Rihanna the Music Queen Sells Out NFTs How to Break the Stalemate in the Music NFT Market

Recently, the song “Bitch Better Have My Money” by Rihanna, a 9-time Grammy Award winner and music diva, was minted and released as a music NFT by the Web3 music startup company AnotherBlock. This music NFT was limited to 300 copies, with a price of $210, and sold out within minutes of its release. On the day of the “American Spring Festival” Super Bowl, Rihanna also performed this song during the halftime show. As of February 17th, the floor price of the Bitch Better Have My Money – Rihanna NFT has reached 0.39 ETH (about $650), with an increase of over 210% compared to the initial price within a week, and a trading volume of nearly 160 ETH.


Rihanna’s release of music NFT is a good attempt to combine NFT with music. In the traditional music industry, who gets paid from streaming depends on who owns the music copyright. For most music, the music copyright is not in the hands of the creators; rather, a significant portion of the rights is owned by record companies and professional investment funds. Major record companies have more industry resources and connections, and under strong capital operation, the sales of songs by their artists are unmatched by independent musicians. Despite strong sales, without copyright, the majority of the royalty income goes into pockets other than the creators’.
According to data from Manatt, Phelps & Phillips, LLP (2018), in the major U.S. music streaming royalty splits, Spotify allocates 58.5% to copyright owners, 6.12% to mechanical reproduction royalties, 6% to performance 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 fees, and 28.5% to the streaming platform itself. Performance fees are collected by performing rights organizations, which will deduct 16%-18% as a profit margin; mechanical reproduction royalties are the fees that streaming platforms need to pay to the producers for recording and distribution rights, and mechanical royalties need to be obtained through the specialized management agency Harry Fox Agency, which will take an 11.5% commission from the royalties. Royalty income is mainly proportional to the number of clicks on music on streaming platforms, but it is easy to see that on Web2 streaming platforms, royalty income has been fragmented by various fees and the distribution method is extremely complex. The final data shows that artists (creators) under major record companies can receive about 16%-18% of royalty income; but for independent musicians with copyrights, royalty income is about 40%.
Of course, it is inappropriate to talk about income without talking about the rate of return. Relying on the resources and capital of record companies can provide various 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 and enable copyright owners/creators to receive more open, transparent, and timely royalty income. However, it should be emphasized that this cannot solve the issue of how much royalty income is obtained. AnotherBlock provides creators with a solution to share royalties through NFT, allowing them to have the right to sell their works directly, without intermediaries. The royalty income generated by DSP streaming platforms such as Spotify and Apple Music will be converted from fiat currency to cryptocurrency by AnotherBlock on the blockchain and stored in smart contracts for the creators. In addition, the copyright of the music released on AnotherBlock is guaranteed by real-world contracts based on NFT holders and rights holders (creators), protected by real-world laws, and these contracts will be stored on IPFS. Every time an NFT circulates in the secondary market, the creator can receive customized royalty income (5% for Rihanna’s music NFT). Therefore, for creators with rights, their income mainly comes from the minting fees of music NFTs, the royalty income from the secondary market transactions of music NFTs, and the royalties paid for the music on streaming platforms (distributed directly on the chain).
In addition to benefiting creators, the release of Rihanna’s music NFT this time also involves selling part of the music copyright, allowing holders to enjoy part of the royalties and shared income from copyright. AnotherBlock allows music NFT holders to receive a portion of streaming revenue, with holders receiving 0.0033% of Rihanna’s song streaming royalties, and will be paid every six months based on streaming revenue, with holders receiving the first payment on February 16th. According to AnotherBlock’s estimate, the royalty income from Rihanna’s song NFT can give holders an income of about $13.65 annually. Although the amount is limited, it is also a new way to interact with fans in a sense.
However, due to the fact that the distribution of music NFTs is not as intuitive and penetrating as the visual impact of PFP, the music NFT track has been lukewarm. On the one hand, as mentioned earlier, most of the widely known singers now belong to record companies, and their music copyrights are not in their hands. Therefore, the right to issue music NFTs is not in the hands of the creators, and music NFT platforms cannot fundamentally change this. Even Rihanna herself is using her old songs released in 2015 to release works in a new circle, which is more likely a strategy of the company behind her to attract attention from the baby boomer generation. On the other hand, the cultivation and development cycle of independent musicians is long, and there is an element of luck, and music NFT platforms themselves lack the ability to create stars, so even if there is a good royalty income model, it is still of no avail for singers without traffic.
In summary, the combination of NFTs and music is to transform the complex distribution industry chain in traditional music into a simplified path of “creators issuing music NFTs on music NFT platforms and selling them to users”, with the transfer of part of the copyright being an additional bonus. However, the music industry chain is not just about distribution, but also includes star-making, variety shows, fan economy, and other links. Currently, the penetration of Web3 music platforms is still limited, but there is still a great deal of flexibility in the distribution stage, such as emphasizing the design of music NFT album covers to make them visually appealing like PFP; launching a national singer selection program or original song competition, allowing users to become creators, choose creators, and give relevant creators incentives, and so on.
Article source: Wu Shuo
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Maverick