Introduction

Music Protocol (MP) reshapes the landscape of music royalty investment by integrating blockchain technology, creating a more accessible, decentralised platform for institutional and individual investors. By offering two distinct investment products, MP allows users to earn yields on music royalties while benefiting from the transparency and risk mitigation that decentralisation provides.

Investment Pools on Music Protocol

At the core of MP are investment pools that allow artists, record labels, or rights holders to raise funds by offering a share of future music royalties. In return for upfront capital, investors receive some of the royalties generated as the music is streamed or sold. The result? Artists can fund new projects while investors earn predictable returns.

Royalty-Linked Notes

The centrepiece of these pools is the Royalty-Linked Note—a way to transform real-world music royalties into a tokenised asset. These notes can be linked to back catalogues still generating income or to future releases. For example, a band with a hit album could issue a Royalty-Linked Note that investors buy into, earning a share of future streaming royalties.

Estimating future earnings of a note involves analysing the artist's fan base, activity, and historical data—factors that MP uses to bring off-chain agreements onchain, streamlining royalty management and distribution for investors.

Liquid RECORD: A Diversified Investment Opportunity

Liquid RECORD offers a diversified, decentralised investment fund for those seeking broader exposure. Investors contribute capital and receive nRECORD tokens, managed on-chain and spread across various music royalty pools. This automated system offers investors passive exposure to music royalties, allowing them to earn stablecoin returns as they are collected and distributed.

Key Features of Liquid RECORD:

• Tokenised Shares: Investors receive nRECORD tokens, which can be traded on secondary markets.

• Diversification: Funds are spread across multiple music royalties, reducing risk.

• Passive Income: Investors earn consistent income, though returns are slightly lower due to over-collateralisation aimed at stabilising the system.

Risk Sharing Pool: A Decentralised Safety Net

The Risk Sharing Pool is MP’s key risk mitigation feature, allowing investors to stake their tokens to provide coverage for higher-risk investment pools. While this pool offers potential rewards, stakers also accept the possibility of covering losses if a pool underperforms. This decentralised approach balances risk and reward, empowering the community to take on roles traditionally held by centralised institutions.

How to Use the Music Protocol App

Music Protocol’s app is currently in its testnet phase! Be among the first to access it once it’s live by joining the allowlist.

Why Decentralisation Matters for Music Protocol

By leveraging blockchain, MP provides significant benefits that traditional systems cannot match:

• Enhanced Liquidity: MP tokenises music royalties, turning illiquid assets into tradable tokens, giving investors more control.

• Risk Mitigation: Decentralised mechanisms like the Risk Sharing Pool offer transparency and empower users to manage risk collectively.

• Community Governance: MP’s decentralised governance model gives users a voice in platform decisions, aligning with the ethos of decentralised finance.

Music Protocol marks a major step towards decentralising the music royalty market. Through blockchain, MP opens the door to new investment opportunities, risk-sharing mechanisms, and financial inclusion in an industry traditionally controlled by a few players. With the rise of decentralised finance, MP is setting the stage for a new, accessible way to invest in music, offering a decentralised platform with transparency, liquidity, and community control.