HOW IT WORKS
First, an artist must decide which tracks they want to sell streaming revenue percentages. If the artist is under contract with a label, this process will require negotiations with the label’s legal team which may make this service dead on arrival. If the track has additional collaborators who also have ownership rights, this may cause additional complications. It’s ideal to choose a track or album which is fully owned by the artist, 100% free and clear.
Typically an artist will choose a newly released track which doesn’t have public data on number of streams versus an older track which has plenty of public data. This is to avoid potential buyers calculating the expected returns and ROI based on the NFT purchase price. The mystery of a track’s popularity adds intrigue to the value of the NFT, and also, fans really shouldn’t be purchasing these solely for the potential ROI.
The service below is only accepting a very limited number of clients at this time, reach out to an AudioNode team member for both legal and smart contract development to accomplish this service in-house.
Typically an artist will sell different tier level NFTs to gain a small revenue split of streaming revenue for a particular song or album. For example, the first tier could be 0.1% of streaming revenue with an NFT price set at $100, the second could be 0.5% with an NFT price of $400, and the third could be 1.0% with an NFT price of $700. Notice how the higher tier, while more expensive, provides a greater percentage per dollar. This is typical in order to drive sales of higher tier (less affordable) NFTs.
An artist can also add additional perks in addition to a higher revenue split % to the higher tiers to help drive sales of the more expensive tiers.
An artist needs to also decide how much revenue they are willing to part with for the track or album in total, then set the number of editions of each tier to total the % they are willing to part with. This can be a great way to fundraise and essentially get an advance from years of future revenue, but is also a significant decision which could impact an artist’s future bottom line.
The artist will add Royal (service below) or AudioNode (custom in-house NFT development) as a contributor on the track or album sold through the artist’s distribution service.
The contributor % will equate to the total amount of revenue percentage to be sold via NFT.
Streaming revenue will transfer from the streaming service directly into an account set up at Royal or AudioNode (now contributors) and smart contracts built into the NFT will then transfer that revenue to the current NFT owners’ digital wallets.
PROs + CONs
Highly attractive for fans and a simple value prop
A great way for artists to fundraise based on potential future revenue
Currently Royal’s service is only for top-tier artists (AudioNode is able to assist artists of all sizes)
Legal issues with material not fully owned by artist
A fairly expensive service for smaller artists (medium and large artists are able to pay for the service via a small portion of NFT sales)