Royal’s Justin Blau and Paradigm’s Fred Ehrsam discuss how selling royalties directly to fans has the potential to upend the music industry.
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If you are familiar with the relationship between record labels and musicians, you are probably aware that artists are frequently on the receiving end of a bad contract. Mega-stars are rare, and as a result, record labels cling on to as much of their earnings as they possibly can in order to support all of the swings and misses they experience. (This is also done in order to maximize their earnings.)
This is a persistent cause of annoyance for many people, but notably for mega-stars, some of whom have grown famous in part as a result of their disagreements with labelling authorities: Prince defaced his face with the word “slave” to express his dissatisfaction with Warner Bros.’ treatment of him; Taylor Swift is currently re-recording all of her previous albums after her former label sold the content out from under her.
Before the year 2000 or thereabouts, labels held all of the cards in this situation. They were in charge of the manufacture and distribution of records and CDs, and they possessed the financial resources and interpersonal ties necessary for marketing. Occasionally, an alternative musician would go out on their own and establish their own independent record label or label group. The big record labels, on the other hand, dominated the business for the most part.
The Future of Music
The concept is to take the standard record industry paradigm, in which the label can retain 80 percent of all future royalties, and flip it to one in which the artist retains 80 percent of all future revenues. (According to the corporation, Royal takes a cut of primary sales that are less than 10%, as well as a cut of secondary sales.)
Blau put the platform through its paces this summer by giving away 333 NFTs, which represented half of the streaming ownership in his new single. They have now earned more than $600,000 in sales and are worth more than $6 million in total.
As a result, investors are even more enthusiastic about Royal, just four months after the company raised its seed round. On Monday, Blau announced that Royal has raised an additional $55 million in funding, with new investors including The Chainsmokers, Nas, and Kygo joining the existing group of investors.
According to Blau, who spoke to me last week, “I truly believe we are only touching the surface of what we can do here.” (In classic rock ‘n’ roll form, he zoomed in from the deck of a ship.) “Creativity is always at the forefront of culture in a variety of ways. And we’re starting to see more and more creatives get on board with this.”