MasterExchange CEO Alexander Fred-Ojala speaks Music and Initial Music Offerings
In today's digital age, the music industry is constantly seeking innovative solutions to address long-standing challenges. One technology that has emerged as a potential game-changer is blockchain. The impact of blockchain technology on the music industry is becoming increasingly evident. This decentralized and transparent system offers promising solutions to issues like music piracy, distribution inefficiencies, and artist authenticity.
Blockchain technology is revolutionizing the way royalties are paid, ensuring secure transactions, and creating unique opportunities for artists. In a recent interview, MasterExchange CEO and Co-founder Alexander Fred-Ojala gave us a deeper look at how the music investment platform is making moves toward improving the lives of Music artists;
What inspired the creation of MasterExchange?
The music industry is changing. Since Spotify launched in 2006, streaming services have revolutionized how music is consumed - with lasting effects for artists and fans alike. The digitalization of music has changed everything about the industry, and the rise of Web3 has allowed us to branch out in ways we didn’t know would be possible even five years ago. We started MasterExchange because we wanted fans and investors to be able to directly support music creators, whilst simultaneously earning a portion of the gain.
The fans and investors earn income in the form of proportional royalties. They’ll have direct exposure to the financial success of their favourite music while enabling artists to continue seeking new ways to engage with and benefit from their work.
How does MasterExchange differ from other music investment platforms?
The main difference with MasterExchange is that we do not require fans to have a crypto wallet in order to purchase shares. We strongly believe in democratizing access to music as an asset class and are aware that there will be a large percentage of music lovers who may not fully understand cryptocurrency. As such, we want to make investing in music as easy as possible - so we do all the hard blockchain and tech work ourselves!
What's the selection process for songs to be available on the site? Or do you just add any songs?
There is a thorough vetting process between us and artists who wish to make their songs available on the platform; either we approach artists, or they approach us asking to list their songs.
We always aim to be receptive when approached, and as we grow as a company, this system will become more streamlined, making the process easier for artists and growing our catalogue of music.
Please explain more about the Initial Music Offering (IMO) process
An IMO is more like an IPO on a traditional stock exchange. On the MasterExchange platform, you can deposit funds using a card or a bank transfer in your local fiat currencies, which will then be converted to Euros on the platform. On the platform, users buy and trade shares with all prices denominated in Euros.
However, the unit traded on the platform is called a 'royalty share'. Each royalty share is a fractionalized license agreement entitling the owner to master royalties (e.g. when a song is streamed on Spotify). This agreement is transparently immutable since it’s tied to an NFT on the Polygon network. The user then interacts with the royalty shares similarly to how they might interact with a stock in a digital bank.
You've raised $2.7M. How do you plan on utilizing these funds?
Our primary aim at the moment is growth. We want to expand our target market from Europe and establish a global presence to attract a worldwide audience. We want to invite stars and music creators worldwide to make their work available on MasterExchange. This way, we can offer fans of tastes the chance to invest in the music that they love.
How can investors expect to receive their royalty payments?
Royalty payments are paid out in Euros quarterly through the MasterExchange platform directly to the user’s accounts on the platform. Users can then choose to keep the funds on the platform or withdraw the money into their bank accounts.
Being a blockchain-focused network, why did you choose a fiat currency-based model? What advantages does it offer?
We are strong believers in blockchain, Web3, and cryptocurrency technology in the long run. We have been active in this space for over eight years and believe that it already today provides tremendous innovation opportunities to disrupt legacy models of ownership and financial transactions.
MasterExchange has launched a music investment platform that is simple, robust, and compliant. All these factors impacted our decision only to use fiat currency in the company's early days, meaning we will have all the infrastructure needed to enable a broader suite of Web3 features and functionalities on the platform when the timing is right and the legal landscape is clear.
What are the plans for MasterExchange, and what kind of growth do you project?
We’re only just getting started, so it’s difficult to predict with any degree of accuracy where we will be in even one year’s time. We have internal goals, of course, but the company's main aim at this stage is expansion and the establishment of music investments as a phenomenon on a global scale. We truly believe that this is the future of music, and we want to be one of the first names on people’s lips when they talk about music investments.
How does MasterExchange benefit both the music industry professionals and the fans?
By offering fans a financial incentive to support their favourite musicians, as well as the opportunity to own future royalty payments from songs, we are generating an entirely new relationship between the two parties - one where users feel more connected to the music creators. The fans are offered attractive terms to invest in an asset class that is uncorrelated with traditional markets, which generate cash flow in the form of royalties, and are robust across macroeconomic cycles.
Meanwhile, artists are given the chance to diversify their income streams, receive upfront payment to finance initiatives in their career and build new, engaged fanbases. MasterExchange is a symbiosis of the digital, financial, and physical fan/artist relationship.
What are the safety protocols associated with MasterExchange and investments?
MasterExchange has taken numerous measures to maintain high compliance and safety standards. We operate our own proprietary marketplace for master right royalties to comply with anti-money laundering regulations, conduct KYC or KYB checks on all the investors, and implement robust systems to monitor and identify fraudulent transactions.
We also use a regulated payment provider that is the custodian of user funds. The royalty share NFTs are kept in custody by a regulated EU crypto asset service provider. MasterExchange also aims to fully comply with the EU’s Markets in Crypto-Assets (MiCA) regulation. Furthermore, as an extra safety precaution a separate legal entity is set up to handle and protect the investors' assets in the unlikely event that MasterExchange is no longer able to operate its trading platform in the current form.
Lastly, what impact do you believe MasterExchange will have on the music industry?
As with many others, the music industry is truly at a crossroads with the advent of AI and Web3. The two options are to either reject technological advancements and risk being left behind or to embrace them. The latter is the obvious choice.
MasterExchange provides a new model that is beneficial to all stakeholders in the music industry and offers artists an alternative source of income and fan engagement. This is a new way of looking at music, but in ten years' time, we will look back and think, “How did we manage before?”. We are incredibly excited about the road ahead and can’t wait for what’s to come.