Investing in anything with crypto is risky. We know that. But you can be smart and invest in things that are solving real world problems and not just chasing the wind. Music on the blockchain has opened up a whole new world of opportunities.
Many blockchain technologies allow for shared ownership of an artist’s music through the use of “smart contracts”. We’ll take a closer look at 5 standouts in a very crowded and fast moving space.
Now blockchain is being used to open new investment avenues, allowing anyone to invest in the catalogues of artists. Not only can you own a percentage of your favorite music’s royalties, you have the option to resell or trade it on open digital marketplaces.
There are variations on the methods used by these start-ups. The primary difference being whether you are required to be a part of a DAO (Decentralized Autonomous Organization ), or you simply purchase the music “asset” with a standard crypto wallet.
Making investments with cyrpto has always been a risky endeavor. It is a volatile market after all, which is only exacerbated by the fact that the music industry is equally as restless.
Before deciding to make any such investment, it’s important to weight the pros and cons.
PROS OF INVESTING IN MUSIC WITH CRYPTOCURRENCY
- You have residual revenue based on your partial ownership of the songs you buy into. The benefit of “residual income” has long been a boon to musicians and their families/estates.
- Buying the token that represents your ownership will often come with extras: such as exclusive access to other artist content, VIP passes to performances.
- If you purchase part of the streaming rights while the crypto it is listed under is at a low, you are getting more for your money (the percentage of your stake in royalties is static, while the price of ETH spikes up and down for example)
CONS OF INVESTING IN MUSIC WITH CRYPTOCURRENCY:
- Given that this is part of the digital economy, cryptocurrencies are the method of exchange, along with the ups and downs of their value. Even though this can also be a “pro” when the crypto market is hot, many NFTs have decreased in value along with the tokens they are based on
- You have to be careful with timing of any resale of your NFT representing your percentage of royalties to realize as actual money, you need to sell when the cryptocurrencies valid for your asset are at what you consider high.
- When using a non-standard token from a DAO, there are even more volatility risks than the widely known cryptos
Here are 5 examples that can be described as variations on a theme.
The theme being to break away from the music world’s traditional paradigm of revenue distribution and find a new twist on promotion and fanbase community building.
Now let’s dive into the list…
Even though purchases are made as standard NFTs (via OpenSea marketplace), they refer to their tokens as “Limited Digital Assets” or LDAs. Royal has gotten significant outside investment.
Royal made news at the start of the year when Nas partnered with them to sell portions of streaming royalties for 2 of his tracks. Nas remains a strong advocate of the platform and is featured prominently on their website.
In May, the Chainsmokers’ used the platform to sell a percentage of royalties as LDAs for their album “So Far So Good”.
The 5000 tokens sold out quickly, with each granting 0.0002% of streaming revenue. In keeping with the practice of “unlockables” (value added content) being bundled with an NFT, they promise that the token owners will have a collective 1% of audio streaming royalties on all the remaining tracks once the album is finished – not to mention the VIP package lottery and Discord channel access.
Here we have DAO model with the $MODA token and what they refer to as “Music3” in an obvious tie-in with the general term of Web3. They have their own design construct of a “Value Model” you can find here.
They advertise an infrastructure for creator tools, an entire decentralized ecosystem for publishing and an innovation lab to aid with pre-release hype, micro-licensing and tokens for artists as well as songs.
Opulous touts the ability to support musicians & share in their success while earning royalties from copyright shares. Unlike other tokens, MFTs offer buyers a share of a single, EP or album’s music copyright.
Opulous offer a system of creating/minting what they call “MFTs” – Music Fungible Tokens. Stating that you can invest in for artists of all levels and revenue calculated monthly, meaning you an owner will profit if there is an increase in popularity.
Additionally, anyone can buy and trade MFTs and Artwork NFTs on the Opulous Exchange, creating a portfolio of music copyright shares and royalty rights previously only available to industry insiders. They even offer de-fi loans backed by “real world music assets and future royaties
Lil Pump and Tyga are a few of the more prominent artists active on the Opulous platform.
Audius is combination of streaming service/app and decentralized token of their own design – $AUDIO. They also promise curated premium features to promote user engagement.
As is the case with Moda, the use of a DAO token is being implemented, along with incentives for anybody to host a “node” that is is part of the peer-to-peer network where content resides.
As an additional feature, not only signed talent can participate. They promote the support for any independent artist to “generate immutable timestamped records for their creative works, secured by an incentive-aligned decentralized network of node operators”.
On Audius, you’ll find new creators as well as some recurring blockchain savvy artists like Deadmau5, as well as 3Lau – Justin Blau, who also happens to be the founder of Royal.io!
MusicFX is another shared ownership model, promising you can become as much a part of the artists world as they can become nearer to yours.
Their site lists the venture as a collaboration between CurrencyWorks Inc, an award-winning financial technology and blockchain pioneer working in partnership with Crown & Ace, a leader in music management and events.
Not specifically mentioned previously, All of these companies include the goals of curation, promotion/hype and artist development.
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AudiusX is dedicated providing you the latest news about Audius (AUDIO), and other decentralized Web3 projects in the crypto industry. Our goal at AudiusX is to provide you with the best and most exclusive information about the crypto industry, decentralized music streaming, music NFTs and music in the metaverse.