Partnered With:

Pantera: How did Royal disrupt the institutionalized business model of the music industry?

Pantera Capital

Read this article in 12 Minutes

Royal is a new platform designed to help artists crowdfund their creative projects using smart contracts

原文标题：《 Tokenized Royalties 》

Pap Veradittakit, founding partner of Pantera Capital

Lu Jiangfei & NBSP;

Pantera 合伙人：一文读懂音乐代币化平台 Royal

The music industry earns $40 billion a year, but only 12 percent of it is actually paid to artists. The rest goes to middlemen such as agencies, platforms and record labels, unfairly stealing the fruits of creators' labor. Moreover, these revenue streams are driven almost entirely by fan participation, but they have no equity or opportunity to participate in the music production process.

Royal is a new platform designed to help artists crowdfund their creative projects using smart contracts that allow backers -- known as token holders of PMITED Digital Assets -- to receive a share of the royalties paid on the project.

The Royal solution focuses on three core functions:

Limited digital assets & NBSP; (LDA) simplification and compliance casting and selling, where fans can purchase these assets to support creative projects from the start;

Collection and payment of royalties, including incentive sharing to LDA holders, to reward their dedication and participation;

Promote LDA secondary markets that allow LDA holders to trade tokens from different creative projects with each other and create a vibrant economic ecosystem around media ownership.

Royal is also building a suite of tools to help creators leverage LDA as an ecological engagement primitive by offering features such as granting special permissions and enabling direct communication access between fans and creators. LDA can serve as both an economic investment and a "passport" for the fan community, more fully capturing the intangible social value of art works.

Project Royal is currently working on undisclosed partnerships with well-known artists, and if all goes well, fans are expected to be able to support music production from October. After building and validating products around music ownership, the Royal team plans to expand their approach to other royalty-generating assets -- both digital (TV licenses, YouTube content creation, etc.) and physical (land mineral rights, patents, etc.).

Royal was founded by well-known EDM artist 3LAU and former Opendoor co-founder JD Ross, who previously sold a tokenized album that made $12 million in a single day. Currently, Royal has completed a $16 million seed round from Founders Fund, Paradigm and other investors.

Digital media production process is undergoing a paradigm revolution, from middlemen (institutions) centered on artists and their most loyal fans, in the end, the Royal will become the paradigm shift on behalf of the project, by eliminating the need for intermediaries, enables artists to rely on loyal supporters, incentive consistent, And offer generous incentives to fans who support them.

The "blind Spot" of royalties

Currently, the main commercial use case for digital art is royalties, where creators charge consumers (usually hosting platforms) for a small amount of use or consumption of their assets. Digital media is characterized by its ease of replication and distribution, which means it lacks the inherent qualities that drive much of the scarcity of physical value (and revenuable income). Royalties allow artists to earn a long-term, steady income from digital media for their original work.

Sadly, the distribution of royalties today favors not artists but middlemen who distribute and platform their work. Of the $40 billion in annual revenues the music industry makes, only 12 percent goes to artists. And it's not just artists who are being exploited -- Kanye West famously revealed in a tweet that his first five albums earned only 18 per cent under his DEAL with Universal Music Group (UMG).

Fortunately, today's inequitable income distribution is a thing of the past, and the inefficient business model was designed by irrelevant institutions in the past. Streaming and record companies like UMG and SONY Music are now a smaller and smaller part of the distribution and platformization of music. In addition, artists gain a wave of fans early in their careers, and as a result fan communities are increasingly engaged, allowing artists to tap into dedicated supporters with the greatest common interest -- including funding. Arguably, the time is ripe to push creators and their communities to the c-bit.

What is Royal?

Royal is actually a using smart contracts to the raised platform of creative projects, the contract as part of the supporters project earnings (or royalties), it is a subversion of today's music industry is highly institutionalized business model, and provides for artists work with tangible rewards, and provide better support for loyal followers.

How does Royal work?

Royal aims to redefine how artists and fans can profit from music in three ways:

1. Simplify the creation of finite digital assets. Royal's deal includes a service to help artists legally foundry and sell limited digital assets (LDA) for any type of digital media, in return for a small creative fee. Fans can also purchase the LDA in the initial sale as a way to "support" the artist's project.

2. Collect royalties automatically and efficiently. Royal's smart contract will automatically collect and distribute royalties, while handling all the conversion between fiat currency and on-chain tokens, as well as royalty payments to LDA holders. However, Royal will take a small royalty as platform management fees.

3. Create secondary markets for limited digital assets. Holders of previously issued LDA can trade with each other, creating an entire value ecosystem around an artist's work and its backers. At the same time, this has created additional business opportunities for Royal, facilitating LDA market making and enabling artists to earn residual profits from the resale of tokens.

Royal is also building a suite of tools that grant special permissions and support direct communication access between fans and creators to help creators leverage LDA as an ecological engagement primitive. By defining LDA as a byword for participation, Royal's model captures more of the great intangible value generated by art and the community built around it. Today, THE LDA is not just an asset in a portfolio, but a rarity in an art collection.

Currently, the Royal team is building partnerships with a number of top artists who have never been seen before. Fans will be able to purchase the LDA to support their creations, most likely in October.

It's not just music

Unfortunately, the unfair distribution of royalties is not limited to the music industry, but also in video streaming, YouTube content creation, TV licenses, independent film production and more. After building a base product for musicians and their fans, Royal plans to disrupt these other digital media verticals as well.

Who is driving the Royal project?

Royal was founded by well-known EDM artist 3LAU and former Opendoor co-founder JD Ross, who previously sold a tokenized album that made $12 million in a single day, He is also a former partner of Atomic Ventures and co-founder of Opendoor.

Currently, Royal has completed a $16 million seed round from Founders Fund, Paradigm and other investors.

Final thoughts

One of the primary goals of decentralization is to reduce the power wielded by institutions and return more value to individuals. The music industry has long suffered from a highly predatory business model that forces artists to hand over a large portion of their profits to record labels and distribution services in order to get their work and music released. On the other hand, fans who contribute their income to the music industry and help it grow are ruthlessly discarded, with nothing in return for their dedication.

Royal has come up with an innovative business model that puts artists and their most loyal fans at the center of music production, enabling artists to rely on this loyal, committed group of supporters to support creative projects and generous incentives for those fans who do. By integrating the fan community into the production process, Royal combines the intangible social value of music with the tangible monetary value of music consumption into a "tradable token." Finally, digital creators and their communities can be funded and rewarded for their creative work, and it's no exaggeration to say that Royal represents a structural shift in the paradigm.