With the onset of the digital universe over the last decades, music has been steadily devalued with a race to the bottom pricing to give subscribers access to massive databases of music. Pandemic social shutdowns were another blow to musicians, who now couldn’t even generate revenue from live performances. In recent months, the emergence of NFTs, or non-fungible tokens, are breathing life into the industry as musicians are getting creative with ways to generate revenue and better connect with fans. An NFT is, in essence, a collectible digital asset, which holds value as a form of cryptocurrency and as a form of art or culture, and offers artists the ability to monetize their art or music. Music DeFi pioneer BAND Royalty (Profile) is taking NFTs to the next level by structuring them with the opportunity to access royalties from its constantly growing library of soundtracks. Just as Apple Inc. (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) shook up the music industry with their subscription services and exclusive content, NFTs are being hailed as the next great disruptor, which would likely benefit Riot Blockchain Inc. (NASDAQ: RIOT), Coinbase Global Inc (NASDAQ: COIN) and others already deep in the cryptocurrency and blockchain markets.
- Sales of NFTs soared to more than $2 billion in Q1 2021, up from $93 million in Q4 2020.
- BAND Royalty is creating a revolutionary ecosystem that provides investors the opportunity to participate in the music royalty market.
- BAND Royalty has amassed an impressive library of rights to royalties for tracks from some of the music world’s most popular artists.
- Once BAND’s NFT is staked, NFT holders can access music royalties in four different ways.
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NFTs Are Pure Gold for Artists
NFTs, one-of-a-kind assets stored and verified on immutable blockchain technology exploded on the scene in 2021, headlined by Christie’s auctioning a collection of Beeple’s digital artwork for $69.3 million in March. During the first quarter of 2021, NFT sales exceeded $2 billion, up more than 20-fold from $93 million in Q4 2020. The $2-plus billion wasn’t inflated by the Beeple auction, according to nonfungible.com. Also excluded were sales of NBA Top Shots, video highlights converted into NFTs. NBA Top Shot trade on the Flow platform reached $472 million during Q1 2021.
Like Bitcoin and other cryptocurrencies, NFTs can be held, sold or traded. Working as part of the complex encryption network of the Ethereum blockchain, NFTs are protected from counterfeiting as all transactions are on the blockchain, open to the public for tracing and authentication.
To date, the collectible space has been the primary attention draw, but the breadth of the market is starting to push through, including the music industry joining the mix. On March 12, Music Business Worldwide reported that NFTs grossed $35 million for the music industry in the past month, including Linkin Park’s Mike Shinoda making more than $30,000 with his new single “Happy Endings” and Kings of Leon becoming the first brand name band to release a new album as an NFT on the blockchain platform YellowHeart. YouTuber and musician PelleK in February claimed to be the first ever to release an NFT music album, which sold out in less than two hours when presales opened, generating $160,000. BAND Royalty did a limited private sale of its music NFTs, selling its three top NFTs for more than $200,000 and resulting in combined NFT presales of more than $700,000.
In the midst of this frenzy, BAND Royalty is establishing a new NFT paradigm. The company is democratizing music royalties by creating new opportunities to participate in a valuable asset class that’s now gained stability after years of decline with the advent of music streaming. The company has already amassed an impressive library of rights to royalties for tracks from popular artists such as Justin Timberlake, Beyonce, Jay-Z, Cher, Rihanna, Demi Lovato, Timbaland, Missy Elliott and more.
There is also a unique collection component to owning a BAND NFT. The company has commissioned leading artists to create distinctive, 3D artwork for each of the strictly limited-edition BAND NFTs. With musician-facing foresight, BAND intends to dedicate part of its platform to serve as a launchpad for new talent.
The BA & ND of BAND
“BAND” is more than just a memorable industry moniker. It also comes from the company’s founders, Barnaby Andersun (BA) + Noble Drakoln (ND), two key opinion leaders in blockchain. Andersun is also CEO of BlockAlchemy, a blockchain, ecommerce and digital design consulting firm, and a widely sought-after public speaker on blockchain, including speaking at the World Economic Forum in Davos and Harvard University on the subject.
In addition to being a best-selling author and contributor to mainstream media outlets such as Forbes, Fox Business News and Bloomberg, Drakoln, CEO of AR/XR game designer WarePlay Games Inc., brings decades of experience to BAND as an avid music royalty investor. The knowledge and networking into the inner sanctum of the royalty business is a clear differentiator for BAND.
Don’t Just Listen to the Music, Make Money From It
Currently retail investors can only get exposure to the music industry by buying stock in a public music label, investing in funds that buy/sell music royalties, or via websites that auction royalty rights, often well into the six-figure dollar range. In what many perceive as a ground-floor opportunity, BAND Royalty is changing the landscape and making it accessible for retail investors to participate by owning NFTs.
After a private sale of music NFTs that generated almost $1 million, BAND launched its own NFT sales platform on its website, creating the first music NFT-only platform this month. The company opened up access to the first series of 3,000 BAND NFTs on its platform, staggering the release based on rarity. The company’s plan is to keep the NFT count tight, much like other popular NFT projects such as CryptoPunks and Hashmasks, both of which have had secondary market sales in the millions of dollars. The long-term intention is to have a maximum of 12,000 BAND NFTs across four different series to be released over the next 18 months.
Once someone purchases a BAND NFT, they can hold or trade it like any other cryptocurrency, or once they pass the BAND KYC protocols, they will be able to “stake” their NFT for a chance to participate in the revenues from one of three music royalty pools: print music royalties, mechanical and public performance royalties, or synchronization royalties, most likely with their share being paid out in the upcoming BAND token. Staking can be for different time periods ranging from 90 days up to 5 years.
Just the Beginning: Upcoming Catalysts
As explained by Andersun on “The Nifty Show” podcast, the vision of the company is starting to be realized. The first series of NFTs were launched this month as the team works to complete the smart contracts that undergird the staking mechanism. Those are expected to be completed this quarter, which sets the royalty revenue component in motion. The goal is to allow BAND NFT stakers the ability to share in four different streams of income, including 50% from all BAND royalty music catalog revenue, a percentage from any auctions of single BAND music tracks sold, 5% on any BAND NFTs traded in the secondary market on OpenSea (or the BAND platform), and 5% from re-selling of music royalties on the BAND platform.
The playbook is for a comprehensive music royalty ecosystem, complete with a launchpad for emerging artists. Presently, musicians are at the mercy of the record industry, a dynamic that BAND intends to disrupt with a platform that gives artists more opportunity to earn and keep royalties with added perks to connect with their fan base through exclusive offers.
Upending the Norm
The music industry has faced bona fide headwinds for decades, as the internet and streaming music became the death knell for terrestrial radio. But where technology taketh away, technology giveth back in the form of blockchain and NFTs, which will likely capture all the top players spanning the entire breadth of music, crypto and blockchain domains looking for new methods of monetization to enhance revenue streams.
Apple Inc. (NASDAQ: AAPL) has been quiet as to how many Apple Music subscribers it has since passing 60 million in June 2019, but CFO Luca Maestri did say last month that Apple had more than 660 million paid subscriptions across all its services as of Q1 2021. The tech juggernaut still hasn’t made any moves into cryptocurrency or NFTs yet, although their SVP of Internet Software and Services, Eddy Cue, last month joined the advisory board of Autograph, an upstart NFT company founded by NFL legend Tom Brady that is being stacked with tech heavyweights, including Dawn Ostroff, the CCO of Apple rival Spotify.
Amazon (NASDAQ: AMZN) isn’t peddling NFTs on its massive ecommerce platform, but the company certainly has established a standard for innovating the music industry. Last year the company reported its streaming service had reached more than 55 million customers globally, with subscriptions to Amazon Music Unlimited growing by more than 50% compared to the year before. In addition, the service saw incredible growth around the world: Amazon Music grew nearly 50% year-over-year across the United States, the United Kingdom, Germany and Japan while more than doubling in newer countries such as France, Italy, Spain, and Mexico. The company also introduced Amazon Music HD, which brings music fans the highest-quality audio available for streaming.
Riot Blockchain Inc (NASDAQ: RIOT) made its biggest move to date to establish itself as the leader in mining of Bitcoin, the popular cryptocurrency where data is stored on blockchain technology. Riot in April agreed to by $651 million in cash and stock to acquire all the assets and operations of Whinstone US, Inc. Once the transaction is complete, Riot will own the largest Bitcoin mining facility in North America, with very low power costs, a key to efficient cryptocurrency mining.
Coinbase Global Inc (NASDAQ: COIN) was the first cryptocurrency exchange to go public, making its debut on April 14 via a direct listing that NASDAQ said valued shares at $250 each. COIN stock shot ahead to as high as $429 in intraday trading before closing at $328.28, valuing the company at $85.8 billion. Interestingly, Coinbase CFO Alesia Haas said that the company is considering NFTs to diversify its revenue streams from trading fees, although she stopped short of providing details about any upcoming strategy (https://www.nnw.fm/3NiFf).
Digital content continues accelerating, underscored by Millennials and Gen Zers valuing digital goods every bit as much as tangible goods they can hold in their hands. NFTs have already established a toehold in the new digital universe and BAND’s NFTs look to claim even more turf.
