360X Music has issued a security token for music royalties in partnership with the German music rights management company GEMA. The blockchain-based tokens are for royalties related to compositions by Hans Günter Wagener, the German composer of soundtracks. Parent company 360X is a digital asset startup backed by Commerzbank and Deutsche Börse. It provides a BaFin-regulated marketplace for tokenized music, art, and real estate.

By tokenizing music royalties, authors can unlock early value for their creations instead of waiting months and years for revenue. There are pros and cons. For example, if a track is much more popular than expected, the musician would have been better off waiting to receive the royalties. However, the artist does not necessarily have to sell the token. In the future, musicians could use these royalty tokens to borrow against future earnings.

“The first token for the music industry jointly issued by GEMA and 360X Music is an important milestone on our journey to improve the economic situation of lyricists, composers and publishers and ensure that they continue to have control over their rights,” said Dr. Harald Heker. , CEO of GEMA.

These security tokens are an investment and are quite different from buying a music NFT closer to buying a track to listen to. Most of the NFT money usually goes directly to the artist rather than to a label, like when a track is purchased. 360X Music Group also has a web3 subsidiary, twelve x twelve (a nod to vinyl measurements) that is involved in NFTs.

“In the future, investors will be able to invest directly in artists, authors or publishers and participate in their success,” said Jan Denecke, CEO of 360X Music. “Our goal is to enable fans and investors to safely invest in the music they love. In this way, they too will be able to participate in the success of their favorite artists”.

The token issuance platform allows instant settlement in euros. We have asked what blockchain technology is used, but did not receive an answer in time for publication.

As a financial asset, security tokens are quite distinctive. However, blockchain has been used elsewhere to earn royalties. Canadian firm GuildOne has launched a blockchain music royalty solution and Tech Mahindra has a blockchain-based royalty platform. GEMA’s French counterpart, SACEM, is using blockchain for intellectual property protection, to prove that the author owns the rights, rather than royalties.