Exclusive: DJ Justin ‘3LAU’ Blau on NFTs and Music Royalties as an Asset Class
“Music royalties are an asset class that the public has never had access to [until now],” Blau told Blockworks
Co-founder of Royal, DJ Justin Blau, also known as 3LAU, performs at a music festival. Photo: Altamira Film
- Royal announced rapper Nas plans to sell his two most recent singles on its platform
- The crypto music startup previously secured $55 million in Series A funding in November 2021
Justin Blau, better known by his stage name “3LAU,” remembers first hearing the words non-fungible token roughly five years ago when cryptocurrencies like Ethereum initially piqued his interest.
Although Blau has made headlines as a renowned EDM artist, whose songs have raked in over one billion lifetime streams, he has been a heavy investor (of both his time and capital) in NFTs and music ownership monetization.
Blau is a Washington University St. Louis business school dropout, who had stints working at UBS and Credit Suisse.
He co-founded Royal, a music platform that aims to allow fans to buy NFTs so they can share in royalties earned by their favorite artists. The crypto startup secured $55 million in Series A funding led by venture capital firm Andreessen Horowitz (a16z) in Nov. 2021.
This week Royal announced that rapper Nas plans to sell his two most recent singles via Blau’s platform. Fans can purchase tokens of the tracks, dubbed “limited digital assets,” which claim partial ownership and streaming royalty rights of the Grammy award-winning artist’s songs.
I spoke with Blau about the future of music NFTs, how increased fan engagement may offer valuation premiums relative to traditional finance and working with Nas.
Chittum: Can you give us, from a very high level, your elevator pitch on Royal? What is it and what should people know about it?
Blau: The idea behind Royal is to give everyone the ability to own their favorite music, and share in their favorite artist’s success.
The quickest way to explain it is that music royalties are an asset class that the public has never had access to. When you think about investing in music and owning music in conjunction with your favorite artists, the incentives between fans and artists become extremely aligned in how that music performs, how it’s distributed and how it’s shared by word of mouth.
Chittum: What is the benefit of an artist selling ownership through a platform like yours versus a traditional fund? In particular, I’m thinking of Calvin Harris’ catalog and how private equity firm Vine Alternative Investments acquired his music for around $100 million. What’s the value proposition for a larger artist like him?
Blau: The only people that have had access to even pricing these assets are labels, private equity firms and publishing houses, right? So like you said, a lot of these bigger players are looking to acquire an individual celebrity artist’s catalogs the same way they did with Taylor Swift’s.
The question is, how much more would her real fans be willing to pay for the same type of ownership. What we’ve proven so far with Royal, at least with some of my assets, is that that multiplier is absolutely ginormous. There’s emotional value to a fan in owning music that’s not being captured by the market today.
Maybe a private equity firm has more liquidity to make those types of offers, but we are more focused on artists that have been disenfranchised by existing systems, who have signed bad record deals. Labels have served a lot of purpose and have a lot of value for many artists. But in most cases, artists end up giving away 80% of their equity very early on in their careers.
Chittum: If in the future you’d like to focus on smaller artists on Royal’s platform as well, why are you starting with a big name like Nas?
Blau: It makes sense for many reasons. Nas is an icon in the hip-hop world. A lot of surveys that we conducted came back with 36% of respondents saying they are interested in investing in hip-hop compared to any other music genre, which is quite significant.
Beyond that, Nas has a long history in crypto. He’s an early investor in Coinbase. He has a legacy of being a true innovator and entrepreneur. It made sense to make a big stand early on and show the world that both legendary artists and up-and-coming artists are going to be active participants in the Royal ecosystem.
Chittum: What do you think the biggest barrier to mainstream adoption is for music NFTs?
Blau: I think a barrier to entry is account setup. As human beings, we are used to logging into everything with our email or our phone number. In crypto, you have to go through a way longer process to do that.
With Royal, if you are crypto savvy, you can connect with your wallet and go about the purchase of the asset. If you don’t know anything about crypto, all you need is an email address to log in and we take care of the rest for you. We kind of guide you on the journey to becoming more Web3 native through the Royal experience, which is something that we feel is really important.
Chittum: Take me back to the first time you heard the words “non-fungible token.” What were you thinking?
Blau: I haven’t gotten that question before actually. It would have been 2017. I had just been reading a lot of blog posts about Ethereum and getting really excited about it. It was more of a gradual thing for me where I began to learn that the technology existed, had familiarity with fungibility from my days in finance, and just got excited about the idea of authenticating ownership on a blockchain, which is ultimately what an NFT is.
I started thinking about non-fungible tokens in lots of different contexts related to ticketing and proof of attendance in 2018. I thought about how [someone] could earn a limited digital asset from attending a concert. We threw the festival in October 2018, where we actually did some of the earliest live NFT experiments ever. Fast-forward and I began to see NFTs manifesting as art.
Fast-forward to when Beeple did his first NFT sale for $2 million. At that time, I was like “holy crap,” there’s digital artists selling NFTs for millions of dollars, not just thousands of dollars. When you see numbers of that size, you pique the curiosity of everyone and then you create this giant feedback loop of people who are interested in the technology and learning what it’s about.
Chittum: Finally, if you could make or mint a music NFT with any artist dead or alive, who would your top choices be?
Blau: Based on my personal taste, I’m a huge Radiohead fan so helping them with something like that would be awesome. I’m a huge fan of Sigur Rós too. Those are my two favorite artists of all time.
This interview has been edited for length and clarity.
Don’t miss the next big story – join our free daily newsletter.