NFT Auction Sells Royalties of A Tribe Called Quest

 by Shekinah Apedo

On July 1st, Royalty Exchange, an NFT platform for buying and selling royalties, sold the sound recording royalties of A Tribe Called Quest's first five albums for 40.191 ETH ($84,765), without the group's permission. The winning bid is guaranteed 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."

So, how did this happen? A Tribe Called Quest (ATCQ) signed with Jive Records in 1989, and at that time hired Ed Chalpin to review the contract. Unbeknownst to ATCQ, Ed included a clause in the contract giving his company, PPX Enterprises, 1.5% of the ATCQ's royalties. Ed Chalpin is the owner of PPX Enterprises and had been known for shady contract business with Jimi Hendrix, a couple decades earlier. It took ATCQ five albums later to realize what he had done; they struck a deal with Jive Records to help them get out of that contract with Chalpin, in exchange for recording a 6th album. And in being too trusting again, the rights to the five albums were apparently given to PPX by Jive in a settlement to release ATCQ from the original contract. Years later, that settlement was sold to an individual, who partnered with the NFT platform, Royalty Exchange, to conduct the sale.

ATCQ reported to not have known that Jive sold the royalty rights to PPX, or else they would've purchased it themselves. It's an unfortunate tale, but let be a cautious one for all artists alike, read your contracts, even if you hire a lawyer. Also, do your own due diligence on who you're working with on your team. I have to imagine if ATCQ knew about Ed Chalpin and the decades of trouble he gave Jimi Hendrix and the Hendrix estate, they likely wouldn't have signed to be managed by him.

"Stephen F", the name of the top bidder, will own the royalties for the rest of his life plus 70 years, and will receive distribution payments twice a year. The next time you stream an ATCQ track, remember, "Stephen F" is receiving that royalty.