Music as an investable asset class has been the furthest thing from open, accessible and transparent. A privilege typically available exclusively to accredited investors and with little to no supporting infrastructure to determine valuation, investing in the illiquid music intellectual property market has historically been an exercise in cutting red tape and crossing ones fingers.
To date, Royal has tokenized and sold music IP from Diplo, Nas, The Chainsmokers and many more elite artists in the form of NFTs. In their ongoing efforts to empower investors, musicians and fans alike, the company also launched their “Song Valuation Calculator,” a lens through which any user can view what a piece of music is monetarily worth based on future expected streaming performance.
Today’s investors are seamlessly collecting royalty distributions from purchases made on Royal while artists are simultaneously raising the capital needed to pursue their goals. But 3LAU’s drive to revolutionize the industry remains unabated.
“The music business has tons of areas of information asymmetry across it, where there’s little visibility into what money is being generated and where it goes,” 3LAU tells EDM.com matter-of-factly. “It’s really impossible to think about solving that whole problem in one effort, but a starting point would be to show people one thing that’s going on in the background that they don’t know.”
3LAU, whose real name is Justin Blau, says one of Royal’s core value propositions is education. Himself an artist of over a decade, Blau is especially forthcoming about the experiences that have gone on to shape his views today. He explains that when it comes to modeling the cash flow of a song, streaming is arguably the most predictive measure. Paradoxically, it’s usually the critical monetization lever that artists are quickest to relinquish when approaching a record deal.
“What I learned having released some of my first independent music in 2015 was that releasing something independently and that thing being successful meant a lot more money in my pocket if I kept the ownership,” Blau recalls.
“There was a song I made called ‘Is It Love’ that I chose to release independently,” he continues. “There was a deal on the table for 50% of that song for $15,000 from a reputable record label. If I had signed the deal the label would have made hundreds of thousands of dollars, but because I didn’t I got to keep all of that. That was a learning experience for me because the whole world was like ‘music doesn’t pay, streaming is bad’ but the streaming actually paid a lot more than the iTunes purchases prior.”
While changing the narrative from the artist’s point of view to illuminate the earning potential of their music remains a key focus of Royal’s strategy, there are additional considerations at play that are driving a sense of optimism in the company’s ability to scale music as an investment class with the public.
Despite a presently challenging macroeconomic environment characterized in part by quantitative tightening and rising interest rates, Blau tells us consumers on Royal are not purely incentivized by yields alone. There is, of course, a logic-based thesis for pursuing an investment in music, but there’s also an emotional one.
“One person might buy interest in a song because it’s exploding, but another might buy in because they love it,” he explains. “Music is in this weird category where it is both emotionally valuable and there’s a cashflow, and that means there are different reasons for people to buy it.”
“In economic downturns music has typically been resilient,” he continues, bringing it back to the macroeconomic outlook, “because people need it to survive, motivate themselves, they need it in the gym, in the car—and people listen to more music when things are bad.”
The emotional side of investing in music is a topic Blau returns to often. Exploring how to appeal to a fan’s emotional interest in being a part of the art’s future while patronizing the artists they already love remains a core part of the company’s strategy going forward.
Undeterred by the macro uncertainty, Royal is instead stepping up its efforts in terms of scalability with the intent of bringing a self-serve tool to any artist looking to facilitate a tokenized sale. The self-serve module currently exists in beta but the company is currently pressure testing it to ensure it’s ready for public access.
“At the end of the day, an open platform is most empowering for musicians and consumers because consumers may even encourage a musician to do something on Royal when that artist can do so,” Blau says.
Getting there was a challenge that included building a payments layer, compliance framework and a means for verifying rights ownership. While it’s been a heavy lift, Blau explains that it’s been some of the company’s most important work to date. The launch of these features was among the company’s most coveted end goals from the very start.
“We had to build all of these things that hadn’t been built before, and we’re really incredibly excited by the fact that it now exists,” he adds.
Explore Royal here.