Crypto’s Best Blockchain Music Projects

What’s The Basic Thing It Does?

Royal.io connects music fans who want to own a piece of a song’s streaming royalty revenue, with artists who want to sell a percentage of those revenues.

Interestingly, Royal is very ‘hands off’ with the regards to the transaction between artists and rights holders. This isn’t obvious from a cursory look at the Royal website, but is stated very clearly in its terms of service. “Royal provides a peer-to-peer web service that helps Users discover and interact with each other and Song Tokens available in public blockchains. We do not have custody or control over the Song Tokens or blockchains you are interacting with and we do not execute or effectuate purchases, transfers, or sales of Song Tokens. Our Services also allow music professionals (“Artists”) to sell certain non-fungible tokens (each, an “Song Token”) to third party entities or persons (“Purchasers”) via the Royal Platform. Royal is not a party to any transaction between Artists and any Purchaser. Royal does not control or vet content provided by Artists, nor does Royal assume any responsibility for the accuracy or reliability of any information provided by Artists. Royal is not a party to any agreement between any Users. You bear full responsibility for verifying the identity, legitimacy, functionality, or authenticity of any User or Song Token (and any content associated with such Song Token) visible on the Service.”

So what does all that mean? In simple terms, Royal is just a connection platform. It won’t ensure you receive the tokens you buy, it won’t ensure you receive the royalty revenues you’re expecting. Each relationship between an artist and a rights buyer, is one to one. If you buy the rights from an artist, that relationship is entirely between you and the artist, so you have to trust that they’ll deliver what they promise.

What’s The Blockchain Angle?

Users who want to buy a share of an artist’s royalties purchase an NFT (which Royal refers to as an LDA) in an initial ‘drop’ on Royal. Drops are comparable to an ICO or IEO – but for a song. Artists can set the price for these LDAs – typically by tiers- for example, Gold, Platinum or Diamond. More expensive tiers offer a higher percentage of artist royalties and the NFTs/LDAs can be embedded with additional rights to things like fan experiences and digital art etc.

The purchase transaction takes place on the Polygon blockchain using MATIC via the user’s MetaMask wallet. When the artists receive their royalty revenue from the likes of Spotify, the plan is they will place the percentage they allocated to fan ownership into a smart contract, and the royalty revenue is distributed to those owners based on their pro-rata share of the song’s streaming revenue.

After the initial drop, these NFTs/LDAs can be on-sold via secondary markets such as Opensea. Royal does not have its own token. Instead the ‘value’ of each song’s NFT/LDA is fully dependent on the streaming success of the song after its initial drop.

Financial Backers

If data from Crunchbase is to be believed, Royal has raised a phenomenal amount of money in an initial seed round ($16 million) and then $55 million in a Series A round in November 2021. Famous investors include performers The Chainsmokers and rapper Nas (who is also involved with Audius). Andreessen Horowitz (a16z) took the lead on the Series A round. Coinbase Ventures and Paradigm also invested.

Technical Details

Royal NFTs/LDAs are ERC-1155 tokens. The Royal transaction layer is on Polygon, via MetaMask or a built in Royal wallet. Royal says additional wallets will be added soon. To date there is no Royal app for Apple or Google Play.

What It’s Doing Well

Amongst crypto music projects, Royal is far and away the leader in terms of investor capital raised. It has also centered its offering around music royalty ownership rights, which is a part of the overall music copyright universe – so kudos for that.

In terms of signups to the platform, data from Royal has not been updated for some time, but the platform claims over 120,000 user signups. It also claims over $7.5 million in music rights have been traded, $2.5 million has been raised for artists (presumedly from song drop revenues) and $156,000 in royalty revenues have been paid out to NFT holders. Similarweb reports monthly website traffic at around 62,000.

Summary

Royal made a good start in the space by concentrating on royalties – allowing LDA/NFT buyers to support their favorite artists for a share of that artist’s potential streaming revenues. Royal has also sold its story well and raised a giant war chest to invest in itself. The platform’s issues are less about what it’s doing and more about the music business in general.

Wisely, Royal does not engage at all in the process of revenue collection and distribution – and in reality it can’t. Only the copyright holder to a song (or their nominated agent) can collect that song’s revenue. Streaming revenue is actually collected by Performing Rights Associations like ASCAP and BMI, who represent and distribute to the copyright holders. There is ZERO blockchain activity going on in that process and won’t be for a very long time, if ever.

Also, streaming revenue is a tiny fraction of overall music publishing revenue. So currently, Royal’s artists are keeping the lion’s share of their earnings for things like synchronisation rights to themselves. This is not to say those revenues could not be included in the Royal packages, but for whatever reason, they’re currently not. So there is an opportunity for expansion there.

On the downside, Royal cannot guarantee any royalties will be received by NFT holders. This is all dependent on the popularity of an artist’s tracks, and of course, on whether the artists are proficient at accounting for and distributing the NFT holder’s shares.

In terms of where its revenues will come from, Royal has suggested it will start charging for artist drops sometime in 2023, but it is unclear what form those charges will take. Aside from that, without a streaming platform of its own, a token, or a mechanism to secure some copyright share of artist’s tracks that it lists, there doesn’t currently appear to be an obvious revenue model underscoring Royal. That said, however, applied in the right way (a couple of strategic purchases for example) $55 million in investment funding could easily solve any of those problems.