‘The misconception is that NFTs are like a get rich quick scheme. That’s not really how it works.’

Anthony Martini is predicting a sea change for music rights.

As CEO of US-based royalty marketplace Royalty Exchange, Martini oversees an online platform that in 2020 counted 27,000 registered investors and marked 1,000 catalog transactions completed across its marketplace.

Now the company has entered the world of NFTs. In June, Royalty Exchange launched what it said was the first ever music publishing NFT, allowing investors to buy music catalogs and songs as NFTs under its new program.

NFTs, aka Non-Fungible Tokens, are akin to a unique digital asset, purchased using the Ethereum cryptocurrency. They have made headlines this year thanks to multi-million dollar sales of collectible memes and $3 million Tweets.

They’re a relatively fresh territory for the music industry however, and clearly have the potential to be a very lucrative one.  After 3LAU made $11.6m from NFT sales in February and Kings of Leon generated over $2m from their album When You See Yourself in March, everyone from Eminem to Lewis Capaldi and Doja Cat have scrambled for a piece of the NFT pie.

But is this current rush for dizzyingly priced digital works sustainable in the long-term? Royalty Exchange says that its USP is that NFTs sold via its marketplace are income-generating for the buyer, not simply a collectible to store on a hard drive.

The platform’s first publishing catalog NFT auction came on June 8, with a share in the 2x platinum song Save Dat Money, by rapper Lil Dicky. The auction eventually closed at 9.209 ETH, equivalent to $23,209.

Then, in July, Royalty Exchange auctioned off a 1.5% share of the sound recording royalties from A Tribe Called Quest’s first five studio albums as an NFT.

The NFT eventually sold to someone with the username ‘Stephen F’ for a winning bid of 40.191 ETH, equivalent to $84,765, but the band’s Ali Shaheed Muhammad took to Facebook to say the band knew nothing about the auction, and wasn’t aware that such a share in their albums existed.

If the band were aware, he said, they would have bought it themselves. He explained that the share originated from a deal ATCQ signed at the start of their career. 

So, what went awry? And, given how the music-related NFT market is arguably still in a nascent stage, can we expect more situations such as this one to arise in future?

Here, Martini talks to MBW about his predictions for the NFT marketplace, and how the Tribe Called Quest deal went down…


What are your short and long term predictions for the buying and selling of digital assets within the music industry? And how big can the market get?

The sky’s the limit, really. With the initial boom of NFTs, everyone thinks of them as these digital collectibles within the art sense of it. That’s great too, but people don’t understand that it’s really just based on blockchain technology. 

That has really practical applications for the music industry. Traditionally, in the music business, there is a lack of transparency. 

Everything is so fragmented, but blockchain solves a lot of these inherent problems. 

What we’re doing with Royalty Exchange is applying NFTs to music. It’s not a collectible that’s based on a speculative value, it’s really just a digital representation of an asset that has an underlying value already. 

When we sell an A Tribe Called Quest NFT, we’re not expecting millions of dollars in a sale, because it’s not based on that kind of value. It’s based on [for example], the last 12 months of a portion of the publishing that you’re buying. We say ‘it’s worth this much, and this is what you should pay for it’. 

It’s much more based in reality and facts, and it’s an income producing entity. When you buy one of our NFTs, you’re actually going to get paid just by holding it.

That’s how we’re doing it a little differently than what people would normally think of as an NFT. We’re just applying blockchain technology to something that we’ve already been doing, which is catalogue sales.


You mentioned transparency. how Is it transparent?

It’s transparent because on the blockchain, everything is on a public ledger. 

You see when it was originated, who the original owner was, who the seller was, who bought it and who currently owns it.

Any transaction that happens throughout its lifecycle, forever, is going to be recorded in a digital ledger that anyone can look up. 

In that way, it’s the ultimate in authentication and transparency.


You also mentioned A Tribe Called Quest. Can you tell us a bit more about the A Tribe Called Quest NFT situation? How did the opportunity arise, and where did it go awry?

Unless you’re in that space and know all the nuance to it, selling music royalties and publishing is a confusing space for people. 

A lot of people don’t realize that when there’s a song out, there’s multiple people who own a piece of that song. It doesn’t have to be the primary artist that’s doing a deal, there might be someone else that owns a small piece of it. 

Our platform is built on allowing the non-superstars to be able to leverage their IP and make money from it. 

In the case of the A Tribe Called Quest NFT, what happened was, back in the day, they had a former manager or someone that was involved on their team that, as part of a settlement, when they stopped working with him he got a piece of their royalties.

Then, he died, and left that royalty to someone, who sold it to someone else.

We ended up coming in to it from a third party. We didn’t do a deal directly with A Tribe Called Quest. It was someone who owned a piece of their royalties through a few subsequent sales.

What surprised the group was that all the headlines looked like, “Oh, Royalty Exchange did a deal with A Tribe Called Quest for their catalog”, when that really wasn’t true. That was really the only part that took them by surprise.

“I think we are going to be doing some more stuff with [A Tribe Called Quest] in the future on a bigger level.”

I reached out to the group when I heard that they were, like, “What the fuck?”. I had a great conversation with [A Tribe Called Quest’s] Ali.

He understood that it was based on an old contract and someone else that had the rights, and they were cool with it. It actually ended up turning into a really positive interaction, where I think we are going to be doing some more stuff with them in the future on a bigger level.

But it was really just the reaction in the press that caught them off guard. What people don’t really understand – even the outlets that reported about it – [is] that someone could sell royalties to a song that is not [owned by] the artist.

It was just a miscommunication, but that speaks to the nature of publishing rights and the complex sort of structure of it.


With NFTs being so new, and in some ways experimental TO a lot of people, does that make for an extra layer of complexity When it comes to music rights?

In a way, it makes it less complex from our perspective.

Normally, when people do catalog deals, they think it’s like all or nothing. It’s either that they have to sell their whole catalog and every song the’ve ever made, or nothing. With NFTs, people can do it as a one song at a time type thing and test it out.

“It’s been interesting to see that shift in perception of what a catalog sale is, just by doing it as an NFT.”

It’s been interesting to see that shift in perception of what a catalog sale is, just by doing it as an NFT. It opens up a whole new market. There’s a bunch of crypto investors who maybe weren’t looking at music royalties in the past, but now this has opened it up to them.

We sold a Little Dicky NFT and Alexis Ohanian, the co-founder of Reddit, is the one who bough it. He’s more in the crypto space, but because we sold it as an NFT all of a sudden we opened the markets to people like him.


There was a high profile dispute between Roc NAtion and Damon Dash around and a NFT for a Jay Z Album. can we expect to see more high profile disagreements over NFT sales of rights in the future?

Yeah, I think so.

The Damon Dash one, from what I read, he actually did have the rights to sell it. He owns a piece of back catalog of that album, so he can sell it.

Jay Z has a lot of power and clout, so he can sue and stamp it out, and he was preparing to launch their own anyway, so that’s really where the issue arose.

But as far as I know, Damon Dash did have the right to sell an NFT of his portion of it. If he wants to sell it on Royalty Exchange, we could do that.


So you would take it on if Damon Dash came to you?

Yeah, why not? We have a whole diligence process where we vet out any assets that come to us. Nothing goes on our site unless it’s a legit asset that’s able to be sold.

“If Damon Dash wanted to relaunch the Reasonable Doubt NFT as a catalog sale, if it’s legit we sell it”

If Damon Dash wanted to relaunch the Reasonable Doubt NFT as a catalog sale, if it’s legit we sell it. There’s no reason not to.

Jay Z is hugely successful, but it shouldn’t prevent other people who were involved and have the rights to make some money off it as well. 


looking at the wider business, and the Tribe Called Quest and Jay Z stories, Do you think these stories might have an impact on the market for music-related NFT sales?

It normalizes it a lot more, which will make it much more accepted and familiar.

Right now, we’re in the beginning stages where there’s a lot of confusion and misinformation, and people are just figuring it out. I expect there to be bumps in the road, but in the long term, it’s going to be better for the industry overall.

The misconception is that NFTs are like a get rich quick scheme. That’s not really how it works, and that’s part of what we created with our token. It’s a way to assign real value to the NFT, and it’s not a speculation. There’s a real value, and we’re going to tell you what it is.

People will bid a little higher than normal catalog deals just because it is an NFT, but the ranges have stayed pretty within reason.


For you and Royalty Exchange, what has the experience around the A Tribe Called Quest release taught you?

Be super clear in the press releases.

We’re just doing what we do. We don’t have control on how it gets reported, but [we should be] clear as to exactly what’s being sold.

That was really the only issue with the A Tribe Called Quest thing, but other than that everything has been great. We’re going to keep it rolling. 


Finally, what developments would you like to see in the NFT market? 

NFTs allow artists to essentially crowdsource releases. It allows all sorts of applications for live ticketing, and there’s all sorts of applications for rights management.

“Once people really start to understand the capabilities of NFTs, we’ll start to see more creative ways that people use it and it will become a normal part of the business.”

There’s going to be all sorts of innovations, and ways that people are going to start to apply it as it gains more traction and mainstream acceptability.

Once people really start to understand the capabilities of NFTs, we’ll start to see more creative ways that people use it and it will become a normal part of the business.Music Business Worldwide

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