Republic – the financial services company, not the record label – has announced the launch of “Republic Music,” a vaguely defined investment product that promises “an entirely new way to create, produce, and share royalties from music.”
Republic Music, the result of a collaboration with the crypto company Opulous, claims to offer listeners the opportunity to “invest in the music they love for as little as $100 and share in the rights to royalties.”
The concept revolves around “S-NFTs,” or “Security NFTs.”
NFTs on a new path?
Non-fungible tokens (NFTs) are a type of cryptocurrency that can be attached to media files and used as proof of ownership. Crypto firms typically argue that NFTs are not securities because securities in the United States must be regulated by the Securities and Exchange Commission (SEC).
Republic appears to be taking the opposite approach, positioning S-NFTs as a type of security – something you can invest in with the expectation of profiting later on.
“The songs will be placed in an LLC, and you will be a member of the LLC,” said Pialy Aditya, Republic’s chief strategy officer, in an interview. “You will have a share of ownership in that song, as well as a right to royalties in the future.”
That means S-NFTs are regulated by the SEC and FINRA, the finance industry’s self-regulatory body; investors in the United States will need to comply with relevant KYC / AML (know your customer / anti-money laundering) regulations before they can participate.
It is based on “Reg CF,” or “Regulation Crowdfunding,” which allows private companies to raise up to $5 million in Kickstarter-style campaigns from non-accredited investors.
Republic also claims to have enlisted the help of rapper and former Donald Trump supporter Lil Pump to sweeten the deal.
“As part of the first wave of planned releases, Lil Pump is offering fans and investors the chance to be a part of his forthcoming single ‘Mona Lisa (feat. Soulja Boy),’ produced by Jimmy Duval,” according to a press release.
The most recent experiment
Companies have long attempted to put digital music “on the blockchain” in a way that makes sense to consumers; Audius, a crypto streaming service, is probably the most well-known name in the space, but smaller projects like Catalog, Songcamp, and Nina have also generated interest.
Recently, crypto-savvy DJ 3LAU released Royal, a similar royalties play that avoids the securities angle entirely.
Republic sees its music platform as a “vertical” of its primary investment business, and it has plans for several other verticals aimed at fractional investments in various aspects of the creator economy.
“I believe that in the New World Order, early supporters will be rewarded, artists will be paid, and the community will grow stronger,” Republic’s Aditya said.