Common terms explained in plain English. Bookmark this page.
In the US, a person earning over $200k/year (or $300k joint) with over $1M in net worth (excluding primary residence). Accredited investors have fewer restrictions on risky investments.
The system used for bank transfers in the US. When you withdraw money from your Artist Exchange account, it comes via ACH to your linked bank account (free, 3-5 business days).
Federal regulations that require platforms to detect and prevent money laundering. Artist Exchange monitors transactions for suspicious activity.
A fractional ownership stake in an artist's project royalty stream. Example: you own 0.02% of a specific album's streaming revenue.
The price you paid for an investment. When you sell, your capital gain or loss is calculated from your basis. Important for taxes.
Profit from selling an investment. If you buy shares at $0.50 and sell at $1.20, your gain is $0.70 per share. Subject to capital gains tax.
A regulated financial institution that holds investor funds in trust. Artist Exchange uses a third-party custodian. Even if we shut down, the custodian protects your money.
The specific project an artist commits to deliver. Example: 'record and release a 10-track debut album by June 30.' Investors can claim non-delivery if not met.
Reduction in ownership percentage due to new share issuance. On Artist Exchange, dilution does not apply (each project is isolated). But the concept matters for understanding other investment models.
A service that artists use to get music on Spotify, Apple Music, YouTube, etc. Examples: DistroKid, CD Baby, Tunecore. Artist Exchange works with distributors to verify earnings.
A payout to investors of earnings from a project. Happens quarterly. You get your share of royalties.
The minimum time you must hold an investment before selling. Artist Exchange has a 12-month holding period (required by Reg CF law). After 12 months, you can sell on the secondary market.
Identity verification required by law before investing. Artist Exchange uses a third party to verify your identity quickly (2-5 minutes).
How easily you can sell an investment. Artist Exchange shares are illiquid for the first 12 months, then become liquid on the secondary market (though liquidity varies by artist).
The actual audio file of a song. The master owner gets paid when the song is streamed. On Artist Exchange, artists retain 100% master ownership.
A metric Spotify uses to show how many unique listeners an artist had in the past 28 days. Used as a rough proxy for popularity and earning potential.
In the US, a person earning under $200k/year (or $300k joint) or with less than $1M net worth. Most investors fall into this category. Reg CF is designed for non-accredited investors.
A specific artist project being funded. Example: 'KARMA NOIR's Debut EP Offering'. Each offering is its own security.
Your slice of an offering. If the offering has 10,000 total shares and you own 100 shares, your ownership is 1%.
The risk that Artist Exchange itself fails or disappears. Mitigation: funds are held by a custodian (not by us), contracts are filed with SEC, and insurance covers operational failures.
The rights to the song composition itself (melody, lyrics, arrangement). A different asset from the master recording. On Artist Exchange, artists retain 100% publishing.
A US SEC exemption allowing small securities offerings (up to $5M per 12 months) to the public without full SEC registration. Artist Exchange operates under Reg CF.
Total money earned before costs. Example: an album generates $10,000 in streaming revenue. Artist Exchange takes 10% fee, investors get 20%, artist gets 70% (80% after fee).
Ongoing payments from streaming, syncs, and other sources tied to a specific music project. When you invest in an artist share, you own a slice of their royalty stream.
Market where investors trade shares with each other (after the 12-month hold). Prices determined by supply and demand. Artist Exchange facilitates matching buyers and sellers.
A financial instrument representing an ownership stake or promise of future returns. Artist shares are securities, which is why they are regulated by the SEC.
Units of ownership in an offering. If an offering has 100,000 shares and you buy 1,000 shares, you own 1%. Your share count never changes (no dilution on Artist Exchange).
When someone listens to a song on Spotify, Apple Music, YouTube, etc. Streaming generates royalties (roughly $0.003-0.005 per stream).
An artist's past performance on streaming platforms. Used to evaluate how much funding they should seek and what their shares are worth.
Permission for a song to be used in a TV show, film, commercial, game, etc. Sync licenses can generate significant one-time revenue for artists. Often shared with investors.
Artist Exchange sends you a 1099 at year end documenting distributions paid. Distributions are taxable income. Capital gains are taxed on your tax return.
IRS tax form showing non-employee compensation (in this case, distributions from investments). Used to report income.
Institutional investors who fund companies seeking high growth and returns (typically 20%+ IRR). VC-backed music funders like Beatbread operate differently from Artist Exchange (which serves retail investors).