Rihanna issued NFT sold out, how to hit the music NFT track
The track “Bitch Better Have My Money” by 9-time Grammy Award winner and music diva Rihanna was recently minted and released as a music NFT through Web3 music startup AnotherBlock. The music NFT, which was limited to 300 units and priced at $210, sold out within minutes of going on sale. Rihanna also performed the track during the halftime show on Super Bowl Day. As of February 17, the Bitch Better Have My Money — Rihanna NFT landed at 0.39 ETH (about $650 USD), up over 210% from the initial price in a week, with nearly 160 ETH in volume.
Rihanna’s music release NFT is a great attempt to combine NFT with music. In the traditional music industry, who gets paid from streaming depends on who owns the music rights. For most music, the music rights are not in the hands of the creators, and a significant portion of the rights are owned by record labels and specialized investment funds. The big record companies have richer industry resources and contacts, and with strong capitalization, their creators can sell more songs than independent musicians can ever hope to. Although sales are strong, the absence of copyright means that the vast majority of royalty revenue goes into pockets other than those of the creators.
According to Manatt, Phelps & Phillips, LLP (2018), of the major U.S. music streaming royalty splits, Spotify allocates 58.5% to copyright owners, 6.12% to mechanical reproduction royalties, 6% to performance rights fees, and 29.38% to the streaming platform itself. Apple Music allocates 58% to copyright owners, 6.75% to mechanical reproduction royalties, 6.75% to performance rights fees, and 28.5% to the streaming platform itself.
Of these, performance rights fees are collected by performance rights organizations, and 16–18% of the performance rights fees collected will be deducted as a way to make a profit; mechanical reproduction royalties, that is, the fees that streaming platforms need to pay to purchase the recording and distribution rights of songs from producers, mechanical rights need to be obtained through a special management agency, Harry Fox Agency, which will take 11.5% commission on royalties. Music royalty revenue is largely proportional to the number of clicks the music receives on streaming platforms, but it’s easy to see that on Web2 streaming, royalty revenue has been fragmented by various fees and distributed in extremely complex ways. The final figures show that record label artists (creators) receive about 16–18% of royalty revenue; but in the case of copyrighted independent musicians, royalty revenue is about 40%.
Of course it’s inappropriate to talk about revenue yield aside, relying on the resources and capital of the record companies can provide all aspects of a creator’s career, but it also puts creators in an unequal position. Combining music with blockchain, using the power of Web3 and NFT has the potential to change this unequal rights structure, as well as being able to give copyright owners/creators more open and transparent access to timely royalty revenue. However, it is important to emphasize that this does not solve the problem of how much royalty revenue is received; AnotherBlock provides a solution for creators to share royalties via NFT, giving them the right to sell their work directly, without middlemen. The royalty revenue generated by DSP streams like Spotify and Apple Music will be converted from fiat currency to cryptocurrency on the blockchain via AnotherBlock and deposited in a smart contract for the creators. In addition, the copyright of music songs published on AnotherBlock is secured by a real-world contract between the NFT holder and the rights holder (creator), protected by real-world laws, which will be stored on IPFS. The creator receives a custom royalty income (5% for Rihanna’s music NFT) each time the NFT is passed through the secondary market. Thus, for the creator who owns the copyright, the revenue comes primarily from the music NFT minting fee, the royalty revenue from secondary market transactions of the music NFT, and the royalties paid for the distribution of the music on platforms such as streaming (distributed directly from the chain).
In addition to benefiting the creators, this release of Rihanna’s music NFT also sells a portion of the rights to the music, allowing the holder to also enjoy a portion of the royalties and share in the revenue generated by the rights. AnotherBlock is allowing music NFT holders to receive a portion of the streaming revenue, earning 0.0033% of Rihanna’s streaming royalties for the song, and will pay the holder every six months based on the streaming revenue, with the holder receiving the first payment on February 16. According to AnotherBlock’s estimates, the NFT royalties on Rihanna’s songs will earn holders approximately $13.65 per year. Although the amount is limited, it is in a sense a new way to interact with fans.
However, the dissemination of music NFT is not as intuitive and penetrating as the visual effect of PFP, so the music NFT track has been in a lukewarm stage. On the one hand, as mentioned earlier, the artists with wide popularity are basically under a record company, and the rights to their music are not in their hands, so the right to release music NFTs is not in the hands of the creators in the first place, and it is impossible for the music NFT platform to fundamentally change this. Even Rihanna herself is only using her old tracks released in 2015 to release her work in new circles, which is more likely a tactic by the company behind it to serve as a gimmick to attract the attention of younger baby boomers. On the other hand, the cultivation and development cycle of independent musicians is long, and there is some luck involved, while the music NFT platform itself lacks star-making power, and singers without flow are still useless even with a good royalty revenue model.
In general, the combination of NFT and music is a simplified path that transforms the complex traditional music distribution industry chain into “creators distribute music NFT on the music NFT platform and sell it to users,” with some of the copyright concessions being an added plus. But the music industry chain is more than just distribution, it also includes star-making, variety, fan economy and many other aspects. At present, the penetration of Web3 music platform is still limited, but there is still a lot of plasticity in the distribution stage, such as paying attention to the design of music NFT album covers, so that they are more in line with the aesthetics of PFP nowadays; launching a national singer selection program or original song tournament, allowing users to become creators, letting users choose creators, and giving incentives to relevant creators, etc.