One of the most compelling promises of web3 is its power to radically expand the earning power of artists, musicians, and other creatives. Musicians, in particular, have long suffered under contracts and agreements which favor big record labels rather than artists, but the broad economic narrative remains the same across the arts.

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Blockchain proposes several solutions to rebalance the scales. One of the most compelling of these use cases is the capacity of NFT technology to distribute royalties back to the artist with each resale of their work on a secondary market.

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Called by one industry commentator as “a crucial aspect of the Web3 music concept,” and heralded by ProfessionalArtist.com as “an outstanding feature… in striking contrast to the analog art world,” creator royalties look to empower artists and creatives of every discipline. 

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The Traditional System

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The struggle of recording artists to recoup a fair share of their sales is well documented. One singer particularly famous for her crusade against exploitative economic models is Taylor Swift. The artist famously pulled her music from Spotify in 2014, arguing that the platform undervalued the work of musicians. 

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If Taylor Swift feels hard done by, it’s no surprise that things are even more challenging for independent and lesser-known artists, who are left unsupported by big streaming platforms. 

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NFT Industry Adoption

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But there is a groundswell of momentum within the industry to turn towards fairer revenue distribution - and blockchain is the movement’s technology of choice. Pieces of music and works of art can easily be packaged as an NFT for fans to purchase and experience just as they might a song on iTunes.

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Some of the biggest artists in the world are leading the way. Less than a month after he acquired the legendary Death Row Records, rapper Snoop Dogg released a set of songs as an NFT mixtape, ‘Dogg on it: Death Row Mixtape Vol. 1.’

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Soon after that drop, the 2022 Grammy Awards released an official NFT collection as part of a three-year plan to integrate NFTs into the overall Grammy experience. Sony Music, meanwhile, has filed a trademark application for NFT-authenticated music, covering artists under the Columbia Records label. 

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What are Creator Royalties?

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With interest from some of the world’s leading artists and some of its biggest institutions alike, NFT-powered music cannot easily be dismissed. One of the most powerful ways in which blockchain-based music distribution can change artists’ lives is in its programmable royalties.

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Each original track is recorded by the artist and saved onto an NFT. That NFT is then sold on a marketplace, as a track used to be sold on iTunes. But here is where the similarities end. After being purchased, the NFT track can be resold by the buyer, just as CDs can be sold second-hand. The best part? The NFTs can be programmed to automatically send a percentage of the resale price back to the original creator - that is, you, the musician.

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Put simply, musicians now have the power to continue earning a cut off their music, even long after they’ve sold all their NFTs. As long as they continue to circulate in the open market, musicians continue to earn. 

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Musicians and other artists selling their work as NFTs benefit from a secondary, passive income stream. They also have far greater control over the specific parameters of their revenue distribution. Using Venly’s tools, NFTs are easy to create and configure, even for someone with no technical experience. No need for middle-men distributors who take such a disproportionate cut.

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And NFTs need not contain simply a music file - they can carry exclusive extra content, including images and other files, as well as membership passes that can be used for promotional content. Kings of Leon, one of the first bands in the world to publish an NFT album, made over $2 million in revenue from its sale. 

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Fans as Investors

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Taking a cut with each resale is not the only way royalties can be leveraged to increase artist revenues, however. Rather than receiving royalties each time their NFT is resold, creators can also sell fans a percentage of their royalty rights, effectively making fans investors in the artist's success. 

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The appeal of this model was recently demonstrated by Jamil ‘Deputy’ Pierre, a co-producer alongside Kanye West on Rihanna’s 2015 hit ‘Bitch Better Have My Money.’ As a co-producer of the track, Pierre receives royalties each time the song is played or streamed. Using NFTs, Pierre sold 1% of his royalty rights to fans, meaning they as well would receive a small proportion of cash back each time the song is played or streamed. The NFT collection quickly sold out, generating over $63,000 in revenue.

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Web3 artist and independent music producer Daniel Allen has taken this idea even further. Using blockchain, Allan crowd-funded his EP, Overstimulated, to the tune of $140,000. In exchange, he gave investors a 50% share of lifetime royalties for the EP. 

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As NFTNow.com put it, “Allan essentially invalidated the idea that, to make money starting in the music industry, an artist or band needed a label’s cash or other forms of assistance.” His blockchain-based crowdfunding campaign was a “blockchain-centric parallel to a traditional recording contract. One that benefits both the artist and investors equally, as it gives each equal incentives for the project to succeed, rather than a label receiving the lion’s share of a deal under the guise of recuperating costs.”

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Golden Oldies

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It’s not just up-and-coming artists who can benefit from NFT royalties. Previously unreleased editions of classic songs can also be given a second life. David Bowie’s 1983 hit “Let’s Dance,” for example, is being re-issued as a limited edition NFT, sold on a pay-as-you-wish basis, delivering all proceeds from the initial sale towards charity.

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The Rolling Stones, meanwhile, are using clever marketing to sell 40 NFT photos of historical moments on tour. 

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Marketplaces

There are now many successful NFT marketplaces where anyone can sell NFTs that automatically distribute royalty payments to their original creators with each resell - Venly’s own among them. There are also increasingly more niche markets, including those that cater towards musicians, artists, and other creatives.

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One example is Royal, an NFT-music platform that allows fans to buy and sell tokenized ownership of songs, in the manner that Jamil Pierre resold a percentage of ownership in Rihanna’s track. Musicians and creators can also earn royalties from the resale of those ownership tokens.

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Royal raised a total of $71 million over three funding rounds, including from some of web3’s most well-known investors, indicating the market’s enthusiasm for the idea.

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Alongside Royal is AnotherBlock, which follows the same format, delivering artists royalties each time stakes in their work are traded by their fans. On the platform are featured artists such as The Weeknd, Martin Garrix, Alan Walker, Offset and R3HAB. Internationally successful DJ Axwell explained that, “enabling greater rights flexibility is the future of the industry. It creates a whole new freedom for creators to share the financial incentives with fans, which are the most important thing we have." 

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Venly already supplies NFT-marketplace technology to several companies making a difference for artists and musicians. Our work with TokenTraxx, a next-generation musical talent development platform and market place, is covered in another post. As is our work with Illuminate.Art to create the world’s best web3 platform for visual artists to grow and sell their work.

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Conclusion

With such a rapidly developing ecosystem of technologies and projects that support music and the arts, web3 is looking more and more like the next great cultural platform. Never before have musicians, artists and creatives of all stripes had access to such cheap, accessible and direct technology to distribute their work - directly to their fans. 

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Blockchain technology replaces the traditional middle-man and allows for new distribution models in favor of creatives. A new era of creative expression is being ushered in. With its industry-leading suite of web3 software, Venly is proud to be paving the way. 

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About Venly

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Venly is a blockchain technology provider creating tools and products to help companies benefit from blockchain technology. We provide a complete technology stack to bring brands, apps, games and platforms into Web3. We help businesses integrate Web3 technology & onboard users seamlessly. We are making blockchain accessible for everyone. 

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To find out more, visit Venly's E-commerce or Entertainment Solutions page.

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Join our Discord for updates on the latest NFT trends and drops, developer channel and community. 

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