In a press release put out by Royalty Exchange, an online platform that allows users to buy and sell royalty assets, it was stated that “A Tribe Called Quest Partners with Royalty Exchange to Launch New NFT That Pays Buyer Ongoing Income.”
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The non-fungible token promised the winning auction bidder “sound recording royalties from iconic and trailblazing hip-hop group A Tribe Called Quest’s first five studio albums" for a period lasting the “Life of author + 70 years.”
When the auction closed last week, the highest bidder, named “Stephen F” won the NFT with a bid of 40.191 ETH, which is equivalent to $84,765 at the time of closing. This would make “Stephen F” entitled to “collect royalties generated from sales, streaming, and sync fees for any of the included albums, as well as the individual singles, released by the group between 1990 to 1998.”
However, ATCQ member, Ali Shaheed Muhammad, says that the group never partnered with Royalty Exchange, and did not know that the group’s royalties were even up for sale.
Muhammad explained that the share being auctioned came from ATCQ’s initial contract with Jive Records. The management company representing the rap group, PPX Enterprises, included a clause in their contract that entitled PPX to 1.5% of ATCQ’s royalties. ATCQ did not learn this until years after the contract was negotiated and went on to challenge the clause in court.
The “Can I Kick It?” rappers were offered litigation help from Jive to settle the case with PPX if they completed another album after their five-album deal. Muhammad explained that Jive would make “the PPX issue disappear.”
Additionally, Muhammad explained that Jive settled with PPX. PPX’s settlement share is what was being sold as an NFT.
Q-Tip followed up with a Tweet after Muhammad’s disclosure, saying, “if you are hip hop publication and reported tribe is doing a NFT we aren’t, and can you pls retract any story that says so?”
The CEO of Royalty Exchange, Anthony Martini told Pitchfork:
Royalty Exchange recently completed an auction for an income producing NFT for a portion of A Tribe Called Quest's sound recording royalties. Some outlets initially presented this news as a partnership between Royalty Exchange and ATCQ instead of with a third party who owned a small interest in the group's catalog. As a leader in the space, we know how complex the nuance behind music royalties can be, which is why we are pioneering new applications of blockchain to further encourage transparency in the music business.
We are advocates for the financial empowerment of the 99% and often our deals are not with the famous artist or producer, but with the lesser known rights holder whose contributions are just as important to hit songs. With our recent ATCQ sale we made it clear the rights holder was not a member of the group, but some reports still positioned it as such. Understandably, the group was surprised. As fans of A Tribe Called Quest and out of respect for all their contributions to music, we reached out to members of the group and had positive conversations clearing up any confusion. We hope to be able to work with them in the future.