Royalone of the biggest names in the burgeoning music NFT space, has finally launched its long-promised marketplace for fractional music royalty rights.
Started by electronic musician and entrepreneur Justin “3LAU” Blau and Opendoor founder JD Ross, Royal has elevated $16 million in its seed funding round in August 2021. Last November, the Web3 the music startup raised another $55 million with funding from Andreessen Horowitz, Coinbase Ventures, and Paradigm, as well as popular musicians like Nas and The Chainsmokers.
With this capital, says Blau Decrypt this Royal has spent the last year developing its browser NFT marketplace, where users can now discover new artists, trade Royal NFTs, and see detailed stats for each asset.
Market Royal pulls auction data and purchase history from the leading global NFT marketplace, OpenSea, and its dashboard aggregates streaming data from Spotify, Apple Music, Amazon Prime Music, Tidal and SoundCloud Premium.
Since he started releasing NFTs, Royal has dropped music with heavy hitters like Diplo, Nas, The Chainsmokers, Vérité, Elephante and 3LAU himself. As part of today’s market launch, Royal is releasing a new release featuring electronic musicians Bingo players and Zookëper.
Each Royal NFT offers buyers a split share of royalty payments when artists’ songs hit streaming services. Earlier this month, Royal announced that its partner artists had paid more than $100,000 in royalties over more than 9,200 NFT collectors since launch.
This milestone shows that collection royalties, while currently modest, can be a real incentive for fans to purchase NFTs from their favorite musicians. The percentage varies by artist and/or song, but it allows fans to invest in artists while betting on their future success.
While holders won’t immediately get back what they paid for each Royal NFT, there are potential benefits for long-term collectors depending on which artist(s) they support. Royal NFTs aren’t just about music rights and royalties — some NFTs are eligible for real-world bonus benefits, like access to meetups or listening parties.
Who is it for ?
Royal’s marketplace is jumping into an NFT space that already has many established platforms for buying and selling digital assets, though many are broadly designed and don’t focus specifically on music. There are also many Web3 music platforms competing for users’ attention, such as Audius and Our song (Blau is an Audius advisor).
Even with so many other NFT platforms in the space, Blau said there’s a need for a dedicated platform that can onboard new users, as Royal isn’t targeting Web3 natives.
“The reason we built ours is because we felt a lot of music fans don’t know how to set up a walletBlau said. Decrypt. “We basically implemented a way for everyone to pay and exchange dollars. So if you have never used crypto before and are signing up to Royal, we are generating a wallet for you. You can deposit USDC in this wallet from your bank account. You never have to see Ethereum if you do not want.
Royal Market Leverages Ethereum Sidechain Polygonfor its NFT assets, but does not view self-custodial crypto wallets or ETH management as a required part of the Web3 experience. Royal simply wants to leverage the concept of blockchain-verifiable ownership while generalizing it.
“We had to build a bridge a little better,” Blau said of Royal’s decision to roll out its own market.
Royal’s goal for the marketplace is to be extremely user-friendly and keep its crypto elements to a minimum. This strategy can prove fruitful: Audius recently reached 7.5 million users, partly because, as CEO Roneil Rumburg already said Decrypt“the average Audius user doesn’t even know the crypto is there.”
“We’re not necessarily building it for existing crypto users,” Blau said of Royal’s market. “We build it for all newbies.”
Debates about royalty
Royal’s music royalties for collectors are not quite the same as the concept of creator royalties in the wider world of NFTs.
Royalties have become a controversial topic lately, as markets like OpenSea and magic eden debate whether to impose royalties on creators – a royalty, usually set between 5% and 10% of the sale price, paid by secondary market sellers. Many platforms have made them optional, although OpenSea chose to keep them following the reaction of the creator.
“I never really understood why we call them royalties in the first place,” Blau said. Decrypt. “Royalties somehow imply that something is consumed – that there is some kind of fee that is paid – and what we call secondary royalties are really secondary commissions.”
Royal’s payments are royalties in the traditional sense: rightsholders receive a percentage of profits when a piece of content is consumed. In the case of Royal, these rights holders are the NFT holders. In the rest of the NFT world, royalties could perhaps more accurately be renamed creation fees or, as Blau suggested, “secondary commissions.”
“My overall view is that the idea of perpetual side commissions is product-market-ready, as long as people are really excited about it,” he said. “Its enforceability unfortunately requires a degree of centralization.”
One of the main reasons Blau launched Royal was to disrupt the mainstream music industry and allow musicians to earn a bigger slice of the total revenue pie, where they currently bring in around 12%.
“At Royal, we obviously believe that creators should be paid forever,” he explained. “We are also sensitive to general tariff structures. For example, 10% every time something trades is just a bit irrational. But there is a middle ground that we think is fair.
Royal said it is covering its platform fees and artist fees in its marketplace until 2023, while its side commission fee for artists will be 2.5%.
The future of Royal
So what’s next for Team Royals? Blue said Decrypt that a mobile market app version is in the works. “Maybe it will be soon,” he said of an iOS app.
But Blau is not worried about Apple strict NFT policies or its 30% in-app purchase fee for all NFTs sold. Apple’s policies have divided NFT supporters. Some see these fees as incompatible with Web3 business models, while others say the mainstream audience is needed, and Web3 builders will just have to get more creative with how they monetize products.
“We have direct contact with Apple that we’re working with to make sure we’re evaluating the correct parameters for launch,” Blau said. “These fees will not impede our vision.”
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