DETROIT • Compact discs were replacing records when Jeff and Mark Bass took a chance on a young white rapper named Marshall Mathers.
Eminem, as he is better known, went on to be one of the world's most popular musicians.
Now the brothers, who still own part of Eminem's catalogue, want to cash in. They have agreed to sell up to 25 per cent of their interest to Royalty Flow, which will buy the stake with money raised in a mini-initial public offering.
Music fans and investors have little opportunity to invest directly in the music business, where the biggest players are closely held or are parts of larger corporations.
Thanks to a 2012 law that made it easier for small businesses to raise money, investors who believe the growth in streaming will make Eminem's catalogue more valuable will be able to buy a slice.
Spotify will be another opportunity when it goes public."If you're a fan and want to bet on that artist, you've got some skin in the game," said Mr Joel Martin, a business partner of the Bass brothers.
Royalty Flow is looking to raise US$11 million (S$15 million) to US$50 million, its founder Matt Smith and chief financial officer Jeff Schneider said.
The Bass brothers agreed to sell 15 per cent of their interest and are in line to get the first US$9.75 million from the stock sale, or US$18.8 million if they commit to selling 25 per cent. Any additional capital will go to the Denver-based company to buy more music rights and, eventually, pay dividends.
Mr Smith comes to the deal through his 2015 purchase of Royalty Exchange, which has held about 180 auctions of music rights.
He saw an opportunity to sell music to a wide swathe of investors after former United States president Barack Obama signed the Jumpstart Our Business Startups Act in 2012 to help small companies raise money.
He created Royalty Flow.
A song can have many owners - from writers and performers to record labels and music publishers - with each entitled to revenue it produces. Mr Smith pitches Royalty Flow as a way for investors to take part in the streaming boom.
For the brothers, the deal lets them partly exit an investment that did not look so great 25 years ago when they started working with Eminem. The only successful white rapper before Eminem was Vanilla Ice.
But they signed Eminem to a contract with FBT Productions and put out his debut record Infinite.
"It sold about 30 copies," Mr Martin recalled. Upset, Mathers returned with an alter ego: Slim Shady. FBT sold thousands of The Slim Shady EP, which eventually landed in the hands of mega-producer Dr Dre.
While the latter receives most of the credit for turning Mathers into Eminem, the Bass brothers produced many early hits, including a dozen tracks off The Slim Shady LP as well as Lose Yourself, the hit song from the biopic 8 Mile (2002).
Earnings from the brothers' Eminem holdings grew 43 per cent to US$5.07 million last year, according to Royalty Flow. The artist had sold more than 44.9 million albums as of 2014, said Billboard magazine.
The proliferation of paid streaming has lifted the music industry after almost two decades of decline.
A Goldman Sachs report recently predicted worldwide sales will exceed US$40 billion by 2030, up from US$15.7 billion last year.
Though Eminem has not released an album lately, he remains one of the most popular artists on streaming. More than 18 million people listen to his music every month on Spotify.