BSC's largest music NFT platform Rocki: N possibilities for music commercialization on the blockchain

Author: echo_z

Source: Chain Tea House

Rocki is the largest music NFT platform on BSC. Ordinary users can listen to some music for free and trade listening rights NFTs; music producers can create royalty contracts that automatically allocate earnings and mint listening rights NFTs; token holders can stake votes for their favorite musicians, and both voters and musicians will receive staking rewards allocated by the project.

Rocki launched its internal test version from September to December 2020, released the token $ROCKI for public sale in December 2020, and launched the public test version on BSC in April 2021, which is still in the public testing phase. As of December 30, 2021, the circulating market cap (MC) was approximately $1.7 million, and the fully diluted valuation (FDV) was approximately $21 million.

1. Product Features

The product currently only has a web version, with core functions including music playback and uploading, listening rights NFT issuance and purchase, and staking mining.

1.1 Music Playback and Uploading

The web version's "Music" page can be understood as a basic version of a music list, functioning similarly to traditional music applications, allowing indexing by single tracks, musicians, and playlists.

Users can also add singles or musicians to "My Favorite" and view and play them within their account. According to the white paper, these songs will eventually adopt a monthly subscription model (see section 3.1 for details), with subscription fees set uniformly by the platform to pay musicians' royalties; however, in the current public test version, all music can be listened to for free.

Musicians can upload their tracks themselves, and they need to set the royalty sharing ratio during the upload. The image below shows the royalty sharing contract that needs to be filled out during the upload. Once there is royalty income, these earnings will be automatically distributed to the accounts specified.

1.2 Listening Rights NFT Issuance and Purchase

The web version's "NFT" page can be understood as a list of songs that require payment to listen to, where users can trade listening rights NFTs. The NFTs have a limited quantity, which musicians set before issuance.

Users can only listen to a preview before purchasing; after buying the NFT, they can listen to the full version. The paid song shown below (by their CEO!) is priced at 0.02 BNB, with a total of 10 issued, and one has been sold.

These NFTs can also be resold, with the platform offering both direct sale and auction methods (left below). Once sold, the purchased listening rights become invalid immediately and will be listed on the NFT market as "resale from fan," while the original author's listing will show "original artist release" (right below).

This is currently Rocki's main NFT play, selling limited listening rights, which is also the primary way musicians earn revenue on Rocki. Other emerging music NFT platforms in the market often bundle limited physical products, Discord exclusive channel slots, etc., with their NFT sales; comparatively, the NFTs listed currently have almost no marketing strategies and mainly rely on the music itself to attract buyers.

In fact, during the internal testing phase in 2020, Rocki attempted to sell royalty NFTs and sold 50% of the future royalties of Israeli musician Guy J's new song Cotton Eyes on Rocki for 40 ETH.

That attempt brought significant fame to Rocki, but so far, Rocki has not launched royalty NFTs in the public test version, presumably due to the lack of a payment model and the inability to collect royalties, leading the team to focus more on promoting listening rights NFTs.

Currently, most NFT issuers are grassroots musicians, and the prices of NFTs are not high, generally ranging from 0.01 to 0.5 BNB.

1.3 Staking Mining

The web version's "Stake" page is a mining activity launched by the platform in October this year. Users can stake any amount of ROCKI to their favorite musicians, and after the activity ends, the platform will allocate tens of thousands of $ROCKI tokens as rewards, half to users and half to musicians, distributed according to the staking ratio of users and the proportion of musicians being staked. Mining activities last for several weeks each time and will continue in the future.

In the first round of mining activities that began in October, a total of over 130 users participated in staking, with over 70 musicians participating in voting, totaling 650,000 $ROCKI staked (approximately $140,000). Staking lasted for three weeks, during which users could withdraw their funds at any time.

After the activity ended, the platform distributed approximately 58,000 $ROCKI (about $13,000) as rewards, with an annualized return of approximately 105%. The second round has recently begun and will last for eight weeks, with a total of 48,000 $ROCKI to be distributed, which is a decrease compared to the first round. Currently, a total of 270,000 $ROCKI is participating in staking.

For ordinary users, the overall product experience is not very smooth, such as being able to only play music in the order of the playlist, music stopping when navigating to other pages, and the NFT purchase page lacking filtering and sorting options. The product feels more like a platform for musicians to release smart royalty contracts and issue music products.

2. Product Operation and Growth

The current product scale is still very small. The top-ranked song, Cotton Eyes, which was sold as a royalty NFT for 40 ETH in December 2020, has only 20,000 plays, and its music producer Guy J has only over 300 fans on Rocki, while Guy J has 96,000 monthly listeners on Spotify and 159,000 fans on SoundCloud.

According to CMC data, the number of Rocki token holders is only 1,569. The product is extremely niche in both the crypto and music circles.

Rocki actually had quite successful marketing activities during the internal testing phase (September to December 2020) and the early public testing phase (April to May 2021), but since May, there have been basically no major market actions, and its decline in popularity is also reflected in the drop in token price.

The seed users during the internal testing phase likely came from the user base accumulated from the CEO's previous entrepreneurial projects. Before founding Rocki, the CEO had already launched several music apps, including Web2 applications Vidiam and Grooveo, aimed at generating revenue for musicians, and in 2017, he founded the blockchain-based music streaming application Choon.

Choon was built on Ethereum, with a mission and approach similar to Rocki, attempting to provide musicians with instant and transparent on-chain income. Reports indicated that by May 2018, Choon had accumulated 12,000 musicians, uploaded 45,000 original tracks, and had 22,000 registered users. Now, Choon's website is no longer accessible, and from user comments in Telegram, at least some users have migrated from Choon to Rocki.

In December 2020, towards the end of the internal testing phase, Rocki launched a royalty NFT for Israeli musician Guy J, selling 50% of the future royalty income from his new song Cotton Eyes on Rocki. The auction took place on Bounce.finance and ultimately sold for 40 ETH (approximately $24,000 at the time), attracting considerable attention. After the internal testing phase ended, over 5,000 musicians uploaded more than 30,000 original music tracks.

In April 2021, the public test version was launched on BSC. The planning in the white paper and the internal test version were based on ETH, and the later migration was mainly due to considerations of user cost. In April and May, Rocki focused on releasing listening rights NFTs for a group of musicians with a certain level of recognition, including Blond:ish (550,000 monthly listeners on Spotify) and Nick Warren (60,000 monthly listeners on Spotify), which received media coverage at the time.

Unfortunately, for some unknown reason, these musicians and their tracks are now unsearchable on Rocki. The left image shows the limited listening NFT for Blond:ish's work Musubi, which had a total of 10 issued, with 1 sold, as seen from the page; the right image is from Blond:ish's Facebook post, where in addition to listening rights, there were also benefits like backstage access to concerts and offline meet-and-greet opportunities.

Subsequently, Rocki has released several announcements, including a partnership with Ontology in May 2021 to provide musicians with a DID system, a partnership with a record company called Black Dog Music Partners in July, and the launch of staking mining activities in October. However, overall, its market presence is gradually diminishing.

Additionally, Rocki's community operation is relatively lacking, with no Discord group established, only a Telegram group with over 6,000 members.

3. Business Model and Token Economics

Rocki's business model is relatively complex, with the team emphasizing its feature of "both musicians and users can benefit," adding elements of "user rewards" and "token economics" compared to traditional music applications.

The revenue model for the platform and musicians is similar to traditional music platforms, but the core is that the platform reduces its revenue cut and redistributes it to active users through staking mining and other activities. Its business model includes: 1) users directly paying musicians and the platform; 2) advertisers paying the platform and musicians; 3) the platform and musicians redistributing earnings to users. The schematic is as follows:

3.1 Users Directly Paying Musicians and the Platform

In the first part, which includes Rocki's main charging model, there are several subcategories:

The first is paid subscriptions. In the current public test version, all music except NFTs can be listened to for free, but according to the white paper's planning, in the future, users will need to pay a monthly subscription fee to continue listening; otherwise, they can only listen to 3 songs for free, after which they will need to listen/watch ads to continue listening, similar to the difference between Spotify's paid and free versions. The innovation of this model lies in the revenue sharing ratio, with 70% to 80% of the revenue going to musicians.

The white paper proposes three possible paid subscription models.

The first is payment in fiat currency, at $8 per month, which is no different from traditional methods and is slightly lower than Spotify's paid version price of $9.99/month in the U.S. In this model, 70% of the revenue goes to musicians, distributed based on the listening duration of the songs; 20% is retained by the platform; and 10% is used to buy back $ROCKI for future user rewards or airdrops. The fiat payment setup shows the project's effort to include traditional internet users.

The second is payment using the project token $ROCKI, priced at 70% of the fiat price, calculated based on the average price of $ROCKI over the past 12 hours. In this model, 80% of the revenue goes to musicians, and 20% is used to reward users, with no cut taken by the platform. This is a somewhat strange design; although it is discounted compared to fiat prices, the volatility of the project token itself may hinder users from using it as a payment method, and in the future, it may still need to revert to stablecoin payments.

The third is obtaining paid listening rights by staking the token $ROCKI. The staking rewards will all go to the musicians on the platform, distributed according to the listening duration of all musicians by that user. The source of staking rewards comes from a dedicated mining pool set aside for staking rewards during the initial token distribution, accounting for approximately 60% of the total. The white paper does not specify the staking amount, which is estimated to be determined based on future token prices and annualized returns.

The income obtained from paid subscriptions will be distributed according to the listening duration ratio of each musician. The value of music is determined by the user's listening duration. When musicians upload music, they can also set the royalty sharing ratio.

One way is to directly input specific user accounts in the contract, and the income derived from paid subscriptions will be automatically distributed to multiple parties according to the contract ratio; another way is to set a sharing ratio for playlists, with corresponding incentives given to playlist creators, encouraging more playlist creators to include their songs in playlists to increase song exposure. The left and right images below represent the first and second sharing methods:

The second charging method is also relatively traditional, namely live streaming rewards. In live streaming rewards, the platform takes a 30% cut. Compared to domestic platforms like Douyin and Kuaishou, which have cuts of over 50%, this percentage is indeed relatively low.

The third is listening rights NFTs, which are paid purchases of single track listening rights, with prices and limited quantities set by musicians themselves, and users can also resell listening rights. This part has already been introduced in section 1 of product features and is currently the only user-paid method launched in the public test version. The platform has not specified the cut for this part; currently, it can only be seen that users need to pay a 1% fee when reselling NFTs.

The core of this model is to leverage the scarcity of listening rights to drive up the value of the product. However, from the current NFT listing situation, very few can be sold, making it difficult to attract "big spenders."

Currently, the musicians listed on the platform are mostly grassroots and lack fame. Rocki's CEO mentioned in an interview that for music NFTs to sell well, musicians must first expand their fan base and establish their brand reputation. However, this ability is lacking in the vast majority of resident musicians, and both the product and resident musicians lack fan listeners, making it difficult for listening rights NFTs to sell at high prices.

The fourth is royalty NFTs, where musicians can set the sharing ratio of future royalties they will receive on Rocki and sell this contract as an NFT. This was also the play that brought Rocki significant fame during the internal testing phase, but it was only attempted once during that phase, and the subsequent public test version switched to listening rights NFTs. According to official responses in the Telegram community, the team has been planning to promote royalty NFTs.

In summary, Rocki's charging model is very diverse, including both relatively traditional paid subscription models and blockchain-based NFT plays, while simultaneously exploring two different models of listening rights NFTs and royalty NFTs.

Its uniqueness lies in two points: first, the platform's cut is low, with 70% to 80% of direct revenue going to musicians, and almost all income in the listening rights NFT model going to musicians; second, musicians can freely set the royalty sharing smart contracts on the platform, allowing them to directly set ratios and sharing recipients, or sell them as NFTs.

Currently, the public test version has only launched listening rights NFTs, but from the actual sales situation, they have not been very popular; the only royalty NFT sold during the internal testing phase received a great response but has not been promoted since. Rocki's path to monetization remains long.

3.2 Advertisers Paying the Platform and Musicians

This part of the revenue model is also similar to traditional platforms. The platform can attract advertisers to place ads and collect advertising fees. If users do not purchase the paid version, they will need to listen/watch ads to continue listening.

On the other hand, the platform also allows musicians to negotiate independently with advertisers; after paying a certain fee to the platform, musicians can play ads they introduce within the platform. The white paper's planning for this section is relatively vague, considering that independent musicians may face information asymmetry when dealing with advertisers, and they generally have little possibility of negotiating independent collaborations, which may lead to the formation of some sort of guild-like management organization in the future.

The difference between Rocki's advertising revenue and traditional models still lies in the sharing ratio: the platform only takes a 40% cut, and 60% of advertising revenue will be used as funds to reward users, potentially for airdrops or incentives for users to listen to and promote songs.

3.3 The Platform and Musicians Redistributing Earnings to Users

The source of the platform's redistribution to users comes from two aspects: first, in the initial design of the token distribution, a total of 64% of the tokens will be used for mining rewards; second, the subscription revenue from fiat or token income includes 10% from fiat revenue and 20% from token revenue; third, 60% of the platform's advertising revenue. Redistribution methods include: airdrops to active users, staking mining rewards for users, and sharing incentives for users who listen to and promote music.

The first two methods are common incentive methods used in Web3 applications (staking mining has been explained in section 1.3 and will not be repeated); the latter is relatively unique, equivalent to the platform paying for music promotion, with the costs going directly into the pockets of listening users. Additionally, musicians can also use the same method for paid promotion, incentivizing users to listen to their released music as a form of promotion.

The platform will also design certain anti-fraud mechanisms, stipulating that each user can only listen to a promoted song once per day, and these instances will not be counted as listening data for the musician's revenue distribution.

Rocki attempts to integrate traditional charging models with blockchain-native charging models, exploring diversification. Except for the "fan token" path, which has not been mentioned, almost all existing Web3 music commercialization approaches can be seen in Rocki's white paper. The platform reduces the cut by "actively giving back," allocating the main revenue to musicians, and redistributing through mining rewards and promotional costs to users.

4. Token Economics

4.1 Token Distribution

The total supply of the token $ROCKI is approximately 100 million, publicly sold in December 2020, with about 8 million released so far, including the initial public sale of 4 million and parts of the ecosystem and grants that have already been unlocked. The current circulating market cap is approximately $1.7 million, and the fully diluted valuation is approximately $21 million. It is worth noting that currently, less than 10% of the tokens have been released, and 64% of the tokens planned for community mining have almost no circulation, mainly because the project team has not launched mining activities for a long time.

|-----------|------------|------|---------------------| | Holder/Acquisition Method | Quantity | Percentage | Lock-up Period | | Community Mining by Listening to Music | 63,000,000 | 64% | None, but mining activities will be established by the platform as needed | | Ecosystem and Grants | 16,774,981 | 17% | 1/15 unlocked every two months after public sale | | Team | 14,000,000 | 14% | Unlocked after 12 months, then 20% released every 6 months | | Public Sale | 4,070,000 | 4% | None | | Advisors | 2,000,000 | 2% | Unlocked after 12 months, then 20% released every 6 months | | Total | 97,844,981 | 100% | |

4.2 Token Utility

The token's utility mainly lies in payment within the platform and proof of staking contribution.

First, the token can be used as a payment method for paid subscriptions, either directly or by staking (with interest going to musicians) as a payment method. However, in this design, the token's substitutability is relatively weak; payments for paid subscriptions can be settled in fiat, and listening rights NFTs can be purchased with BNB, so users using tokens do not have special rights.

Second, users can participate in the platform's staking mining activities, with rewards evenly distributed to staked users and musicians who vote through staking, essentially redistributing wealth by proving their contributions. This design will certainly attract some users to buy tokens for staking, but the staking activities are entirely determined by the platform, with no long-term stable rules, and there is no community governance mechanism, leading to a strong dependence on platform policies.

Comparing Rocki and Audius's token economic models reveals both similarities and differences.

The similarity lies in the fact that the initial distribution of circulating tokens to the community is very small for both; Audius initially airdropped tokens to the community, accounting for only 5.5% of the total supply, while Rocki plans to allocate 64% of the total supply to the community, but this will require mining to obtain, with only 4% of the total supply being publicly sold initially. If we do not consider the expected 64% of tokens to be released through mining, it accounts for only 11%.

The difference lies in the fact that Audius has clear rules, with a total annual increase of 7% in tokens, all allocated to staked users, while Rocki's staking mining activities are customized by the platform as needed, with a relatively opaque mechanism. Additionally, Audius token holders have community governance rights, creating a deeper binding of user interests and the platform, while Rocki lacks a community governance mechanism.

5. Team Background and Financing Situation

The team has not disclosed any financing information and has not introduced a complete team.

From publicly available information, the team appears to be a traditional musician team that has crossed over into blockchain. The white paper mentions that the team comes from top artists, record companies, agents, lawyers, accountants, etc., in the music industry, all of whom are roles within the traditional music industry chain. CEO Bjorn Niclas has worked in the music industry for 20 years, founded his own record company Spundae black, and has continuously launched several music streaming applications, including Web2 applications Vidiam, Grooveo, and the Web3 application Choon.

6. Product Summary

Compared to Audius's approach of prioritizing community before commercialization, Rocki can be said to have taken on the commercialization of musicians from the very beginning. The team comes from the traditional music industry chain and attempts to explore various commercialization models to solve revenue issues for musicians, including paid subscriptions compatible with on-chain and off-chain payments, trading of listening rights NFTs and royalty NFTs, and allowing musicians to negotiate advertising collaborations independently.

It resembles a comprehensive on-chain commercialization testing ground. The design philosophy of the business model is very music-centric, trading based on the listening rights or future royalties of the music itself.

In terms of revenue distribution, the platform focuses on ensuring that musicians and users receive more revenue, and the internal wealth distribution among musicians is fairer. The platform allocates 70% to 80% of direct revenue to musicians and redistributes 60% of indirect revenue from advertising to users; at the same time, the wealth distribution among musicians is strictly determined by the actual listening duration of users.

In the early stages, the product attracted considerable attention through collaborations with well-known musicians, issuing royalty NFTs and listening rights NFTs, leading to a significant increase in token price. However, since mid-year, operational activities have been relatively passive, lacking continuous engagement from major influencers and topic marketing, and community building is also lacking, with no active user community established yet.

The product has very few users and lacks major influencer song resources. Currently, the paid subscription model and royalty NFTs have not been launched in the public test version, and although listening rights NFTs have been launched, sales volume is scarce. For commercialization to succeed, there must first be enough exclusive music resources; under the current circumstances, Rocki's commercialization process is bound to be very challenging.

As two of the earliest and longest-operating Web3 music projects, Audius and Rocki have almost opposite development paths. Audius has spared no expense in airdropping tokens to attract a batch of major electronic music influencers, accumulating approximately 200,000 daily active users, but has yet to launch any commercialization methods; Rocki, on the other hand, has been exploring various commercialization paths from the beginning but has not yet built a community.

Additionally, Audius's token play is more crypto-native, with a token issuance mechanism to encourage staking and plans for major influencers to issue their own fan tokens, allowing for stronger interoperability with other Web3 applications; Rocki's token utility is primarily as an in-app payment method and for staking tokens to unlock rewards, with relatively limited imaginative space.

Moving forward, Audius is expected to focus on commercialization, while Rocki just launched staking mining activities in October this year. Both platforms are gradually rolling out new features and looking forward to developments in the coming year.