Gone are the days when music fans would line up around the block to spend $18 for a band’s new CD at Sam Goody or Tower Records.
While some loyal fans still buy digital and physical copies of albums, most artists rely heavily on revenue from concerts and merchandise, as online streaming services like Spotify pay fractions of a penny per stream.
Chris Dixon, general partner at Andreessen Horowitz, tweeted that less than 15,000 musicians, or 0.2 percent of the 8 million musicians on streaming services, earn more than $50,000 per year from streaming royalties.
Royal, an Austin-based startup, hopes to offer another revenue stream to emerging artists with a new platform that allows music fans to purchase rights to and earn royalties from their favorite songs.
Royal allows anyone — yes, anyone — to buy non-fungible tokens, better known as NFTs, that represent a share of a song’s royalties. The tokens can be bought and sold on the blockchain.
Three months after raising $16 million in seed funding, Royal announced Monday that it has raised another $55 million in Series A funding, including contributions from musicians such as The Chainsmokers, Nas, Logic, Stefflon Don, Kygo, Joyner Lucas and Disclosure.
The Series A round was led by Andreessen Horowitz and included investments from Coinbase Ventures, Founders Fund, Paradigm and Creative Artists Agency, which represents musicians and other artists.
“We believe blockchain technology has the ability to transform music ownership the same way the internet has transformed the way music is listened to,” The Chainsmokers in a joint statement. “At the dawn of Web3, Royal’s model of modernizing the way we collect and share music made perfect sense to us as musicians and investors — we had to get involved.”
Royal was co-founded by college friends Justin Blau, a DJ and electronic music producer also known as 3LAU, and JD Ross, who co-founded digital real estate platform Opendoor.
More than 120,000 users have signed up for the platform since it was announced in August. The company said it will use the capital to invest in expanding its network, as thousands of artists have expressed interest in working with Royal.
“We couldn’t be more excited to welcome a roster of innovative artists that believe in our mission,” Blau said in a statement.
Last month, 3LAU gave away 333 limited digital assets representing half of the streaming ownership of his latest single.
Within the first two weeks, the song reached an implied value of over $6 million, with fans holding half of the value. The tokens have traded at more than $650,000 in secondary market volume, Blau said, showing how an open market values ownership in music royalties.
Katie Haun, a partner at Andreessen Horowitz, wrote in a blog post that the founders of Royal envision a future where artists can layer NFTs with opportunities to attend live and virtual events, win merchandise and gain access to exclusive communities.
“Royal is building a music service that in the past would’ve only been a pipe dream — letting fans participate directly in their success,” Haun wrote.
