Royalty Income

Dominic Thomas
Dec 2023 • 1 min read

Royalty Income

For those of you who are business minded or ‘entrepreneurial’ (perhaps the most overused business word), the ‘rules’ around royalty income may be changing.

In recent decades we have all seen, particularly in the arts, how doing your work once and then getting paid repeatedly for it is the most honest definition of a ‘passive income’.

This is most evident in the music and film sector where stars of the past continue to earn income from repeats, resales, commissions and so on of a performance long ago. In fact I think it was George Lucas and his Star Wars franchise that really brought this to most people’s attention.

Imagine, you worked hard, made an album or wrote a book and forty years later you are still collecting money for your labour. Some of our clients are in this happy position.

So the twist is that this appears to be changing, well for some anyway. Various financially successful artists have been selling their back catalogue for a single, substantial lump sum, forfeiting the future royalties.

I wonder what this suggests? Perhaps that they would prefer to have the lump sum to spend, invest or gift rather than a lifetime of income. Perhaps they are concerned about the ability and resources to prevent plagiarism in the future or to restrict the use of their materials in other ways. Perhaps they are concerned that AI will actually make them irrelevant. I don’t know why, but it’s certainly an unexpected change to the basic business model in some sectors.

In September we learned that pop princess Katy Perry has agreed a deal to sell her back catalogue for around $225m. Her actor husband Orlando Bloom played Will Turner in Pirates of the Caribbean, so no need for bootleg albums for Katy (or perhaps bootstrap albums, with such a load of pieces of eight).

Katy Perry reportedly makes $225m by selling her music catalogue: https://www.bbc.co.uk/news/entertainment-arts-66853047

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Delicious

Solomons-financial-advisor-wimbledon-blogger

Delicious

I wonder if you have seen a new Sky 4-part mini series starring Dawn French, Emilia Fox and Iain Glen called “Delicious”. I don’t think I’m giving too much away by saying that it is the story of an apparently successful, once divorced remarried chef, who has an affair with his first wife, who it turns out is the real culinary genius.

Like most good stories, the drama of ordinary lives holds our attention when under the scrutiny of dramatic pressures. The series exposes the problems beneath a beautiful façade of a middle-class life. Set on the idyllic banks of the Tamar river, an entrepreneurial temple of hotelier cuisine is the bling that diverts the eye from seeing what needs to be seen.

Just below the surface

There is an understandable and customary dig at middle-aged men but with a twist on the usual, predictable affair with a younger model, with Leo attempting to have his cake and eat it. A setting of fine dining, lends itself to the customary style over substance debate and of course the market price of every thing.

Wood for the trees

From a financial planning point of view there are numerous warnings that I would hope business owners can heed. One of the problems that business owners, or indeed anyone has, is that they are often too close to the problems to be able to see them clearly, let alone any workable solutions. It is certainly hard to fathom how any decent financial planner could not draw attention to what is revealed within the plot (which I shall not spoil).

Virtually reality?

One of the most popular criticisms of social medial is that it has encouraged us to live false lives, like those contained within magazines, or indeed within television or film. Whilst I’m sure this has some truth and resonance, this all rather depends upon each of our ability to be truthful, yet mindful of impact, timing and social etiquette. There is nothing new about attempting to be something you are not, which is perhaps one of the oldest dramatic tools.

The truth can be painful

Of course, not everyone wants to see or hear the truth, particularly when it is going to require some change. I sometimes wonder if this is what puts most of population off from seeking financial advice. Deep down most of us know that we need to master our money lest it master us. A financial plan is designed based around your values, grounded in truth and enables you to see ahead to any potential “surprises”. In essence making sure your plans for style have substance.

Here’s the trailer for the series on Sky.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk