VAULT co-founders Rob Jones and Nigel Eccles.
The IMI 22nd Mar 2023

VAULT projects $10bn market for Digital Music Collectible format

The company completed a $4m Series A funding round in February, with target to rival vinyl sales within 5 years…

VAULT has set a clear target for its Digital Music Collectible (DMC) format, predicting that it will rival vinyl sales in the coming years – and establish itself as a $10 billion industry long term.

VAULT’s DMCs may well have been called NFTs a few months ago. Marketed as “rich-media box sets”, they offer fans exclusive authenticated content from artists such as archival recordings, track-by-track commentary, videos, and voice memos.

The company is also developing its own VAULT protocol – an open and fully decentralized standard for purchasing, playing, and sharing DMCs on third-party apps.

While the frenzy around Non-Fungible Tokens as a buzzword may have waned recently, there’s clearly still appetite for sensible, useful Web3 applications across the music business.

VAULT announced a successful $4m Series A funding round in February, after what it hailed as “a breakthrough six months” in which fans purchased over 3,000 DMCs from singer/songwriter Fletcher.

The Series A round was led by Placeholder VC, an investor in decentralized networks, with additional participation from existing investors AlleyCorp, Bullpen Capital, and Everblue Management. The recent funding brings the company’s total funding amount to $13m.

Speaking to The IMI, Vault’s CEO Nigel Eccles said that the DMC format could soon be as valuable as the billion-dollar vinyl market by incentivising music’s most loyal fanbases.

"Unlike a physical box set, the artist will continue to earn a royalty when a DMC gets re-sold or traded."

“Within five years we expect the VAULT DMC format to rival vinyl sales, a $1 billion market,” he said. “Longer term, we see this as a $10B+ market. From 2001 to 2021 the recorded music industry in North America dropped from $22 billion to $12 billion, a loss of $10 billion. That drop nearly all came from a reduction of spend from top decile fans. The DMC format is a way to reclaim that lost market.

To date, the company has sold 5,000 DMCs in total, with artists themselves getting 70% of revenue, plus 10% of any secondary sales.

Unlike physical box sets, however, artists will continue to earn a royalty when a DMC is resold or traded.

“Unlike a physical box set, the artist will continue to earn a royalty when a DMC gets re-sold or traded,” Eccles pointed out. “That’s a win-win for both the fan and the musician.”

When asked about how independent artists in particular can make the most of the DMC format, Eccles suggested: “Dropping DMCs gives independent musicians the tools to stay independent and build a living directly with their fans. If artists can go direct to fans, then there’s no more waiting for the right time to drop to game the algorithm.”

Looking ahead, VAULT is hoping to establish partnerships with both major labels and independent music companies to scale the DMC format globally.

A huge part of our vision is our open protocol, which allows music fans to play DMCs on any website, application, or music player supported by the VAULT protocol,” said Eccles. “We are also exploring partnerships with DSPs and distributors, who can implement the VAULT format to offer upsells and unique drops to their users.”