What you own, how it is legally structured, and what moves the price.
When you buy a share in an artist, you own a fractional revenue claim on that specific project's earnings. It is not ownership of the artist themselves or their entire catalog. It is not a loan. It is a royalty stream.
Think of it like this: when an artist releases an album on Spotify, Spotify pays royalties (about $0.003 per stream) to whoever holds the rights to that revenue. Normally, the artist keeps all of it. On Artist Exchange, the artist agrees to share a portion (usually 15-25%) with investors who funded the release. You get a slice of that slice.
You get:
You don't get:
Artist Exchange operates under Regulation CF, a U.S. SEC exemption that allows small companies and artists to raise money from the public (non-accredited investors). Here is what that means:
An 'artist share' legally qualifies as a security under the SEC's Howey test. That is why we follow strict rules about who can invest, how much they can invest, and how we report to you. This is the thing that gives you legal protections.
No single offering can raise more than $5 million in a 12-month period. This is a legal limit set by the SEC. It also means that Artist Exchange will run multiple offerings (one artist at a time) rather than one giant fund.
If you earn less than $200k/year (or $300k joint), you are non-accredited. Non-accredited investors are limited to $2,000 per person per year across all Reg CF offerings. You can still invest, but there are caps. Accredited investors have no limits.
We verify your identity (KYC) and monitor for money laundering (AML). This is federal requirement. Your data is handled by a third party and discarded after verification. We never sell your information.
Artist Exchange must send you and the SEC quarterly reports on each offering you invested in. You will see: revenue received, distributions paid, outstanding shares, and any material changes. This is auditable.
On Artist Exchange, share price is set at issuance (when the raise goes live). After that, it can move based on artist performance and demand. Here is what moves it:
Streaming growth
Artist's monthly listener count or Spotify saves increase
Media coverage
The artist gets featured in a playlist or press outlet
New release buzz
Upcoming project or surprise single drops
Artist collaboration
A feature with a bigger artist signals quality
Platform momentum
Positive news or new artists joining
Market sentiment
General investor interest in music investing
Important: Share price is not tied to any single metric. There is no earnings report or P/E ratio. Instead, the price reflects investors' collective belief in the artist's future. Early investors who pick artists before they explode can see outsized returns (2-5x). But there is also real downside risk.
When an artist first lists on Artist Exchange, we set their initial share price using a formula that accounts for:
Monthly listener count and growth rate
Streaming revenue from the past 3 months
Social media following and engagement rate
Market comparables (what similar artists are valued at)
Artist stage and project scope
Example pricing:
Distributions happen quarterly (January, April, July, October). Here is the flow:
Streaming platforms pay rights holders
Spotify, Apple Music, etc. pay royalties to whoever controls the rights. The artist's distributor collects this.
Artist Exchange collects
The artist sends their statement and proof of earnings to Artist Exchange. We verify and reconcile.
We calculate your share
Total revenue times your ownership percentage equals your payout. You see a detailed breakdown.
Money hits your bank account
ACH transfer (free, 3-5 business days) or payment method you chose during setup.
The contract specifies deliverables. If the artist fails to deliver within 90 days of funding close, the raise is considered unfulfilled and you have recourse (refund or claim). This is how we protect against fraud.
Yes. If an artist stops making music or their streams dry up, the ongoing royalty stream evaporates. Your shares are only worth the present value of future earnings. This is why diversification matters.
Yes. Quarterly distributions are taxable income in the year you receive them (or earned them, depending on your situation). Keep records for your accountant. We will send you a 1099 at year end.
Yes. Your shares pass to your estate like any other asset. Your beneficiaries keep receiving distributions.
The terms depend on the contract. Typically, if an artist signs to a label and the label owns the master going forward, new releases are not subject to the investor royalty share. Only the original project specified in the raise continues to pay out. This is why understanding the project scope matters.
Learn about dilution, secondary trading, or payouts.