Non-fungible tokens (NFTs) have seen a surge of mass adoption in the arts and video games sectors. On-chain music platform Royal has now announced that the company has managed to raise $55 million (about Rs 409.7 crore) in Series A funding, led by venture capital giant Andreessen Horowitz, also known as a16z. The startup collaborates with musicians and allows users to purchase NFTs, which represent collective ownership in the works of these artists. Chainsmokers, NAS, Logic and Kygo are among the musicians who chose to support the project with A16Z Crypto.
The project is led by Justin Blau, an EDM artist performing under the platform name 3LAU, and JD Ross, co-founder of home-buying startup Opendoor. Royal had managed to bring in $16 million (approximately Rs 119.18 crore) during its seed round in August, led by Founders Fund and Paradigm.
Over the past few months, Blau ran a test project during which he distributed 333 NFTs via the platform to fans who owned 50 percent of the streaming rights to a new single titled “Worst Case.” The startup claims that there have already been approximately $600,000 (approximately Rs 4.46 crore) in secondary sales of these tokens, giving the “worst case” estimated valuation of $6 million (approximately Rs 44.69 crore). Crypto-forward musicians such as Blau have already enlisted millions of crypto holders to diversify their holdings via NFTs, supporting projects that expand the opportunities of the blockchain market.
“We believe that blockchain technology has the potential to transform music ownership in the same way that the Internet has changed the way we listen to music,” electronic duo The Chainsmokers said in a joint statement.
While the premise for Royals fans to fund their favorite artist and receive a portion of the royalties in return is promising. It needs to be seen whether the company has the ability to measure its initial success. Music copyright is complex and has in the past been the subject of costly litigation, which has been going on for decades. Royal’s model of using blockchain technology to cut out the middleman and raise funds directly from fans may make the royalty process less problematic, but there are still relevant questions.
The biggest one is this: How does Royal decide what percentage of control owners will retain over their songs? This can prove to be a bit tricky especially with third party use and advertising while staying on the right side of the law.