Economic Transparency for Royalty Music NFTs
Dopr
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Rob Abelow
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David Rosen, PhD
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August 18th, 2022

What is a Royalty mNFT worth?

(scroll down to view forecasts)

Music royalties are a strong investment asset that more individuals now have access to through royalty music NFTs. But, how do you value or forecast these to find out if the price tag is worth it? There is very little information available regarding historical performance, future forecasts, or even streaming royalty mechanics.

At Dopr, we’ve put a lot of energy into this question, developing probabilistic, ai predictive models to help collectors understand the range of outcomes for any royalty-bearing mNFT drop.

Now, you can use Dopr’s predictive data to power more informed decisions when that next drop happens from your favorite artist or platform. Or, even to help you discover your next favorite.

In this article, we will cover:

  • Projections on drops from leading platform - Royal
  • Results of our previous Royal projections
  • Strategies for assessing royalty mNFTs’ value
  • A new player in the royalty space, anotherblock

9 months of royalty mNFTs

Royalty mNFTs offer unique utility for collectors - fractionalized royalties for a song, EP, album, or even catalog to share in the future financial success with artists. These mNFTs made their debut on December 1, 2021 on Opulous, with Lil Pump and Soulja Boy’s “Mona Lisa”. In two hours, it sold out, hitting their $500K fundraising goal. Then on January 20, 2022, Royal dropped two tracks by Nas, “Rare” and “Ultra Black’, in which tokens were sold across three tiers with varying prices and royalty share. These tokens sold out in minutes, earning $556K ($369K for “Rare” and $187K for “Ultra Black”).

Since these first drops, Royal has been leading the way in terms of number of collectors, tokens sold, and revenue. They’ve had 13 drops in total - some of which have come from some pretty massive artists including: Diplo, The Chainsmokers, Big Boi, and others. Additional players in the space include Opulous, Decent, Band Royalty, ANote, and others. Each platform and drop differs in pricing, tier structure, artist-types, and term length, which complicates things.

Therefore, a collector is left to figure out what the royalty share for a drop is worth. What’s tricky is that prices range from under $50 to $9,999, and royalty shares range from .004% to 5%.

New forecasts on Royal drops

Dopr provides 5-year quarterly probabilistic forecasts on streams, royalty earnings, and ROI for these mNFTs. Our predictive analytics improve financial transparency, and hopefully, will lead to more favorable pricing for collectors.

Dopr's 5-year forecasts on 6 Royal drops. The table shows median projections for streams, token earnings, and ROI.
Dopr's 5-year forecasts on 6 Royal drops. The table shows median projections for streams, token earnings, and ROI.

We ran 10 of Royal’s drops through our models. You can view all forecasts along with additional details (e.g., High Upside Projections - 95th percentile), at the Dopr Discord. Here, we report summary results from the median projections and show tokenized stats on 6 of the drops. It should be noted that 5-year ROI calculations were made based on the minting price and did not include earnings between drop date and data of analysis: August 8, 2022.

Across these 10 drops, we calculated the mean 5-year ROI and standard deviations for each tier:

Gold: 35.67% (sd = 38%)

Platinum: 39.11 % (sd = 41%)

Diamond: 49.07% (sd = 59%)

At first glance, there was high variability for ROIs across token tiers. One drop raised its hand from the rest. Diplo’s “Don’t Forget My Love” was the only collection where Dopr projected each tier would earn more than 100% ROI in a 5-year period. The gold, platinum, and diamond tiers were priced at $99, $999, and $9,999, respectively. Although the drop sold out on Royal, many tokens are available on OpenSea with floor prices just above the minting price based on the current ETH value: 0.6 ETH (gold), 1.25 ETH (platinum), and undefined (diamond).

5-year performance forecasts for streams, royalties and token earnings on Diplo's drop "Don't Forget My Love" via Royal.
5-year performance forecasts for streams, royalties and token earnings on Diplo's drop "Don't Forget My Love" via Royal.

Given that the Diplo track was projected to be such an over-performer, we recalculated the 5-year ROI for the others. The ROIs were reduced by 35-40%, and standard deviations decreased by more than 50%.

Gold: 23.29% (sd = 16%)

Platinum: 25.18% (sd = 18%)

Diamond: 29.23% (sd = 24%)

Results on Dopr’s Forecasts

Earlier this year, we published forecasts on Royal’s first three drops from Nas and Vérité. We detailed the process of forecasting a music NFT in a previous article.

So how are those first three forecasts going?

With 6-months of data in, here’s Dopr’s predicted stream projections compared to the actual global streaming data, as well as mean absolute error (mae).

The results of Dopr's projections on three Royal drops earlier this year.
The results of Dopr's projections on three Royal drops earlier this year.

While it is still early-on and three drops is an extremely small sample, the average mae is 0.279, which aligns with our backtesting accuracy metrics. Through extensive testing, our models show high accuracy on music across all genres and artist types/sizes, with very strong correlations (R² > 0.9) and low mae (0.25-0.35).

Picking winners is all about the upside

To date, the forecast data we’ve displayed publicly has focused on the median or 50th percentile outcome. For tracks that have been out awhile and have reached or nearly reached steady state, it makes sense to use this value. The odds of a song drastically changing trajectory after its first six-months is highly unlikely. For newer tracks, however, collectors looking for the royalty mNFTs with the most value should be seeking those ‘diamonds in the rough’ that have the potential to explode and be a massive hit, earning them several multiples on their investment.

In the music industry, the hits tend to pay for everything else. This philosophy not only applies to music, but also to venture capital and investing in general. You’re not going to win big by grinding out small gains by slightly beating the median projection. Instead, you’re looking for strong asymmetrical bets - the winners pay for the rest.

This is why it is important to have probabilistic models that detail this information. Dopr’s forecast API provides projection data that includes the 33rd/66th and 5th/95th percentile outcomes for any released track (+/- 1 and 2 standard deviations from the mean). You can view 95th percentile - ‘high upside’ - projections for all 10 Royal drops at the Dopr Discord.

anotherblock enters the scene

We are excited about anotherblock, a new player in the royalty-bearing mNFT space. They are committed to making financial transparency a priority for their collectors.

anotherblock is a Sweden-based startup developing a web3 music rights marketplace.
anotherblock is a Sweden-based startup developing a web3 music rights marketplace.

Their first drop will be on August 19th - an unreleased track titled, “Weekend on a Tuesday”, a collaboration between megastars R3hab and Laidback Luke. anotherblock consulted with Dopr to help set the token price. Stay tuned for future drops where Dopr’s analytics will help provide increased transparency to anotherblock’s collectors.

We will be giving away an mNFT for “Weekend on a Tuesday”. To be entered to win, join our Discord.

What is Dopr?

Dopr is a suite of music discovery and modeling tools that shed light on the most compelling artists and releases across the web3 ecosystem. We help collectors find the music that means the most to them; whether that’s as a fan, investor, or both. Utilizing advanced models based on our neuroscience research on music-preference-formation, Dopr provides music and music NFT predictive analytics today, and fandom-based recommendation for listeners in the future.

Dopr is the music collector’s home for discovery and valuation in web3. Find music NFTs from any platform, understand their value, and track your collections.

Dopr makes music collecting easy.

If you’re a music fan or collector who believes in our mission to create the best version of music’s future, please join us!

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