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Written by Ramsey Brown.
NFT and crypto-based projects have taken the music industry by storm within the past couple of years. Artists and music companies are waking up to the importance of Web 3 and beginning to experiment more with Blockchain technology.
New developments and applications have emerged to integrate the Blockchain into artists’ long-term marketing strategies and business models — completely disrupting the economics of the music industry as we once knew it.
Historically, music ownership has been limited to record labels, publishers, and other entities, with the artist often retaining only a small percentage of ownership, if any at all.
However, one particular music start-up company has set out to redefine the future of music ownership — and is using blockchain technology and NFTs to do so.
Royal is an NFT music rights marketplace founded by Justin Blau (3LAU, a pioneering EDM DJ) and Justin Ross (Opendoor co-founder). The company bills itself as “a platform that allows anyone to purchase the right to earn royalties from their favorite songs.”
Royal broadens access to real ownership in music by providing an opportunity for music fans (just like me and you) to invest in music, own rights to songs, and collect royalties alongside the artist.
Royal’s model empowers artists to maintain control over their work and fuel their careers by sharing a piece of their music rights with fans.
This not only provides artists with a new revenue stream but more importantly, it creates a deeper connection with people who are invested in their music’s success.
Royal works by issuing Limited Digital Assets (LDAs), making it so that anyone can own rights to songs. Limited Digital Assets are Royal’s version of an NFT — what’s unique about them is that they are embedded with music rights and additional benefits such as fan experiences, special tracks, digital art, or anything else the artist decides on.
Artists choose what percentage of the song's royalties to put up for sale, and any additional benefits they want to include with it.
Fans can then purchase these streaming royalties in the form of 'tokens', directly from the artist. Any extra bundled benefits will be attached to this token.
Once an artist’s token is purchased, the buyer can claim royalties for the song after they've accrued. The time to payout will vary depending on the artist.
These tokens can also be put up for resale on an NFT exchange. When someone else buys this token, they'll get all the royalties and additional benefits that come with it.
All you need is a debit/credit card and you can participate in one of Royal’s NFT/LDA drops. The checkout process is like any e-commerce site and is as simple as buying a pair of shoes from Nike’s website.
If you’re curious to dive deeper and take full advantage of your ownership (reselling your LDA on a secondary marketplace), you’ll need to set up a crypto wallet. Royal currently supports MetaMask with plans to support other wallets in the future.
Limited Digital Assets are first distributed during a drop — this is the initial sale that takes place on Royal.io. When you buy an LDA during a drop, you directly support the artist and gain instant ownership of the music.
If you miss out on the drop, you can also buy Royal LDAs on a secondary marketplace like OpenSea. You’ll need to have MetaMask to participate.
As a song is streamed, it accrues royalties across the various streaming platforms — Spotify, Apple Music, Youtube, etc.
Although the song accrues royalties whenever it's streamed, the artist receives their royalties payouts in aggregate for a given period of time. The frequency depends on the artist and their deals; sometimes it's once a quarter, sometimes twice a year, etc.
Because every artist is different, Royal token holders will get paid out based on when their artist is paid. Buyers will be notified as soon as they can start claiming royalties on their tokens.
Royalty payouts will go to whoever holds the token at the time a payment is made. If you sell your token before a payout, you will not receive any royalties generated while you owned it.
In January 2022, Nas released two songs on Royal.io for fans to purchase a percentage of the “streaming” royalties. The collection featured tracks “Ultra Black” — the lead single from his 2021 Grammy Award winning-album King’s Disease — as well as “Rare” — a single from his 2022 Grammy Award-nominated album, King’s Disease II.
A limited supply of tokens exists for both “Ultra Black” and “Rare,” with streaming royalty ownership separated out into three tiers: Gold, Platinum, and Diamond.
On top of royalty rights up to 50%, each tier also yielded unique secondary benefits such as exclusive merch, VIP concert tickets, and more.
The collection — which was the first live sale of NFTs on Royal.io — consisted of 1,870 NFTs across two separate drops, both of which sold out in record time. Grossing over $560,000 in total revenue.
This does not affect any of the rapper's publishing, songwriting, or mechanical royalties, nor does it affect any of his payments or royalties from sync license. Nas retains all his rights to the song and is only selling a percentage of the revenue that is generated through streaming alone.
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