in Europe, one of the most prominent problems of the Blockchain remains GDPR: this new EU regulation forbids all companies to use personal data in unattended ways, and furthermore to distribute it to unadvertised partners. As such, storing any personal information on a blockchain which is not completely held within the company bearing the GDPR rights would probably not comply, forcing to use some legal tricks, or restrain the use case, as a purely private Blockchain rarely makes sense. ANote only stores data for KYC processing with a defined purpose, and stores no such data on-chain. As it explains all use cases in its Terms and Conditions, ANote can be considered GDPR compliant.

Also, Blockchain is actually still quite slow. While the consensus algorithm we referred to is strongly secure, and allows to build immutable chains, it takes time to reach this consensus, and often much more time that what a user would deem acceptable. That’s why, in private environments where trust can be assumed (which is not always the case!), Blockchains should still remain an exception. ANote uses so called lambda chains, which are public chains with a lesser consensus algorithm but whose state is backported to a stronger chain every couple of hours to get the best of both worlds.

ANote Music and the Blockchain, the love story

Anote Music does not particularly act differently from your bank to generate transactions. ANote uses a certified e-money institution regulated by the CSSF – the Financial Sector Supervisory Commission of Luxembourg – that can be instructed to create transactions. The difference lies in the fact that it may not yet be perceived as trustworthy as major banks by its end users.

To make operations auditable from day one, ANote Music chose to use a blockchain. Each user has his own anonymized smart contract, allowing him to sign electronically transactions. This smart contract activation cannot be triggered by ANote Music, as it requires some derivative of the user’s password, which ANote does not have access to – this is also the reason why, except from the fact that it is a very sound practice, ANote requires users to have a strong password. Furthermore, each listing has its own smart contract, capable to persist for eternity all transaction requests it receives.

When a user issues a transaction on ANote Music (a transaction can be a bid on the primary market or a secondary market order, or an expressed will to import or export fiat money), the platform asks for his password. That allows ANote Music to sign the request, register it in the blockchain, and execute it straight away, in order not to have the user wait. If any state of the platform has to be proven, would it be users’ balances or the holders of a song’s shares, one can easily “unfold” the blockchain to recover the desired transaction.

Obviously, the Blockchain is only immutable if we are not the only ones to operate it. That is why, every major new listing gives the right to operate a node of our blockchain, reinforcing trust for all actors of the ecosystem. 

Next time ANote Music asks you for your password again before allowing your order to go through, you’ll realize the whole chain put into place to ensure your money is securely transferred, and be actually glad to have to confirm!

HOW DO WE MANAGE MONEY?

Two kinds of assets are exchanged on ANote Music: Music rights and the funds loaded on the platform to purchase these Music rights.

We register all the transactions on the Blockchain in order to track them over time and verify the correctness of the transactions.

We rely on an established e-money institution, regulated by the CSSF – the Financial Sector Supervisory Commission of Luxembourg – for money management purposes. When a user registers and completes all the KYC procedures, we open a personal e-wallet linked to the user’s account, so that he can start operating on the platform. 

We take care of receiving the Royalties from the Collective Management Organizations on behalf of the Investors. Once we receive the Royalties, we transfer them directly to the accounts of the Investors on the ANote Music platform. From that point and on, the Investors are free to withdraw their funds from the wallet into their bank accounts or to reinvest the new liquidity into new catalogues.

HOW CAN YOU WITHDRAW FUNDS?

You are able to withdraw funds at any moment, according to liquidity constraints (we allow withdrawal of funds that are not being invested or committed in limit orders). In case you decide to withdraw all your belongings, you first need to disinvest your portfolio and remove all standing orders. The actual withdrawal simply consists of issuing a transfer of funds from your ANote Music account to your bank account.

Headquarter

9 Avenue des Hauts-Fourneaux
L-4362 Esch-sur-Alzette
Luxembourg

Representative Office

Music Innovation Hub
Via Bergognone 34 – 20144
Milano, Italy

CONTACT

Email us: info@anotemusic.com
You can use our contact form

Privacy Settings
We use cookies to enhance your experience while using our website. If you are using our Services via a browser you can restrict, block or remove cookies through your web browser settings. We also use content and scripts from third parties that may use tracking technologies. You can selectively provide your consent below to allow such third party embeds. For complete information about the cookies we use, data we collect and how we process them, please check our Privacy Policy
Youtube
Consent to display content from Youtube
Vimeo
Consent to display content from Vimeo
Google Maps
Consent to display content from Google