Will The Wu-Tang Clan Make More Money Selling One Copy of its Upcoming Album?

Dolla' dolla' bills y'all.

Mar 28, 2014 at 12:52PM

In the age of Apple (NASDAQ:AAPL) iTunes and Pandora (NYSE:P), the value most consumers put on music is rapidly diminishing to zero. The music industry has fought an arduous battle against piracy, and has succumbed to lowering the cost of music through downloads and streaming options. While I'm a strong proponent of the music industry embracing technology to facilitate distribution, I admit it's not the only solution to prevent a decline in music revenue.

The greatest rap group in history, the Wu-Tang Clan, are taking the exact opposite approach. Their upcoming album, The Wu-Once Upon a Time in Shaolin, will be a limited edition release.

Very limited.

The group will sell the only copy of the album to one very lucky and very rich buyer.

Www
The double album will come in this silver-and-nickel box. Source: Forbes

Wu-Tang Forever
The Wu's highest selling album, Wu-Tang Forever, is certified 4x Platinum, meaning it sold four million copies. Even if the legendary group could recreate the commercial success it had, the revenue would pale in comparison to the album sales.

Under the Copyright Act, the Copyright Royalty Board sets the going rate for reproduction (mechanical) licenses. That rate is currently set at $0.091 per song. That's the amount the music labels will pay the songwriters per song sale (physical and digital).

Once Upon a Time in Shaolin will have 31 songs, so the group would bring in about $2.82 per album sale if it went the traditional route. If it were to be as big a hit as Wu-Tang Forever, an unlikely scenario, the group would pocket a cool $11 million.

The group's album would be unlikely to receive much radio play, or receive a significant amount from other licensing opportunities due to the nature of the music. It's not exactly Top 40 material, although the group has had several top 10 Rap Chart hits.

There is, however, the additional revenue the group could get through streaming royalties, which are structured differently.

Streaming royalties are next to nothing
Pandora pays songwriters 1.85% of revenue as a royalty to ASCAP -- a rate slightly higher than terrestrial radio and recently upheld in court. Last year, that rate amounted to $11.8 million sent out to songwriters. By some estimates an artist's song would need to be played more than 250 times to equate to one song download on iTunes.

Compensation

Source: MIDiA Consulting via Economist

Let's say the album racks up about 1 billion song streams via YouTube, Pandora, Spotify, et al. (note, the most popular song on Spotify is Avicii's "Wake Me Up" with 200 million streams.) The group would be lucky to make another million dollars from streaming.

So, in the very best case scenario, the group could make $12 million from a traditional release of The Wu-Once Upon a Time in Shaolin.

How to monetize a single copy
For starters, Wu-Tang producers RZA and Cilvaringz are going to tour the album to various venues such as art museums and music festivals. Patrons will have the chance to see the one of a kind silver-and-nickel box that houses the double album and listen to the entire production on headphones.

Tickets are estimated to cost $30-$50. Depending on how much the venues charge for commision and security, the Wu could take home a good amount of money from the "tour" with no physical presence necessary.

More importantly, the creators believe the single copy of the album could fetch millions of dollars.

As a precedent, Jay-Z sold the rights to "leak" his Magna Carta Holy Grail to Samsung last year for $5 million. That was basically for an exclusive window; this is for exclusive rights. The buyer, a company or wealthy individual, is free to do what whatever it pleases with its -- the only -- copy. It could, in fact, turn out to be a worthwhile investment for someone.

'C.R.E.A.M.' ('Cash Rules Everything Around Me')
In an era when music's value is plummeting, Wu-Tang Clan are on a mission to reelevate it to the status of high art. Whether it will pay off in a larger pay day is unclear, but it will certainly be comparable.

Still, it's a smart financial move as the RZA clearly understands the time-value of money. The Wu will get paid up front in one lump sum instead of waiting for royalty checks. That just makes good financial sense.

Boost your 2014 returns with The Motley Fool's top stock
Like the difference between Wu-Tang and Vanilla Ice, there's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Adam Levy owns shares of Apple. The Motley Fool recommends Apple and Pandora Media. The Motley Fool owns shares of Apple and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers