The Reality of NFT Royalties
How A Platinum Producer Made $50k Off Of One Song
We’re six months since the NFT explosion enveloped the music industry and artists continue to lead the way in terms of innovating this unprecedented technology — from collectible tokens to self-generating art. One sector that has gained a lot of interest is the application of blockchain to rights management.
Last month, Philadelphia producer Yuri Beats sold his publishing rights on the 2x platinum Lil Dicky song “Molly” via NFT on Royalty Exchange for a cool $51k. So we tracked him down on Discord (where else?) to find out his plans for the money and more.
You recently sold the publishing royalties for your song “Molly” on Royalty Exchange via NFT. Let’s start by explaining what that means, technically.
There's some space between the verbiage and the reality of the situation. There's a lot of sloppy language, right? Like even on what constitutes an NFT feels pretty wide open in terms of what rights are insinuated or actually provided in that transaction.
For this auction, rather than pitching to the broader NFT community or going on Open Sea, I went through the Royalty Exchange because the company has links with a lot of publishing admin that can execute that kind of legwork in terms of IRL distributed in royalties. They have a group of buyers who know their platform, know the drill. Know that royalties are going to be executed IRL by a publishing admin company. The NFT component is relatively new, but it's meant to function as a signifier of where those are going to point.
So is the NFT really just symbolic?
It’s more than that. I receive a 5% gratuity, in perpetuity, on sales of the NFT. That's not something you can really promise unless it’s built into the smart contract because you have a clear understanding of who the rights holder is and how these transactions are transpiring around.
But you bring up a good point. The fact that this was an NFT does not mean that the calculation of royalties is occurring on the blockchain. It's occurring manually behind the scenes. This is a step towards more on-chain components and accountability around royalty distribution.
What do you think it will take to get there?
There are a lot of hurdles to Web3 adoption. People don't like getting wallets. People would rather do transactions based on credit cards or all these sorta needs. On the other side of that, you have a dev community in Web3 that's going gangbusters. That's the community I want to be a part of. I'm actually starting to work at a DAO, which I'm really pumped about. I think decentralized autonomous organizations bring a lot to the table in terms of that vision of self-executing smart contracts for royalty distribution.
So how did you find your way into the NFT world?
Back in February of 2020, my buddy Noah Breakfast (formerly of Chiddy Bang) was like, there's something going on here. Maybe you can get some meetings with some folks. And I was introduced to Friends With Benefits (FWB) that way. I made an NFT on Zora and one of the folks who run FWB, Cooper, picked it up. So I started making my own NFTs and selling some on Foundation. I like a lot of people, just in awe to have this opportunity to get revenue directly from people interested in my work.
What sort of NFTs were these?
I was experimenting with the visual dimension because I don’t think anyone has built an interface that puts audio first. But I've also been experimenting with generative video stuff on Foundation, which I really love.
Any other projects that people should watch?
People are into these avatar projects. What I find interesting is, what does it mean if a hundred people go in together on an avatar? Can we all change our profile pics to that? Obviously, there's no profile pic police, but what’s the social convention? If you don't own a crypto punk, can you make a crypto punk avatar? People are going to start calling you out on Twitter and it'll probably be more of a negative experience for you.
As a musician, is it hard to imagine an NFT that isn’t visual-first?
I think there’s a beautiful analogy with crate-digging with records. Right. I know a lot of hip-hop heads, when they go to a record store, they will buy based on the cover. And I think auction houses on Zora and Catalog, with their beautiful display of stills, are going to get us closer to the kind of interface that we need around audio. User interfaces that use the cognitive rails that we had maybe 20 years ago around music.
It’s impossible to predict, but I think it’s kind of beautiful how musicians are leading the charge around a lot of this. I think musicians are going to have a really good voice in how this space gets architected out.
You’ve been involved in some other Web3 music projects. Care to explain Song Camp?
Song Camp was a project where me and two strangers I met on the internet made a song. And we sold it for five ETH, which was a big deal for everybody. The auction utilized a new tool called the Party Bid that allows fractional bidding.
So let's say you see a million-dollar NFT and you don't have a million dollars. I don't have a million dollars either, but we could get a hundred of our closest friends to come together via the Party Bid. Then fractionalize it into tokens. And the tokenized share is redeemable for a proportional amount of value. And there's like a series of governance tools that come into play that are really powerful. I think the Party Bid opens up some of these blue-chip NFT commodities to regular folks.
And Party Bid is the DAO you’re going to start working with, correct?
Yeah. I think Party DAO has a bright future, how they've been able to actually write the code is major. I'm just excited to be in the mix with them. You know, I'm not going to be retiring off of working in their discord channel, but I'm very excited.
So you’re all in on crypto, it seems.
I still have some portions of “Molly” that I'm going to be collecting from ASCAP and getting streaming from the label. I didn't completely wash my hands of it. But I honestly think having money in ETH — this is not financial advice — but I think that having money in Ethereum for me is going to be a better proposition than collecting payments over time. I’m very bullish on ETH as a commodity. And I'm grateful for the opportunity, at this point in my life, to really just take off into the unknown.
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TAKEAWAYS
Salient statements from this week’s music news.
2. Music’s Next Big Challenge: Licensing for the New Wave of Social Platforms
The collapsing divide between user-generated content and brand advertising has caused pricing paralysis for rights holders.
Takeaway: The tech industry has mostly viewed the music industry as a burden that they undervalue and would rather not have to pay, however, the music industry has been very slow to make themselves easy to work with, assuming the platforms need what they have.
2. Massive Attack Unveil Plan to Reduce Carbon Emissions Across Music Industry
The sweeping plan conceptualizes plug-and-play venues with standardized gear, which could radically reshape venues post-COVID.
Takeaway: Among the shifts required for “rapidly accelerated” progress are the immediate elimination of private jet use, a switch to electric transportation for concerts and festivals, and, by 2025, phasing out diesel generators at festivals.
3. For Musicians, TikTok Is More Important Than YouTube – Here’s Why
Much like COVID, it appears we’re going to be living with TikTok from now on.
Takeaway: In the US, ByteDance’s app first overtook YouTube in August last year, and as of June 2021, its users watched over 24 hours of content per month, compared with 22 hours and 40 minutes on YouTube.