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Private markets have grown well beyond the traditional domains of private equity, direct lending, infrastructure and real estate. As explored in Ampersand’s lead article, investors are increasingly searching for differentiated sources of return and greater portfolio diversification. One area attracting growing interest is royalties, which offer access to a broad universe of assets spanning music, film and television, life sciences, brands, technology and natural resources. So what sets royalties apart, where do the opportunities lie, and what role can they play in a diversified portfolio?
What makes royalties different?
A royalty is a right to receive a share of the revenues generated by an underlying asset - such as a music catalogue, a pharmaceutical product, a brand, a technology patent or a mineral resource. Investors can gain this exposure either by acquiring the underlying rights outright, as is common with music copyrights, or by acquiring a contractual entitlement to a share of the revenues an asset generates, as is typical of pharmaceutical or natural resource royalties.
A distinguishing feature of many royalty investments is that returns are driven primarily by the income the underlying asset generates over time. Unlike certain private market strategies in which much of the return is realised at exit, many royalty investments are substantially self-liquidating and distribute cash throughout the life of the investment. Investors may therefore be less reliant on favourable exit conditions or terminal valuations to achieve their target returns.
'Many royalty investments are substantially self‑liquidating'
The royalties investment universe
Royalties are not a new concept. Creators, inventors, resource owners and other rights holders have long received payments linked to the use and commercialisation of the assets they own. Royalties are also part of everyday life: behind much of the music we listen to, the medicines we take and the brands we buy sits intellectual property that generates royalty income. More broadly, royalties arise wherever intellectual property - such as copyrights, patents and trademarks - or natural resources are commercialised under licence. Although royalties remain a relatively nascent allocation for many institutional and professional investors, M&G estimates that the addressable market exceeds $2.5 trillion, highlighting the scale and breadth of the opportunity set.
Key sectors of interest
Media and entertainment
Income from music, film, television and other media rights, earned when content is streamed, broadcast, performed, licensed or sold.
Life sciences
Royalties on sales of pharmaceutical products and medical technologies, typically paid under patent licensing agreements.
Brands and technology
Income from the licensing of trademarks, brands and technology patents.
Natural resources
Payments linked to the production or sale of minerals, metals, oil and gas, or renewable energy.
Some royalty sectors are more established than others, but the market’s continued growth reflects both the increasing use of royalty financing by asset owners and growing investor demand for differentiated return drivers and diversification.
Why investors are paying attention
Much of the investor interest in royalties stems from their potential to add diversification to a portfolio. Royalty cash flows depend primarily on the use of the underlying asset, such as how often a song is streamed, how widely a medicine is prescribed or how much a mine produces. These drivers are largely unaffected by shifts in interest rates, credit spreads or equity valuations and, as a result, royalty income has historically shown low correlation with the performance of traditional asset classes. Several royalty sectors, notably pharmaceuticals and music, are also relatively non-cyclical, as demand for medicines and music has tended to prove resilient through economic downturns.
Because royalty income is typically calculated as a share of revenue rather than profit, investors are largely insulated from rising operating costs and margin pressure. Where the prices of the underlying products or services rise over time, royalties can also provide a degree of long-term inflation linkage.
Royalty holders have a contractual right to the cash flows an asset generates but, unlike the coupons on a traditional fixed income instrument, those cash flows are not fixed: they can grow as use of the underlying asset increases. It is this combination of contractual income and potential for growth that can give royalties the potential to deliver compelling returns with limited risk characteristics.
'Royalties have the potential to deliver equity-like returns with credit-like risk characteristics.'
In some royalty sectors, active management can also create additional value by increasing the use of an asset, aggregating complementary assets or identifying new commercial applications. In music, for example, songs can reach new audiences through placements in film, television, advertising, video games and social media. Existing copyrights can also earn additional income when reused in new releases, through sampling, which incorporates part of an original sound recording, or interpolation, which incorporates elements of the underlying composition such as melody or lyrics.
Seeker Music: active management in practice
Seeker Music is M&G’s dedicated music rights platform. Launched by M&G in 2020 and led by award-winning songwriter and music executive Evan Bogart, Seeker acquires, manages and develops music publishing rights and master recordings, combining institutional investment discipline with deep creative and industry expertise.
Its catalogue now comprises more than 19,000 copyrights and master recordings, including songs written or recorded by artists such as Beyoncé, Christopher Cross, Drake, Joan Jett, Lewis Capaldi, One Direction, Maroon 5, Miley Cyrus, Shawn Mendes and Justin Bieber, to name a few.
Seeker pursues an active management strategy designed to grow the income its catalogues generate over time.
Its creator-led approach includes working with songwriters, artists and producers to reimagine songs from its catalogue for new audiences, alongside licensing, social media campaigns and new visual content for older songs. One notable success is Shaboozey’s Grammy-nominated ‘A Bar Song (Tipsy)’, which interpolates J-Kwon’s 2004 hit ‘Tipsy’ from Seeker’s catalogue and spent 19 weeks at No. 1 on the US Billboard Hot 100.
In 2026, Seeker closed its inaugural $267 million asset-backed securitisation a milestone that reflects growing institutional recognition of high-quality music rights as a long-term asset class. Fast Company also ranked Seeker second in its list of the Most Innovative Music Companies of 20251.
For investors, Seeker illustrates that royalties need not be passive income streams: in the right sectors, specialist managers can play a meaningful role in enhancing the value of the underlying assets over time.
Duration is another important consideration. Depending on the asset and its stage of life at the point of investment, a royalty stream may have anywhere from a few years of income remaining to several decades. Pharmaceutical royalties typically run until the relevant patents expire or the product loses market exclusivity. By contrast, copyright in a song generally lasts for the lifetime of its writer plus 70 years. Natural resource royalties can last for the entire productive life of a mine or field. This range allows managers to build portfolios with a mix of revenue drivers, durations, and risk characteristics.
Structurally attractive characteristics
Royalty investments could offer attractive income characteristics, with yields and risk profiles varying across sectors, asset types and transaction structures.
They are also underpinned by well-established legal frameworks, including copyright, patent, trademark and contract law. Protections vary by structure but may include security over the underlying asset, financial covenants and minimum payment provisions. Although performance ultimately depends on the ability of the asset to continue generating revenues over time, these features can provide a meaningful degree of downside mitigation.
'The combination of contractual rights and structural protections can provide an important degree of downside mitigation'
The role of royalties in private markets portfolios
For many investors, royalties may serve as a complementary allocation within a broader private markets portfolio. They can be accessed through a range of approaches, from single-sector strategies, such as music, to diversified portfolios spanning multiple royalty sectors, asset types and vintages. Given the long-dated nature of royalty income, evergreen fund structures offering periodic, but limited, liquidity could be well suited to the asset class, allowing investors to build and maintain exposure over time.
As with any specialist private markets strategy, manager expertise, underwriting discipline and active asset management are key determinants of investment outcomes.
An increasingly relevant allocation
Royalties have evolved from a niche area of finance into an established and growing part of private markets. Their appeal lies in the combination of contractual rights to typical long-term income, differentiated return drivers and cash flows with low correlation to traditional asset classes. For investors seeking to broaden their private markets allocations, royalties offer access to revenue streams that are difficult to replicate through traditional public or private market investments, making them, in our opinion, an increasingly relevant addition to the private markets toolkit.
1 Source: Seeker Music, ‘Seeker Music makes Fast Company’s Most Innovative Companies 2025’ Press Release.
The views expressed on this webpage should not be taken as a recommendation, advice or forecast, nor a recommendation to purchase or sell any specific security.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.
