On Jan. 11, Nas is selling 50% of the streaming royalty rights for his master recordings “Ultra Black” and “Rare,” using the platform Royal. This marks the first-ever sale for Royal — a buzzy new startup, co-founded by electronic musician and crypto pioneer Justin “3LAU” Blau, which acts as a platform for anyone to buy rights to songs or recordings directly from artists. Hoping to lower the barrier between artists and their fans, Royal was founded on the ethos that the general public should be able to buy in to their favorite artists’ music and that artists should have more options than just the traditional path of label funding.
“Having Nas be the first artist to sell royalty rights through Royal is an incredible affirmation of our mission,” says 3LAU. “It’s proof that artists across genres feel strongly about democratizing ownership of their music, and that they want to be connected to their listeners on a deeper level.”
Royal, however, is not the first company to test out selling fractional ownership of music rights. Similar startups like Vezt and Bluebox have been working to provide the public access to buy into music rights using blockchain for the last few years, though each company takes a different approach and the rights offered for sale vary. Vezt, for example, models these music rights sales after Wall Street — instead of Initial Public Offering, a Vezt sale is cheekily called Initial Song Offering, or an “ISO.”
In less than a year, Royal has proven to be a worthy new opponent in the burgeoning field, given the powerful industry and artist backers its acquired. In November, the startup announced its $55M Series A funding round, led by venture capital firm Andressen Horowitz and participation from investors like CAA, WME, Crush Music, Coinbase Ventures, Founders Fund, Paradigm, and NEA’s Connect Ventures. Beyond just company backers, Royal also boasts investment participation from artists like The Chainsmokers, Logic, Kygo, Stefflon Don, Joyner Lucas, Disclosure, and Nas.
For the Nas sale, anyone is able to sign up, using their email address on the company’s website. The exact timing of the sale is undisclosed, but those who sign up will receive notifications with more details directly from Royal. During the sale, fans can choose between different tiered token options of streaming royalty ownership for each track, titled Gold, Platinum and Diamond. The price of each level is fixed and ranges from $50-$9,999 with higher tiers offering more streaming royalties and other exclusive perks.
“Ultra Black” was released as a single from King’s Disease in 2020 and “Rare” was a single from his follow up King’s Disease II in 2021. As of Jan. 6, 2022, the songs have earned 23.6 million and 25.1 million on demand global streams, respectively, according to MRC Data. The sale of these singles is on a first-come, first-served basis and sales will end once all of fans shares add up to 50% of each song.
While the concept of selling fractions of royalty income or overall ownership of music via blockchain poses an exciting new frontier, legal barriers block many artists from participating, but Nas is an ideal candidate for a sale with Royal because he owns 100% of his master recordings for both singles, a rarity in the music business. While most major artists have either signed away the ownership of their masters to labels or signed away control for a decade or more in direct licensing deals with labels, Nas works with the independent label Mass Appeal, where he is a partner, allowing him the opportunity to control the rights of his own creations under the deal. The two songs also do not contain samples, which typically require artists to cede chunks of their master recording ownership to other parties. Because of these barriers, it remains unrealistic for many household names to participate in sales like this one.
Beyond the question of ownership, some lawyers speculate a barrier for these fractional sales of music rights is future regulation by the SEC, which could potentially deem this as a form of security. A representative for the company says, however, that “Royal is following guidance from regulators who have indicated that they consider digital assets such as cryptocurrencies and NFTs, due to their decentralization, as commodities like gold and other precious metals, rather than securities. Royal’s novel non-fungible asset standard, the Limited Digital Asset, fails the third pillar of the Howey Test, and therefore can’t be considered a security. In addition, Royal works with former regulators to ensure its flagship LDAs will follow geographic rules. Artists can’t use Royal to fundraise for unreleased songs. Owning master recording rights and music today is not treated as a security and Royal has no plans of issuing securities in the short term.”