In December 2025, Partners Group announced a royalty-backed note for a venture built around the Weeknd’s music catalog. The venture is co-owned by the artist and Lyric Capital. Royalties secure the note; the Weeknd retains creative freedom to use the catalog’s publishing and master rights. Variety reported that the deal had closed that month.
It is an unusual arrangement to explain in one sentence because it joins several things creators often have to weigh separately: borrowing, shared ownership and control over the work. The artist has access to capital without simply selling the entire catalog. The lender, meanwhile, has a claim tied to future royalty income.
The deal belongs to a much larger market. The World Intellectual Property Organization estimates that at least $20.4 billion went into music-rights acquisitions from 2019 onward. That figure counts estimated rights transactions; it does not show how much artists received or what an independent creator could borrow. It does show why investors look at songs, patents, and software as sources of future income, as well as creative work.
Black Musicians and Royalty-Backed Finance
Black musicians were testing these arrangements well before catalog investing became a regular Wall Street story. Nickolas Ashford and Valerie Simpson reportedly used copyrights to 247 songs to back a $25 million bond offering. James Brown later arranged a reported $30 million royalty-backed deal. The Isley Brothers also entered a catalog-backed transaction. In each case, investors gained a claim on future income from specified rights.
That is the basic bargain behind a royalty-backed bond: the artist receives money now, and investors are repaid from income the rights are expected to generate. The artist may keep ownership, depending on the structure, but the pledged royalties are spoken for under the bond terms. Which rights are included and how reliably they have paid out can make a substantial difference.
David Bowie’s 1997 offering put the model on the map. He raised $55 million through a 10-year bond backed by royalties from 25 albums recorded before 1990. Investors were promised a 7.9% return, and Prudential bought the offering. Years later, the bonds were downgraded as the music business moved from physical sales to digital distribution. The catalog had not disappeared; the assumptions used to forecast its income had run into a changing market.
David’s reaction was why haven’t we started yet. —David Pullman
There is a deeper issue for Black creators in this history. A person can help create a valuable work and still lack the rights that generate its income. Selling or pledging an asset can help an owner put it to work; it cannot restore rights previously signed away.
How IP can bring in capital
Royalty-Backed Notes, Advances and Loans
The Weeknd deal combines debt with a catalog venture. Partners Group says its note supports the venture while the artist retains creative freedom to use the publishing and master rights. Lyric Capital and the Weeknd co-own the vehicle.
A royalty advance may work differently. It might be a loan with interest and scheduled repayments, or a purchase of some future income for a fixed period. The name on the offer does not settle the important questions: if royalties fall short, can the lender pursue other assets? Which income is assigned? Does the agreement restrict future deals?
A lender will want royalty statements, a clear record of who owns the rights and evidence that payments are steady. A track record over several years is easier to weigh than forecasts for new work. And the money has a cost beyond interest: royalties committed to repayment cannot fund recording, staff or expansion while the lender is collecting them.
Catalog Financing and Securitization
A catalog is made up of rights that can belong to different people. The composition is the song itself; the master is a particular recording. Publishing and recording royalties can pass through separate agreements and administrators. Before lending against either, a financier has to untangle who owns what, what has already been licensed, and whether a contract limits the owner’s ability to borrow or transfer rights.
Securitization takes income-producing assets, pools them, and issues securities backed by the cash they generate. A special-purpose entity may hold the rights or revenue stream. Investors are then paid from royalties collected across the pool. Pooling can spread risk, though a handful of popular titles may still supply much of the income. Investors study earnings history, ownership records, collection costs and the chance that future royalties will fall below projections.
The scale matters. Large securitizations require a sizeable portfolio, legal work and a long record of earnings. They are not a standard funding option for every independent musician. Their relevance is that they show how institutional investors can treat a documented catalog as a financial asset.
Patents, Royalties and Software Licensing
Lonnie Johnson’s Super Soaker is a clear example of a patent producing income. The Black American inventor licensed the toy to Larami. The product line later generated more than $1 billion in lifetime sales, according to the National Inventors Hall of Fame. Royalties helped support further research and his technology company. Johnson used licensing, rather than a patent-backed loan, but his experience shows how income from an invention can pay for more work.
For a lender, a patent’s value depends on more than the invention’s originality. Is there a buyer or licensee? How broad is the protection, and how long does it last? Who owns the patent today? What would enforcement cost? A portfolio may offer more routes to licensing than a single patent, but selling one quickly after a default can be difficult.
Software businesses often point to license fees or subscriptions to show demand. A license lets customers use software under agreed conditions while the company keeps ownership. Subscription income may be easier to forecast than a one-time launch, but the business has to show that it owns the code or has permission to use it. Contractor and employee agreements matter. So do open-source obligations, which can limit how software is packaged or pledged.
The USPTO’s small-business resources cover IP valuation and commercialization. WIPO says banks may consider intellectual property as collateral, although this kind of lending remains uncommon. Its IP-finance guidance explains that a borrower can retain ownership while a lender’s security interest restricts future use, licensing or transfer.
The Value—and the Cost—of Future Income
Any investor looking at IP starts with the ownership trail. Who made the work? Who owns it now? Has any part already been sold, licensed or pledged? A song may involve writers, performers, producers, publishers and a label. Software may have been built by staff and contractors. A patent may have changed hands through an assignment or company agreement. Missing paperwork can stall the conversation before anyone gets to valuation.
Then comes the income. Investors look at payment history, licensing agreements, customer retention and whether revenue depends on one song, one customer or one platform. A diverse portfolio may feel safer than a single hit, but even a large catalog can lean heavily on a few titles. Forecasts are adjusted for that uncertainty, along with collection costs and the time needed to recover the investment.
Owners have a different calculation. After repayments, is there enough left for collaborators, taxes and everyday operations? Can the company still license the work, refinance the debt or sell the business? What happens if royalties drop or a payment is missed? Those clauses determine how much room the owner has after taking the money.
Setting up a separate company to hold IP can make ownership clearer, but paperwork still has to be right. Co-creators need written agreements on shares and revenue. Businesses should document rights transferred by employees and contractors. The owner should understand which decisions remain theirs and which need lender approval, including what the lender can do after default.
Creator platforms face a related question: who owns the infrastructure around the work? Financing adds another participant. Even when a creator keeps the underlying rights, an agreement may direct a portion of future income to a lender or investor.
Isaac Hayes III, founder of creator platform Fanbase, has spoken about ownership of the infrastructure built around Black culture. Fanbase raised money through equity crowdfunding, which gives investors a stake in the company. That is not the same as borrowing against royalties or pledging IP. It illustrates how the rights investors receive can change with the type of capital raised.
So instead of being customers to our creations, we are turning our innovations into acquisitions. —Isaac Hayes III
The use of the money belongs in the decision too. Capital might help an owner develop new work, protect a patent, improve software or build a licensing operation. But a promising plan does not guarantee a return. The creator still has to weigh the income being committed against what the financing could help build—and whether the business can keep earning after repayments end.
For creators and inventors, IP finance opens a door alongside licensing or selling rights. It does not make future royalties certain, and a valuable work alone will not guarantee a loan. The lender needs a clear record of the rights and the income. The owner needs terms that leave enough cash and control to continue building.
FAQs
What does it mean to use intellectual property as collateral?
The owner pledges rights such as copyrights or patents to secure a loan. Ownership may stay with the borrower, but the lender can set conditions on the asset. If the borrower defaults, the lender may enforce its security interest and seek repayment from the pledged rights.
How did Black musicians use royalty-backed financing?
Ashford and Simpson reportedly used copyrights to 247 songs to back a $25 million bond offering. James Brown arranged a reported $30 million royalty-backed deal. Investors received claims on future income under the agreements; the deals were not simply outright purchases of the artists’ work.
Is a royalty-backed note the same as selling a catalog?
No. A note is debt secured against royalty income. A catalog sale transfers specified rights, often for a longer term. Some partnerships combine debt with shared ownership. The contract spells out who controls the work and receives future income.
How do investors value music royalties?
They review royalty statements, ownership records, payment history, revenue concentration, licensing terms and collection costs. They also estimate future cash flow and account for risk. A large catalog or audience alone does not set the value.
Can a patent help an inventor get financing?
It may support a financing request if it protects a useful invention with a credible path to income. Ownership, market demand, the patent’s remaining term and enforcement costs all affect a lender’s assessment.
What should creators check before accepting IP financing?
They should identify every right included, confirm fees and repayment terms, understand what happens after default and estimate the effect on future income. They should also check whether the agreement limits licensing, refinancing, a sale or continued use of the work.
