It may be time to admit that NFTs have well and truly evolved from their big-bang moment last year. As more industries find ways to shape and utilise blockchain governance, we’re starting to see the rules of digital ownership. Particularly when it comes to art, start to spring new opportunities that simply didn’t – and couldn’t have – existed beforehand. One of the latest has to do with investing in music, using NFTs to gain access to potentially lucrative music royalties from some of the industry’s biggest names. That’s where blockchain-based music investment platform Royal comes into play, entering the new year fresh from a $55 million fundraise backed by artists like Disclosure, Joyner Lucas, Logic, The Chainsmokers, and rap legend Nas.
Royal isn’t the first platform to try and create a new ground-level category in the music industry for retail investors. Band Royalty claims to be doing the exact same thing, although it’s unclear what kind of artists have been offering up their songs on the platform’s own NFT marketplace.
Reportedly, the pioneering service has already amassed a library of rights for tracks from artists like Jay Z, Cher, Demi Lovato, Timbaland, Justin Timberlake, and Beyonce. Everyday investors can purchase ‘Band NFTs’, which differ in price based on rarity and are split into different series, and either trade or stake them.
Staking the NFTs gives users the chance to participate in the music royalty market and earn revenue from either print music royalties, mechanical and public performance royalties, or synchronisation royalties. You can find an explainer on the different types of music royalties here.
The difference with Royal is that it seems like users will have more direct dealings with specific musicians. Nas, for example, has already committed to selling partial rights to two of his most recent songs – ‘Ultra Black’ from 2020’s Grammy-winning King’s Disease, and ‘Rare’ from 2021’s Grammy-nominated Kings Disease II. Both songs are being released on Royal’s own marketplace this week and users can invest by purchasing tiered limited digital assets in the form of gold, platinum, or diamond digital tokens.
It appears Royal is only dealing with streaming royalties, for now at least. Users who own a part of a single, such as ‘Rare,’ will receive a share of royalties every time the track is streamed. For perspective, ‘Rare’ currently sits at 10,875 million streams on Spotify alone.
Prices will, of course, differ based on the artist and the song. If you wanted to purchase a part of ‘Rare,’ you’re looking at US$99 (AU$137) for a Gold token that will get you a 0.0133% share in whatever the track earns from music streaming. Only 10 Diamond tokens for the single will be sold, priced at US$9,999 (AU$13,856) each, netting each user a 1.5789% share as well as various other perks offered exclusively by the artist (VIP concert tickets and signed merch, mostly).
Royal founder Justin Blau – also known as musician 3LAU – gave away 333 limited digital assets in October last year to try prove the platform’s concept to naysayers. That much represents 50% streaming ownership to his single ‘Worst Case’ which, according to Royal, has “already reached an implied value of close to $12 million, with fans holding half of that value.” A Nas NFT, theoretically, should easily be worth much more than that, although ‘Rare’ may not prove as timeless as something like ‘N.Y State of Mind’ or ‘One Mic.’
Owning at least a fraction of the rights to your favourite song is an incredible idea that has potential, but it’s hard to say whether it makes much sense as an investment category right now. Even though ‘Rare’ and ‘Ultra Black’ are excellent songs, Nas doesn’t fetch the kind of mainstream popularity he once enjoyed throughout the 90s and early 2000s. If Disclosure dropped a fresh banger and offered rights to the song immediately on Royal, it might make more sense to jump all over it.
As such, consider it a platform early investors should definitely be keeping their eye on rather than a “run, don’t walk” situation.