Music Intellectual Property (IP) is an intangible asset, the right to compensation for the use of music is supposedly protected under IP law pertaining to copyright, however in practice the compensation a music creator receives is determined by an oligopsony - a small number of large buyers. The power of these buyers has led to an asymmetrical market in which major labels are historically profitable whilst performers’ incomes average less than the median wage.
Trump Signs Music Modernization Act Into Law - Kid Rock, Beach Boys’ Mike Love, Jeff Baxter, and more were there
Boomer lawmakers have attempted to address this, such as through the Music Modernization Act of 2018 that led to the establishment of the Mechanical Licensing Collective (MLC), however the music royalty “black box” has meant that it has been impossible to allocate the revenues. The MLC has received $424 million from Digital Streaming Platforms (DSPs) of unmatched music royalties - money which should have been paid to artists, but nobody actually knows who it belongs to.
Clearly, there is an epic data and attribution problem at the heart of the music industry, and this has only been compounded by the siloed approach to data that has been instituted in the age of Web 2. If only there was a way to align economic incentives around an open approach to music data that enabled a set of data standards to emerge that meant every kind of music rightsholder benefited - would that be enough to trigger a twenty-first century musical renaissance?
Snoop Dogg is an early adopter of NFTs and plans to turn his label - Death Row Records - into the 1st NFT record label
When Snoop sold over $44 Million of Stashbox NFTs this Feb, he didn't need to share any of those proceeds with a label, unlike his 1993 debut album Doggystyle, which was certified as 4X Platinum by the Recording Industry Association of America (RIAA) selling over 11 million copies worldwide, but with Snoop only receiving a small fraction of the total revenue.
Something is evidently up, unsurprisingly the music industry is scrambling to figure out web 3 - an industry which arguably has the most to gain from the emergence of a new paradigm in data management, distribution and direct to consumer access. NUSIC strives for balance, creating the tools that enable independent, long-tail artists to benefit as much as traditional rightsholders & superstars, while empowering fans with deeper engagement that has ever before been possible.
What it does
Music publishing is inherently complicated and revenue streams are centralized around a small number of institutions - designed for a previous era of rights management. Organizations such as the American Society of Composers, Authors and Publishers (ASCAP) and SoundExchange are non-profit Performance Rights Organizations (PROs) established to ensure songwriters and composers are fairly paid, but practically have little oversight of the digital music consumption landscape.
How is music consumption changing in the 2020s? That's right, short-form apps like TikTok are redefining the format
NUSIC fixes this by bringing all data on-chain, enabling a rightsholder to fractionalize their music assets, with usage not only being attributed to a single track, but to its constituent components. Let's face it, music consumption has changed - many of the biggest hits break through Apps like TikTok, where the vast majority of fans will only be familiar with the catchy 15-second hook that soundtracks the latest trend - therefore NUSIC enables attribution to micro-components of a track.
Short-form music assets
Web 3.0 native artist
We've teamed-up with web 3.0 native meta-artist YATTA who is offering full commercial rights to fractions of her debut track from upcoming album HAIKU. The track Mystery of the Floating Pagoda is being offered-up as an NFT collection of 32, divided on both the vertical and horizontal axes, meaning that individual loops are divisible from the main track as their isolated instrumentals, and each section of music, i.e. the Intro, Verse, Chorus etc... this opens up numerous possibilities for NFT holders, including the option to utilize the music NFTs in short-form videos, as remixes or as part of a brand new song.
The debut track from meta-artist YATTA is available to be minted on the NUSIC Marketplace on Moonriver right now
The track is available on the NUSIC assets marketplace and live on the Moonriver canary network, priced in MOVR, this is the first track released in this short-form format as a music NFT collection, with all the metadata stored on the NUSIC L1.
Yield bearing publishing rights
The second release on the NUSIC marketplace is an NFT collection of writer Steve Russell's ASCAP publishing rights to the track No Air - originally released in 2008 and performed by Jordin Sparks and Chris Brown. The rightsholder of this asset is offering-up this former top 10 hit as a yield-bearing NFT, initially under a one-year window as a proof-of-concept. In order to calculate the value of an individual section, projected cashflows have been fractionalized according to their duration:
|Count||Duration (s)||Relative value coefficient||Share||Price|
Though in this case the
Relative value coefficient is set at
1.00 for each section, this can be modified as more granular cashflows become available from short-form video and music platforms, and the part
Count can be utilized in order to roll sections together as bundled assets if required due to musical repetition, especially between loops.
The No Air Steve Russell ASCAP US market royalty projections (USD) account for seasonality and overall trends
Projections are based on historic cashflows and a standard IRR of 5.89% is estimated based on a fixed price for each NFT. Extrapolation of future revenue from the track derived from past revenue with a recency bias and adjusting for seasonality.
How we built it
We started off launching the substrate node template (as prototyped during the Chainlink Spring hackathon) as a substrate chain on onFinality and setup a subquery server to index the music metadata that’s uploaded in the NUSIC substrate chain. Using this music metadata in our client app, we utilized React with Tone.js to visualise the tracks and stems for the offering. Our client connects to Moonbase Alpha and Moonriver networks and mints NFT tokens for different sections of the music.
The NUSIC Metadata Layer is now up-and-running as a substrate node, thanks to the support of the OnFinality team
Initially we were planning to utilize the RMRK protocol for our nested NFTs, but ultimately the implementation did not match our requirements. Therefore we implemented our own data structure to hold information in the tree for the NFTs that need to minted. Every token had to be priced differently and this was assigned while generating the tree structure after deployment. In this implementation each segment is a child of the full track, once a user buys any child segment the parent cannot be independently purchased, checks are employed to ensure the logic remains intact.
Challenges we ran into
We faced numerous challenges in getting the Dockerfile for the substrate node and hosting the image in a container; such as when writing Docker properties like
CMD with arguments to start the substrate node and when hosting the node on a virtual machine there was a persistent error in the terminal when the machine tired to connect to the wss//endpoint of the node. This was fixed by hosting on onFinality and understanding the proper node arguments to run.
One of the biggest challenges was implementing the data tree structure, as
Struct in Solidity does not support circular references, so we could not add the property of the same
Struct which is mandatory for the tree. In order to get around this mapping an array of
Struct was combined to achieve a tree like data structure without actually nesting it.
Some issues came-up in offering the track as stems, as some NFT segments on some channels were actually completely silent, as the particular instrument track was not featured at that moment in time. These assets were just manually priced at
0 to avoid confusion, but in the future this could be addressed by not enabling completely silent assets to be minted at all.
Bringing multi-channel audio NFTs to life in Unity presents an exciting way to visualize music assets in the future
We were looking to expand the marketplace and track explorer to the metaverse itself and started to devise some neat concepts around this but sadly the scope of a hackathon is not sufficient to implement every idea. We're pumped to build out this grand vision and are bringing a storyteller onboard to help articulate the emergence of the music metaverse.
We've started exploring parallel realities, meta-naratives to illuminate the NUSIC story inside the festivere and beyond
Finally, in order to bring the publishing rights onchain, we inevitably faced some legal challenges and need some time to resolve these in order to ensure the POC is legitimate. This foundational legal work will help set-up an infrastructure for onboarding rights in the future, and we need to get it right in order for all parties to feel secure in this and future offerings.
Accomplishments that we're proud of
We've launched an NFT collection on a canary network, branched out into a new ecosystem and have brought our first and second users onboard! We're looking forward to establishing a pipeline to bring new publishers and self-releasing artists into the NUSIC ecosystem, and ramping-up to provide real utility for a brand new epoch of music. This is the beginning of a generational transition, from digital music rights to digital music assets, a right being something that is inferred by an outside authority while an asset is something you own and control. This is self-sovereign music and it's happening now...
NUSIC Marketplace and Track Explorer is now live on Moonriver, mint a piece of music NFT history today
What we learned
We learned about using Substrate Pallets and creating a parathread to become a parachain on a relay chain, how Cross Chain Messaging (XCM) works for assets within the Polkadot and Kusama ecosystems. We took a deep dive into the Moonbeam ecosystem, understanding the benefit of canary networks, nested RMRK NFTs, the KILT protocol, as well as a general overview of Polkadot's ecosystem, the opportunities for building with the tools and leveraging the network.
We came up against the limits of the binary tree data structure and may have to consider more sophisticated ways to organize music mappings. There are questions of artificial scarcity which were brought to light when addressing the supply of the initial NFT collection. There is a clear difference between ownership and rental - and despite the current popularity of the ownership model, we may need to consider how to implement a rental model, especially when it comes to enabling sampling of loops for music production purposes - these should probably be infinitely available for creative expansion.
What's next for NUSIC
With the first release now available on the Moonriver canary network, we are preparing to launch further music assets on the same network as technical and economic test-cases. Auction functionality could prove to be a popular feature and some thinking has gone into the implementation of this. Visualizing the data in a Metaverse environment (2D or 3D) will help to bring these assets to an entirely new audience, as a digitally native asset class made tangible for a generation that has been priced out of physical property. The capacity of the Metaverse to revitalize music is the next frontier for NUSIC, with the unique properties of music making it expandable, yet finite until that creative expansion occurs, i.e. there are only so many melodies, basslines and rhythmic sequences which can ever be composed, and these can be tracked through Music Information Retrieval (MIR), or Shazam-like algorithms. A Metaverse constrained only to the limits of Music will more closely resemble a universe than a physical world; music may prove to be a much more appropriate asset class for the Metaverse than the arbitrarily scarce landsales that have defined our understanding in the early era of Metaverse property.
Early explorations in understanding music as metaverse property have included using the amplitude of the song to render the height map of the vertices (represented by the spheres) on a mesh in real time to make the track tangible
Onboarding more rightsholders, from major publishers to self-releasing artists is a priority as we operationalize the Layer 1 and scale the protocol for liquidity. Establishing NUSIC DAO as a decentralized music 'regulator' (for absence of a better description) may be possible by utilizing an attestation network via KILT. The music industry is hungry for the new revenue opportunities created by web 3.0 and by plugging key stakeholders in, transparency can be enforced and new musical standards would have the opportunity to be iterated upon and gain traction within a competitive and liquid marketplace.