Mr. Peace, whose background is in technology, started the Royalty Exchange in 2011 with two others after first trying a similar idea with SongVest, which sold interests in songs as high-priced memorabilia items for fans. But that model tended to work only with big artists, he said, so the Royalty Exchange instead aims at investors with bundles of songs.
Since it was founded two years ago, The Royalty Exchange, based in Raleigh, N.C., has held 18 auctions, raising about $750,000. But Sean Peace, the company's chief executive, envisions it as a robust marketplace where musicians can capitalize on their work and investors can find a somewhat exotic asset that could still bring in steady earnings.
"Most musicians have no idea that they can take their royalties and reinvest in themselves," Mr. Peace said. "If they could get $80,000 up front for selling 50 percent of their royalties, that can be game-changing."
The music industry is full of bitter stories of musicians who have given up royalty rights for a fraction of their future value. Eli Ball, the founder of Lyric Financial, a competing service that gives musicians short-term advances on their royalties in exchange for a fee, thinks that musicians should not sell their rights.