While the winds of change have blown away most of the animosity between Fintech companies and incumbent banks, leading to partnerships and in some cases acquisitions, some players on the up and coming side are holding out on armistice as a means to better serve niche markets.
For example, two companies with focuses on enabling independent musicians—one in a financial capacity, the other in publishing—forged an agreement last week. TuneCore, a digital music publishing and distribution provider, has partnered up with Lyric Financial, a financial services company that focuses on musicians.
The two have created TuneCore Direct Advance—a product for web and mobile that allows musicians with TuneCore to access cash advances on future royalties.
Using the musician’s sales history provided by TuneCore, Lyric Financial can determine if he or she qualifies for advance. Musicians who qualify reportedly receive money within 24 hours via PayPal or ACH network transfer to their bank accounts, said American Banker.
“We wanted to offer them something different,” Lyric Financial founder and CEO Eli Ball was quoted as saying. “Credit cards and bank loans can be dangerous; they can get upside-down with those real quick. But this is not a loan. It’s an advance based on forecasted earnings.”
Independent and unsigned musicians typically fund new projects and tours out of pocket, leveraging credit cards or personal bank loans for capital.
When leveraging TuneCore Direct Advance, musicians reportedly pay 3 to 5 percent on the advance depending upon the payback period, a highly competitive rate compared to many credit card and bank loan interest rates.
And since TuneCore already has the musician’s information, leveraging the new product isn’t as time intensive as other financing processes.
In the future, Lyric Financial reportedly looks to expand its service into the broader music industry. Ball envisioned the likes of a service that works with suppliers to improve cash flow management and budgeting for musicians.