Real risks. Real case studies. How we protect you.
You invest $100 in an artist, but their follow-up project never gains traction. Streams drop. Royalty payouts shrink to pennies per quarter. Your investment becomes nearly worthless. There is no buyback and no guarantee.
How we mitigate
Real-world example: Most music projects fail. 90% of artists who raise capital on emerging platforms never exceed 20k monthly listeners. But 5% of them do 200k+. You are betting on the distribution curve.
An artist releases an album and generates initial streams, but then does not promote it or releases poor-quality follow-ups. Streaming slows. Royalty payments decline over time. Your upside depends on the artist's continued effort.
How we mitigate
Real-world example: An artist releases an EP, gets 5k streams in week 1, then vanishes. No promotion. By month 3, new releases are rare. This is not fraud; it is just poor execution. You see it in the data.
Artist Exchange goes out of business or fails technically. Distributions stop. You lose access to your portfolio. This happened to Vezt (a predecessor platform) where thousands of investors lost access to their holdings.
How we mitigate
Real-world example: Vezt launched in 2016 and issued thousands of shares. By 2020, the platform became unreachable. Investors reported unpaid royalties and no support. The company did not maintain proper custodial arrangements and the legal structure was murky. We are designed to prevent this.
An artist achieves some success, then decides to quit music or take a long break. No new releases mean no new royalties. Your existing shares still own the back catalog (passive income), but there is no growth.
How we mitigate
Real-world example: Indie artists often take breaks (school, family, burnout). If they come back, older shares can see resurgence. If they don't, you own vintage catalog royalties. Not great, but not zero.
The SEC changes rules around Reg CF or public investing in music securities. Artist Exchange has to change operations. Distributions might be delayed or require renegotiation.
How we mitigate
Real-world example: Unlikely but possible. SEC has signaled interest in fintech and music securities. We are conservative in our compliance to future-proof the platform.
An artist signs to a major label. The label buys them out and takes over future releases. Your shares only apply to the project you invested in. You no longer share in their career upside.
How we mitigate
Real-world example: An artist raises $10k at $0.50/share. Two years later, they are signed to a label at a $500k advance. Investors see 10x appreciation. They can sell on secondary market at the elevated price.
All investor funds are held by a licensed custodian, not by us. We cannot touch it. Your capital is protected by fiduciary law.
We operate under Reg CF, a regulated exemption. All offerings are filed with the SEC. There is a legal record of your investment.
Every artist agreement is written in plain language and filed with the SEC. No hidden terms. You see exactly what you own.
We send quarterly reports on revenue, distributions, and artist status. You see the data in real time and can request clarification.
We evaluate artists for reputational risk, contract compliance, and streaming trajectory before they list. Bad-faith actors are rejected.
If there is a disagreement about distributions or artist performance, we have a formal arbitration process that protects both sides.
We carry errors and omissions insurance and maintain cybersecurity insurance. If we fail operationally, insurance covers investor harm.
We encourage smaller position sizes per artist and per investor. Limiting concentration is the best risk management.
Artist Exchange is built on the principle that transparency and risk disclosure are better than false reassurance.
Investing in emerging artists is risky. There is no way around that. But the risk can be managed through diversification, smart selection, and clear terms. We do not promise guaranteed returns. We promise clear information so you can make informed decisions.
Every investor should understand: this is a 12-month minimum illiquid investment with real downside risk and upside potential. If you cannot afford to lose the money, do not invest it.
Learn about secondary trading and payouts, then browse the leaderboard.