Reimagining the Music Industry: Innovating the Legal and Technical Basis for Fractional Ownership of Music Royalties Through Utility and Security Tokens and Portfolio Models

‍Project Overview

The DLT Science Foundation has funded a groundbreaking project, "Reimagining the Music Industry: Innovating the Legal and Technical Basis for Fractional Ownership of Music Royalties Through Utility and Security Tokens and Portfolio Models." The initiative centres around the conceptualisation and development of a platform that leverages blockchain technology to facilitate the legal trade of music royalties using tokenized representations of song copyrights and royalties.

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Background

There's an emerging interest in identifying innovative means to manage and profit from music royalties, and blockchain appears as a promising answer. This project seeks to fill the existing knowledge and application void. The multidisciplinary team, boasting prowess in blockchain, law, music, and finance, is uniquely positioned for success, especially with the collaborative support from the FCA.

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Abstract

The project delves into the utilisation of multi-token models, examining both utility tokens (used for individual asset ownership, like individual songs) and security token models (focused on trading asset portfolios and index funds). A significant facet of the endeavour is the collaboration with the FCA (the UK’s Financial Conduct Authority) to understand the legal foundation of these novel trading frameworks. The project also assesses the feasibility of such innovative trading and ownership models in today's market.

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Objectives

The primary objective is the development and validation of a functional platform that allows the legal trading of music royalties using blockchain tokens. One of the measurable definitions of success is obtaining regulatory compliance and ensuring market acceptance, which can be gauged by user adoption rates, liquidity, and trading volumes.

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Expected Outcomes and Impact

Upon completion, the project is anticipated to unveil a platform enabling the tokenized legal trading of music royalties. Potential benefits comprise novel monetisation opportunities for artists and an innovative avenue for fans to invest in their favourite songs. By facilitating this new approach to music monetisation, the industry could witness transformative shifts in terms of efficiency, transparency, and accessibility.

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Ecosystem Development 

The development of the blockchain ecosystem underpinning this project will be driven through alliances with established blockchain entities, such as Hedera, and the creation of proprietary blockchain infrastructure. Beyond the technology, relationships will be fostered with artists, music labels, rights owners, and fans. This holistic approach aims to create a robust ecosystem that is mutually beneficial to all music industry stakeholders.

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Methodology & Implementation

The project blueprint involves rigorous research, strategic partnerships, community building, and phased testing. With a key emphasis is on adjusting the investment framework for musical assets.

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Conclusion 

In sum, this funded endeavour holds the promise of leading transformative changes in the music industry, reshaping how royalties are perceived, managed, and traded.