Justin Blau’s Royal would allow fans to invest in musical artists

A beloved hip-hop troupe. A hated pharmaceutical brother. The most expensive piece of music ever sold.

This is where this story begins, really.

Flashback to 2015: Rap supergroup Wu-Tang Clan is limiting the release of its seventh album, “Once Upon a Time in Shaolin,” to a single copy and auctioning it off to the highest bidder.

Currently imprisoned, former Turing Pharmaceuticals CEO Martin Shkreli, a Gordon Gecko-meets-Scrooge McDuck comic book villain embodied with a thirst for overpriced drugs, buys him for $2 million.

The point was that the album could not be commercially released in any way until 2103, only played at listening parties or for friends and associates, as a stipulation of its sale.

Cue Justin Blau’s raised eyebrows.

The Vegas-based DJ-producer, a techie with a background in finance who performs under the name 3lau, has long sought to disrupt the way the music industry does business.

“What Wu-Tang has done with this album has been a huge inspiration to me,” Blau, 30, said on a Zoom call Wednesday from Miami, where he attends the Art Basel art fair. He is here to sell his own unique musical creation, the song “Waveform”, which will be offered as an NFT (non-fungible token) in the famous auction house’s first NFT auction. Christie’s, produced in collaboration with the peer-to-peer marketplace for crypto-products OpenSea.

Bidding started on Saturday and ends on Tuesday.

As with “Once Upon a Time in Shaolin,” its buyer will own the only copy of the song in existence. Unlike this album, however, the sale is unconditional.

“Back then, they gave a person the right to listen, but they didn’t give them ownership,” Blau says of “Shaolin.” “This person owned the physical CD and the album cover, but they didn’t have the right to distribute it; they couldn’t put it on Spotify. These were the rules. So we thought, ‘What if there were no rules?’ ”

Blau has been at the forefront of introducing NFTs and cryptographic technology to the music industry. Three years ago, he launched OMF (Our Music Festival), the first blockchain-powered music festival.

In February — in a year in which NFTs exploded into public consciousness, with sales exceeding $17 billion, according to crypto news firm Cointelegraph — Blau again positioned himself as an industry leader, selling $11.6 million in NFTs, setting the mark at the time of overall sales for a single NFT drop/collection, as well as the highest price paid ($3.6 million) for a single NFT.

(In case you need a quick primer, NFTs are digital certificates of ownership for digital assets like songs, artwork, NBA game clips, tweets, podcasts – pretty much everything can be tokenized – which can be bought and sold on online marketplaces like OpenSea or NBA Top Shot, which use blockchain technology to verify the authenticity of an NFT.)

In May, Blau sought to capitalize on all that momentum by launching a new company, Royal, a blockchain-based platform that allows fans to invest directly in an artist’s music via NFTs like “Waveform “.

“Where music has been as it is in the NFT landscape today is that it’s purely collectible,” says Blau. “You can buy an NFT of a song to show your patronage to your favorite artist, but it doesn’t give you any ownership of the song. The premise behind Royal is: what if fans could own music too? What if your fans could be your record label?

“Imagine if your record collection paid you a check every month”

Scarcity is rare in the music industry.

These days, you subscribe to Spotify to get unlimited access to almost any song in the world, or you pay 99 cents for a one-in-a-million copy of a hit song.

Outside of limited pressings of a vinyl record, which cater to an equally limited audience, music has always been widespread, cheap to own, and readily available for free on the commercial airwaves.

Yet rarity is what gives many works of art their value – from an original Picasso painting to a Fabergé egg to – in less exotic terms – one of the few front row seats at a concert of the Rolling Stones.

Blau cites a collectible cartoon as an example.

“You are looking at a Pokemon Charizard card; the physical value of the card is the cardboard and the printing, which costs only a dollar and 50 cents. The Charizard card is worth $350,000. Why? Well, it’s all virtual value, because I can print another Pokemon Charizard map from the highest quality printer, but it won’t be an official map. So what we’re doing is trying to capture that excessive emotional value in music by creating rarity in a world that never had that component.

“If you can own an exclusive edition that gives you ownership of a song, what does that mean to you emotionally?” he asks. “When you’re at a music festival and you can say to your friend next to you, ‘I own this song that’s playing,’ it’s a similar reaction to how we flex physical goods in real life. life.”

Now, fans investing directly in an artist is not a new phenomenon.

Many artists, for example, have launched GoFundMe campaigns in which contributors have financed the recording of a new album, and in return they can receive credit in liner notes, a signed drum skin, tickets for a show in their town or something. nature. But ownership of the disc — and any profit from its sale or commercial use — remains solely in the hands of its creators.

With Royal, Blau is trying to create a platform where this kind of investment in an artist can potentially pay monetary dividends.

How it works: An artist determines how many editions they want to hit of a song to be auctioned on the site, each indicated by a unique piece of art sold as an NFT entitling its owner to a specific portion of all royalties. generated by the song.

“As the artist makes money on the song,” Blau explains, “they pay it into a smart contract that each of those token holders can claim as the revenue comes in.

“The way I describe it,” he explains, “is, like, imagine if your record collection paid you a check every month because you owned a track of all the songs that were in your record collection. .”

Ahead of “Waveform,” Blau gave Royal a test, giving away 50% of the streaming revenue from his previous single, “Worst Case ft. CXLOE,” to 333 fans via NFT.

These fans then started trading NFTs on OpenSea.

“We achieved about a million trading volumes in a month,” says Blau. “The total valuation based on the price is $12 million today for a song – for a song. It’s so beyond the cash flow that exists from streaming. It proves that there is so much more emotional value in property than the world is pricing in.

That said, he acknowledges that such lucrative success with NFTs would be difficult for most artists to replicate, just as it is difficult for an artist to earn a gold record.

“Everybody says, ‘You did that first; maybe you are an exception to the rule,” says Blau. “That may be true, but even if an artist makes a thousandth, it’s still better than the other deals he has on the table at his disposal.”

Banking on the next big thing?

It’s the equivalent for a music geek of a soldier’s stripes, of being able to say that we discovered a group before everyone else, of having seen The Killers in front of 20 people in a dive bar on a Saturday evening , long before they became famous.

What do you remember from the experience?

Mainly bragging rights.

What if you could monetize those bragging rights?

What if you could invest in an up-and-coming artist and watch your portfolio grow with their career?

These are the two big questions Blau is trying to answer with Royal, which he started with his best friend from college, Opendoor co-founder JD Ross, and which counts Darkroom’s records manager among its investors. Justin Lubliner, best known for discovering Billie Eilish.

“Fans can only participate today,” Blau says of a listener’s relationship with an artist. “They can buy tickets, they can buy merchandise, they can listen to music, but there’s no way for them to take advantage of an artist’s success if they’re there early.

“These fans at the beginning bring immense value,” he continues, “because they share the music with their friends, they listen on repeat, which helps the Spotify algorithm, they added all that value to the artist. But then the artist blows up, their tickets get more expensive, and it’s harder to access the artist from a social perspective. What Royal does is create a mechanism to align fan incentives with the artists.

He also sees Royal as a way to connect these artists with their industry peers.

For example, a singer could cut 10 vocal tracks, keep two for herself, and sell the rest on Royal to a producer who wants them for the songs he’s working on.

“It happens to artists all the time,” Blau says. “I’m sitting on a hundred incomplete songs that I may never get to, but someone else might want to work on them or own them. It’s a new way for artists to monetize.

As with anything new, this can all take a minute to figure out, especially when the context is the still-nascent intersection between digital art, trade and investment.

Blau knows that, and that’s what this year has been for him: producing tangible results from a non-tangible realm.

“The idea of ​​owning something digitally has never made sense, because we’ve always lived in this right-click and save mentality, where anything digital is copyable,” he says. “Creating authenticity on the blockchain for ownership completely changes that mindset – it’s spinning on its head.

“That mentality has been there forever in the gaming world,” he continues, “but it doesn’t really exist in digital media. Now that people are starting to see it, it’s just explosive. It’s really, really explosive.

Contact Jason Bracelin at [email protected] or 702-383-0476. Follow @jbracelin76 on Instagram.