Where it all began! for me –
Sometime in December 2020, Mr Eazi, known not only for his Nigerian/Ghanian influenced Music but also his love for tech and its capabilities, tweeted about an experiment he would explore for his next release. In his words, “Gonna try an experiment on my next release where you guys the fans will be able to buy shares on My Song! Meaning you will own an equity % on the Song! As u stream & give me $ some goes back to You!!!”. I found the concept exciting, so I bookmarked the tweet without any further research on the feasibility or otherwise of the idea.
Fast forward to October 5 2021. I received an email from the chaps at https://republic.co with the subject “🎶 Invest in Music » own a piece of your favorite songs”, and as a music lover, this got me excited. The email was exactly what I was hoping it would be, an opportunity to back an Artiste you love(or do not) and earn returns as you stream their Song. Music has never sounded so good; I whispered under my breath while reading the line “Returns on repeat”. The next step was to join a waitlist for the launch featuring two artists I had never heard of – Lil Pump and EDM titan KSHMR.
I cared less, as the concept and possibilities of this new asset class and business model via Security-NFT, previously enjoyed by Record Label owners, was too good to pass on, so I joined the waiting list.
The Business Model –
Now it is almost two years apart between Mr Eazi’s tweet and Republic’s launch of their Music vertical.
A lot has happened in the blockchain space since then. Nigeria had banned Cryptocurrency, Bitcoin and ETH had experienced a surge, “Tech bros” now have an ETH domain extension, and NTF has become a thing.
Speaking of NFT (Non-Fungible Token). According to Republic, the new business model “is a way for artists to raise capital from their fans through investing and in exchange, the fans receive equity in the rights to the royalties.” This investment is made via Security NFTs, which “combine the ownership and transparency of NFTs with an innovative investing framework. Republic is one of the first crowdfunding platforms to offer this type of investment”.
How is this structured? –
I am using Lil Pump as a standard of this model.
An LLC was created to house all the investors. The LLC owns 50% of the master rights and 50% of the publishing rights to the Song, which basically entitles it to receive 50% of any potential future royalty payments from streaming, licensing, ads, and more.
“When you invest in these songs, you’re becoming a part owner in the rights to the Music, meaning you have a financial interest that’s directly connected to the master rights of the Music. This ownership gives you the right to share in potential royalties with the artist and other investors.”Republic.co
The success or otherwise of the Song depends on the continuous popularity of the musician, the LLC’s ability to navigate the complex Royalty collection schemes etc.
However, the upside is that revenue will be in perpetuity, and returns(if any) will be paid quarterly (passive income 😊).
The numbers –
The overall investment goal was a minimum of $25,000 and a maximum of $500,000. Republic sold out the investment in less than a day!
$500,000 for a 50% share of the Song means the Song is valued at $1m.
I ran some numbers based on the data shared for past performances of some of his popular tracks. I picked three tracks the oldest, newest and most popular.
It will take Seven (7) months for this track to match his best performing song – I love it (ft Kanye) to break even for the investors and as high as 1.3 Years for his worst-performing Song – Coronao Now (Shitty title if we are being honest).
On average Lil Pump crosses the $1m revenue per song in 11 months. So fingers crossed 😊Temitope Omoniyi
|Release Date||Track||Streams||Revenue||Months Since Release||Average Revenue PM||Break Even for $1m (in Months)|
|Sep-2018||I love it (ft Kanye)||801,000,000||$ 5,020,000||37||$ 135,675.68||7|
|May-2020||Coronao Now||143,430,000||$ 900,000||14||$ 21,951.22||16|
|Oct-2017||Gucci Gang||856,860,000||$ 5,370,000||48||$ 111,875.00||9|
|Averages||600,430,000||$ 3,763,333||33||$ 103,945.46||11|
Numbers were as at Q3 and cover both Master and Publishing rights
Note that new songs might take some time to catch up and become viral. This was not considered in this model
- The Song might flop, record labels and angel investors face a similar risk
- Zero control on what the musician does with the cash raised, i.e. funds can be used for other purposes different from creating, distributing and promoting the Song, splurge in a club
- The streaming platforms might delist a Song if they believe the ~920 investors will significantly influence the streaming numbers or game it. It is unlikely, but what if a song has 1 million investors?
- Other Crypto associated risks (wallet hacked, unable to recover password etc)
Finally, I am super excited about the new business model and looking forward to Afrobeat musicians, both established and newbies, trying this out.
If this fails, I got this NFT (do not screenshot! 😀😀) for my investment 🚀🚀🚀.
Comment on “The future of investing in Music via the Blockchain”
Is Republic the only company offering this type of platform? I see this being the future for artists, but it seems like companies like Republic and Opulus are only willing to take on established acts and not grassroots acts. Nevertheless, this is a valuable avenue for upcoming acts to raise money and grow their careers.