The music industry has traditionally been exclusive, creating significant barriers for external financial participants and making music investment complex and limited. Despite these challenges, an active internal market exists, with hundreds of millions invested annually in music-related advancing and lending activities. High entry barriers persist, similar to those in alternative asset classes, and investors often perceive these investments as risky due to the specialised knowledge required to evaluate opportunities. The inherent illiquidity of these investments further restricts broader participation.

The industry lacks the technological infrastructure needed for effective capital allocation, leading to an inefficient risk-return profile compared to other financial markets. These inefficiencies present an opportunity for investors to achieve higher returns with comparable levels of risk.

Music Protocol addresses these challenges by using blockchain to create an accessible and efficient investment ecosystem. The platform employs a tokenisation model similar to other financial protocols, enabling investors to diversify their portfolios and exit investments early. Its liquidity mechanism mirrors the bond market, where yield rates and risk profiles determine investment values.

We are enhancing capital efficiency by establishing a liquid market for music royalties through tokenisation, facilitating seamless entry, exit, and diversification that traditional platforms do not offer, and reducing the complexities typically associated with music investments.

Development Approach

Music Protocol’s development will follow a phased approach, structured around key milestones that will ensure the platform evolves to meet both immediate needs and long-term goals for the music industry. The roadmap is designed to create a comprehensive, decentralised ecosystem for music IP and financial flows.

It is important to clarify that Music Protocol provides only the technological infrastructure to support the music industry, facilitating IP management and royalty flow through blockchain technology. The platform does not offer investment services or investment notes directly. Instead, we enable an ecosystem that empowers regulated entities to manage music-related financial activities through decentralised technology, while remaining distinct from the financial services sector.

The functionalities described in this document are part of the ongoing development roadmap and will become operational pending the necessary regulatory approvals. This phased approach ensures that our long-term vision is realised in compliance with all applicable regulations.

Any new utilities or use cases for the $RECORD token will also be subject to approval by relevant regulatory bodies. As such, all utilities mentioned in this document should be seen as a work in progress, contingent on compliance and formal approval.

As a provider of technological infrastructure, Music Protocol is committed to adhering to the regulatory frameworks that govern technology providers in the financial sector. This includes compliance with standards on cybersecurity, risk management, and other necessary obligations, ensuring the platform is secure, reliable, and trusted by all stakeholders.

• Phase 1: Financial System

• Phase 2: Liquid Record

• Phase 3: Transparency of Financial Flows

• Phase 4: New Blockchain for Dynamic Music IP

Underwriters are essential to the Music Protocol ecosystem, evaluating music catalogues for Royalty-Linked Notes through comprehensive due diligence that includes analysis of historical performance, projected income, and associated risks.

Their detailed assessments ensure that Investment Pools are accurately priced and reflect the true risk profiles of the underlying assets, giving investors a reliable basis for their decisions.

By validating these notes, Underwriters improve transparency and help mitigate investor risk, fostering a more secure investment environment. They are compensated through origination fees tied to the capital raised or the interest generated, aligning their incentives with the quality and success of the deals they structure.

The Risk Sharing Pool serves as a protective layer for investors, safeguarding against the underperformance of Investment Pools. By staking $RECORD tokens, participants provide collateral that can be used to compensate investors if royalty earnings do not meet expectations. This arrangement allows the Risk Sharing Pool to absorb potential losses, offering a safety net that boosts investor confidence.

Stakers are rewarded for their participation with yields determined by the protocol’s governance, creating an additional incentive for contributing to the pool. The Risk Sharing Pool not only mitigates volatility in music catalogue performance but also strengthens the overall stability and appeal of the investment ecosystem.

The traditional music financial market is substantial but restricted by fragmented infrastructure and limited access. Most investments in royalty cash flows or IP rights are privately arranged for a select few. This exclusivity creates capital inefficiencies, preventing external investors from participating due to the lack of effective platforms for discovering and executing deals.

Music Protocol addresses these challenges by tokenising real-world assets and offering liquid investment pools, enabling broader participation from retail and institutional investors. Artists, labels, and rights holders can issue Royalty-Linked Notes tied to music catalogue cash flows.

$RECORD token holders can join a Risk Sharing Pool to support underperforming investments in exchange for rewards. Additionally, the music bond mechanism allows investors to trade their positions on a secondary market, enhancing liquidity and mitigating the typical illiquidity of music investments.

By creating a transparent and accessible financial market for music rights, Music Protocol enhances capital flow into the music industry. It offers high-yield, risk-adjusted returns minimally correlated with traditional asset classes.

An Investment Pool is an financial mechanism that brings Issuers, Investors, and Underwriters together in an accessible way. Built on smart contracts, these pools act as digital agreements that facilitate the flow of capital into the music industry.

Issuers—such as artists, labels, or rights holders—create these pools by offering Royalty-Linked Notes, setting clear terms that outline the expected yield, repayment schedule, and capital requirements. This structured approach allows Issuers to raise funds directly from a broad pool of investors, bypassing the traditional gatekeepers and complexities that often hinder music financing.

Investors can allocate their capital according to their risk and return preferences, choosing pools that align with their investment goals. Each pool undergoes rigorous assessment by Underwriters, who meticulously evaluate the music catalogues, analyse historical performance, and determine the potential risks and returns. This due diligence ensures that every investment opportunity is properly vetted, giving investors the

At the top of the music industry are Right Owners, including artists, labels, and music investment funds, who monetise their intellectual property (songs and catalogues) through various licensing agreements. Monetisation channels such as streaming, digital downloads, physical sales, merchandising, sync licensing, and live events each have distinct characteristics. Streaming is particularly significant for its stability. It offers consistent returns by relying on widespread music consumption, which minimises risks associated with the rights owner's actions.

Investment in the music industry primarily occurs through IP Right Purchases or Cash Flow Advancements.

• IP Right Purchases involve acquiring active or passive IP rights and are typically accessible only to specialised investors due to high capital requirements and the need for industry expertise.

• Cash Flow Advancements allow music distributors to provide upfront capital in exchange for future royalty shares, but these transactions are often illiquid and restricted to industry insiders.

Passive rights refer to music rights that generate income without requiring ongoing actions by the rights holder, such as royalties from streaming, radio play, or album sales. These rights are largely driven by consumer behaviour and do not depend on active promotion or management by the artist or rights holder.

Active rights, on the other hand, involve rights that require the rights holder to take specific actions to generate income, such as sync licensing (where music is actively pitched for use in films, commercials, or TV shows), live performances, and merchandising. These rights are directly influenced by the efforts and decisions of the rights holder.

The key difference is that passive rights produce more predictable, steady income streams, while active rights are more variable and dependent on the rights holder’s active involvement and decision-making.

The lack of accessible investment infrastructure creates capital inefficiencies and barriers for external investors, presenting opportunities for higher returns.

Music investments generally offer annualised returns between 10% and 15%, significantly surpassing traditional corporate bonds. Additionally, music returns are less correlated with the broader economic cycle, providing stability and diversification benefits during periods of market volatility.

Royalty-Linked Notes are a new and exciting way to invest in the music industry, allowing investors to tap into the earnings of popular songs and albums. These financial instruments are tied to future royalties from music catalogues, primarily generated through streaming and digital distribution. Issuers—such as artists, labels, or rights holders—raise capital by selling a share of these future royalties to investors, creating a direct link between the success of a song and investor returns. Unlike traditional music investments that often involve complex legal agreements and insider access, Royalty-Linked Notes make it simple and accessible to invest in the music you love.

The best part is that these notes provide predictable cash flows driven by mass consumer behavior—every stream, download, and play generates revenue. The collection of royalties is handled directly by distribution platforms like Spotify and Apple Music, reducing counterparty risk and ensuring that investors receive their share of earnings in a transparent, streamlined process.

The Investment Pool is the primary mechanism through which Issuers, such as artists, labels, or rights holders, raise capital on Music Protocol. By issuing Royalty-Linked Notes tied to future cash flows from their music catalogues, Issuers can access financing from Investors.

To create an Investment Pool, Issuers propose key terms, including:

• Underlying Asset Identification: The music catalogue’s cash flow and distribution deals that will generate the royalties assigned to the Investors.

• Expected Yield: The estimated return based on projected royalty income.

• Payment Period: The maturity of the deal and the frequency of royalty payments.

• Underperformance Terms: Optional clauses specifying measures in case of underperformance, such as extending the maturity period.

• Capital Requirements: The minimum and maximum amount the Issuer seeks to raise from Investors.

• Underwriter Due Diligence Report: A comprehensive assessment prepared by the Underwriters, evaluating the catalogue’s historical performance, projected income, and overall risk profile.

• Third-Party Due Diligence Report: An independent external review provided by a third-party firm, which validates the financial assumptions, projections, and overall quality of the catalogue and investment terms.

• Risk return profile: this parameter is defined by the Underwriter according to all the due diligences attached.

When an Investment Pool is ready, Investors can review the terms, assess the accompanying due diligence documents, and decide whether to allocate capital based on their risk preferences.

Issuers are required to stake $RECORD tokens when creating an Investment Pool. This stake acts as a commitment signal and helps cover the Underwriter’s review cost. The remaining stake is redeemable once the Issuer repays the borrowed capital in full.

This dual-layer due diligence process—combining internal review by Underwriters with independent third-party assessments—ensures that each Investment Pool is thoroughly vetted, transparent, and offers investors the documentation needed to make informed decisions.

Issuers, including artists, producers, and labels, are the owners of music IP rights who seek funding by issuing Royalty-Linked Notes. By tokenising future royalty cash flows, they can access new streams of liquidity without giving up ownership or long-term control of their music.

The approach provides Issuers with a flexible way to finance upcoming projects, scale their operations, and manage cash flow more effectively, all while maintaining control over their creative works. With access to immediate capital, they can strategically invest in growth opportunities or navigate financial challenges without compromising their rights or independence.

Investors supply capital to Investment Pools, gaining a share of future royalty revenues from music catalogues. Participants range from institutional entities such as hedge funds, asset managers, and private equity firms to crypto-native investors who are well-versed in DeFi models.

Music royalties provide stable, non-correlated returns, making them an appealing choice for those looking to diversify their portfolios and earn higher yields than traditional assets like bonds or stocks. The predictable nature of music royalties, driven by consistent consumer behaviour like streaming, offers a unique investment opportunity, especially during times of economic uncertainty, attracting both traditional and digital market participants seeking reliable and innovative ways to grow their investments.

Risk Sharing Pools are designed to protect investors' capital in the event that an Investment Pool underperforms. Underperformance occurs when the cash flows from royalties are lower than expected, leading to a return on investment below the anticipated rate or, in extreme cases, a loss of the invested capital. In such cases, the Risk Sharing Pool mechanism steps in to mitigate or prevent investor losses.

The Risk Sharing Pool is a smart contract where participants can stake $RECORD tokens, earning a yield determined by the protocol's governance (e.g., an APR of 100%). The $RECORD tokens staked serve as risk capital for all active Investment Pools on the protocol, meaning they can be used to compensate investors in the event of capital loss.

Investors assess the opportunities within the Investment Pools and provide capital with the goal of earning returns. Each investor is responsible for managing their decisions and ensuring appropriate diversification. However, the system allows investors to act similarly to fund managers, enabling them to manage third-party capital. Music Protocol will also offer a fund that operates under a tailored model to ensure both diversification and liquidity, leveraging the Liquid $RECORD model (see the section on $nRECORD).

To track the contributions made by different participants, investors are issued an NFT upon supplying capital. This NFT records the amount contributed and monitors the proportion that has been redeemed. At any point, investors or participants in senior positions can use their NFTs to redeem their specific portion of available repayments from the pool.

The Underwriter provides thorough due diligence, evaluating the music catalogues' historical performance, risk factors, and future potential, ensuring that the pricing and terms of the notes are accurately set.

To compensate Underwriters for their expertise and effort, Investment Pools apply an origination fee that is paid to the originator of the pool. This fee can be structured in one of two ways:

• Percentage of the capital raised: In this case, the fee is paid immediately to the originator’s wallet upon closing the capital raise.

• Percentage of the interest: Here, the fee is distributed to the originator according to the payment schedule of the deal.

This fee structure ensures that Underwriters are appropriately compensated for their role in mitigating risks for Investors while promoting high-quality investment opportunities within the protocol.

Liquidity is introduced by sending stablecoins to the Liquid RECORD Minting Smart Contract, which mints an equivalent number of $nRECORD tokens. Only accredited Liquidity Providers can access this mechanism. These providers sell $nRECORD on the secondary market, enabling all investors to purchase tokens and access investment opportunities.

Accumulated liquidity forms a capital reserve ready for investment when an Investment Pool opens. Pools are funded on a first-come, first-served basis, prioritising those with favourable risk-reward profiles as defined by Underwriters. The cash flows from these pools are directed to the Liquid RECORD Yield Smart Contract for distribution as yields.

$nRECORD holders can stake their tokens to participate in returns through three options:

• Yield Only: Generates indefinite yield while active. Positions can be closed at any time.

• Yield and Redeem: Generates yield for two years and repays the staked USDC using cash flows, burning the corresponding $nRECORD at the end of the term.

• Redeem Only: Available exclusively to accredited Liquidity Providers, allowing immediate redemption of $nRECORD for USDC if sufficient reserve is available.

The Liquid $RECORD system facilitates the flow of liquidity into Investment Pools within the Music Protocol ecosystem. $mbUSD holders can invest in a diversified portfolio of music-related assets and earn returns from royalty-linked cash flows. Direct investments in pools typically offer higher yields than investments via the $nRECORD system. However, $nRECORD provides greater liquidity and enhanced diversification by applying a small fee on each yield distribution, resulting in slightly lower returns.

Technologically, the system is managed by a smart contract that handles key financial flows:

• Liquidity Inflow: Accredited Liquidity Providers send stablecoins to the Liquid $RECORD Smart Contract, minting $nRECORD tokens. This controlled process ensures compliance and stability.

• Liquidity Management: Funds from $nRECORD issuance are invested into Investment Pools, allowing Liquid $RECORD investors to earn returns based on the performance of music royalty-linked notes.

• Liquidity Outflow and Redemption: $nRECORD holders can redeem their tokens for stablecoins, which are burned in the process. Redemptions depend on the system’s available liquidity and investment returns.

• Yield Distribution: Returns from Investment Pools are distributed proportionally to $nRECORD holders, providing a steady income stream from music royalties.

• Reserve Management and Overcollateralisation: A reserve of liquidity ensures efficient redemptions. Additionally, a percentage of incoming cash flows is retained to build an overcollateralisation reserve, mitigating risks from potential investment underperformance.

This streamlined system allows $nRECORD holders to access music investment opportunities with the flexibility of liquidity management and easy redemption, making $nRECORD a liquid asset backed by a diverse range of music-related investments.

Liquidity in the system is either invested or awaiting investment. Assuming all Investment Pools perform well, the total invested capital and uninvested liquidity will match the $nRECORD in circulation. $nRECORD can be redeemed 1:1 in two ways:

1. Yield and Redeem: Users stake $nRECORD and receive yield and capital over time, burning tokens as they redeem.

2. Liquidity Providers: They can redeem $nRECORD at any time.

Regular users must sell $nRECORD on the market for immediate exit. If supply and demand are balanced, the price stays at $1. If demand drops and price falls below parity, liquidity providers can buy below $1 and redeem for a profit. If demand exceeds supply, they can introduce USDC to mint new $nRECORD, sell above parity, and earn the difference.

This mechanism maintains $nRECORD price near $1, with two key exceptions:

1. If the price falls below $1 and there's no liquidity, the provider can't redeem to restore parity, likely because system yields are lower than market rates.

2. If the price rises above $1 and the liquidity provider has no liquidity to arbitrage, though this is mostly theoretical and unlikely.

Arbitrage

Let's assume that the system is paying an annual yield of 20% to $nRECORD stakers. If more retail investors want to participate in this yield, they will need to buy $nRECORD tokens on the market and stake them. This buying pressure will cause an increase in the price of $nRECORD above 1 USD. At that point, the Authorised Liquidity Provider will be able to inject new liquidity into the system to mint new $nRECORD at a 1:1 ratio and immediately sell those $nRECORD on the market at the market price, earning an arbitrage profit.

Conversely, if the yield offered by the system is too low, prompting retail users to redeem their $nRECORD, the selling pressure will cause a decrease in the $nRECORD price. In this scenario, the Authorised Liquidity Providers will have the incentive to buy $nRECORD tokens on the market and redeem them for USDC at a 1:1 ratio, again earning an arbitrage profit.

This mechanism will ensure that the $nRECORD price remains around 1 USD. However, it is important to note that parity with USD is not guaranteed, nor is it a goal of the system. The price will be allowed to vary within a tolerance band that does not impede the system's functionality. For example, if a retail user buys $nRECORD at 1.05 USDC, they are effectively forgoing a portion of the yield from the staking contract. However, this could still be economically acceptable for the user if the staking yield is sufficiently high.

Market exposure

$nRECORD tokens are available on all regulated blockchain platforms, allowing both crypto and traditional investors to access the music asset class easily. This integration facilitates significant liquidity flow, especially when investors shift from traditional crypto assets to more stable, income-generating investments tied to real-world activities.

When the contract receives the cash flow from the Investment Pools, it is divided into the following components:

• Distribution Yield: The distribution yield is a certain percentage of the total cash flow calculated at the protocol level as an “alpha” percentage of the implicit yield in the established RBs. “Alpha is a protocol-level parameter inversely related to the $nRECORD collateralisation rate. The smaller the alpha, the faster the $nRECORD transitions from being collateralised by future receivables in RBs to being collateralised by USDC.

• Underwriter fee: the fee that remunerates the Underwriter who manages the flow.

• Liquidity provider fee: a protocol fee that remunerates the liquidity providers.

• Accrued Value Flow: the liquidity flow that feeds the Value Accrued Fund and, if not redeemed, is reinvested in other Investment Pools.

$nRECORD introduces a new level of liquidity and accessibility to the world of music investments. Representing a tokenised share of investment pools, $nRECORD allows investors to participate in the market with the flexibility of trading their positions on the open market. Unlike traditional investment models that often restrict access, $nRECORD offers an efficient way to manage capital, enabling investors to adjust their holdings without the constraints of long-term lock-ups. This tokenised structure separates the capital component from the returns, enhancing liquidity and giving investors more control over their portfolios.

The liquid nature of $nRECORD sets it apart, providing a dynamic approach to investing in music royalties that traditional platforms cannot match. Its design caters to a more agile investment strategy, allowing participants to balance exposure to the music industry while maintaining access to their capital. The ability to enter, exit, and diversify investments with ease positions $nRECORD as a compelling tool for those seeking to navigate the evolving landscape of music royalties with greater efficiency.

$RECORD is a key component of Music Protocol, driving the platform’s operations and risk management. As the native token, it plays an important role in the ecosystem by facilitating risk-sharing and aligning the interests of all participants.

$RECORD holders can stake their tokens in the Risk Sharing Pool, where staked tokens serve as collateral to protect against underperformance in Investment Pools, mitigating potential losses. Stakers are rewarded with yields set by the protocol’s governance, creating an incentive structure that enhances security and stability for the entire system.

Beyond its role in risk mitigation, $RECORD is vital for ensuring accountability in the evaluation of Royalty-Linked Notes. Underwriters stake $RECORD to guarantee their assessments, aligning their evaluations with the platform's success. Issuers also stake $RECORD when setting up Investment Pools, covering the cost of due diligence and signaling their commitment to the platform.

exploitation methodologies.

Last update: 30 August 2024

Token Distribution

Glossary of Cap Table Terms:

• Sales: pre-TGE private sales to raise funds and gain early support.

• Founders and Team: core contributors of the project.

• Industry Partners: strategic partners who provide crucial support.

• Community Airdrop: Free distribution to promote the project.

• Marketing and Growth: marketing efforts and ecosystem growth.

• Treasury short-term: short term growth and operational needs including listing liquidity and market makers.

• Treasury long-term: long term operational needs for expansion and long-term sustainability.

Notes (*)

*) Community Airdrop: We have allocated 160 million $RECORD tokens (16% of the total supply) on Base for community incentives and distribution as a token of our appreciation. These tokens will be distributed across multiple seasons, each carefully designed to enhance different aspects of our ecosystem. To date, only a portion of these tokens has been distributed across completed seasons, such as the pre-TGE season (SZN1) and the LBP season, with 88 million $RECORD tokens still remaining for distribution. The vesting terms we’ve indicated are projected averages and may vary with each season. We are committed to transparency and will keep our community informed as we move through these distribution phases. **) Treasuries: We have subdivided the treasuries into Marketing and Growth, Short-Term, and Long-Term categories to provide the community with a clear projection of their intended use, each aligned with its specific purpose. It’s important to note that these treasuries are 100% available at TGE, as there are no locks or vesting periods applied to them (please refer to the following section for detailed treasury management procedures). Additionally, these treasury categories do not form part of the circulating supply.

Treasury Management

• The Web3 Music Association, the foundation behind the Music Protocol, is a non-profit organisation established under Articles 60 to 79 of the Swiss Civil Code.

• It operates as an independent legal entity with legal capacity under Swiss law.

• It is incorporated in Switzerland and follows strict compliance procedures.

• The Association underwent a full regulatory assessment with the Swiss Financial Regulator (FINMA) to obtain a token classification as a utility.

• It has a structured and rigorous governance model to ensure that management and team members fulfil their purpose of leveraging open-source distributed ledger software and protocols to directly or indirectly promote the growth, development, and adoption of such technologies within the music industry, the surrounding community, and the entire ecosystem.

• To ensure the safety of token holders and align with the Association's mission, the treasuries are managed through a multi-signature (multi-sig) account controlled by the Association Governance.

PLEASE READ THE ENTIRETY OF THIS "LEGAL DISCLAIMER" SECTION CAREFULLY. NOTHING HEREIN CONSTITUTES LEGAL, FINANCIAL, BUSINESS OR TAX ADVICE AND YOU SHOULD CONSULT YOUR OWN LEGAL, FINANCIAL, TAX OR OTHER PROFESSIONAL ADVISOR(S) BEFORE ENGAGING IN ANY ACTIVITY IN CONNECTION HEREWITH.

This Documentation contains forward-looking statements that relate to Web3 Music Association (“W3M”) current expectations and views of future events. These statements may prove to be incorrect and may be influenced by inaccurate assumptions, unknown risks, uncertainties, and other factors beyond W3M's control. It is expected that some of these assumptions may not materialise or may significantly differ from actual results.

The Documentation is provided for informational purposes only and does not constitute a prospectus, advice, offer document, offer of securities, solicitation for investment, or any offer to sell any product, item, or asset in any jurisdiction. W3M and its officers, directors, advisors, agents, partners, representatives, consultants, and employees make no express or implied representation or warranty regarding the adequacy, accuracy, or completeness of the information in the Documentation or the described project.

The Documentation has not been reviewed or approved by any competent authority in any Member State of the European Economic Area or in any other jurisdictions and does not constitute a prospectus within the meaning of the capital market regulations. Prospective purchasers should make their own independent evaluation of all risk factors and should read the detailed information set out elsewhere in the Documentation. Other risks and uncertainties unknown to W3M or considered insignificant at this time could equally have a material adverse effect on the business, operations, financial conditions or prospects of W3M.

Authorization by W3M.

No person is authorised to provide any information or to make any representation not included in the Documentation, and any information or representation not contained herein must not be relied upon as having been authorised by W3M.

Changes to the Project.

The project may be updated and modified without prior notice. W3M is not obligated to update any forward-looking statements, even if they become incorrect or misleading due to new information, future events, or other circumstances. Additionally, W3M may face challenges during product development, including financial, resourcing, and technical difficulties. These difficulties are unpredictable and may be unsolvable, potentially compromising the overall project development. The project may fail, terminate, or experience delays at any time for any reason. Certain project features may never be realised, which could significantly reduce or completely eliminate the utility of $RECORD Tokens.

Legal status of $W3M Token and Project is untested.

Certain jurisdictions might apply already existing laws and regulations to blockchain technology-based projects or introduce new laws or regulations for this purpose. In particular, $RECORD Tokens may at any time be deemed to be a security, investment, asset or money by governmental authorities or regulators. This could lead to substantial modifications, termination, and/or loss of $RECORD Tokens. W3M may receive formal or informal queries, notices, requests, or warnings from governmental authorities and regulators. Regulatory action may be taken against W3M or the project.

No assets, property, governance or security right underlying $RECORD Token.

​​In particular, $RECORD Token does not represent or constitute any intellectual property rights, ownership rights or stake, shares or security, membership right or equivalent rights nor any right to receive future revenues, shares or any other form of participation or governance rights in or relating to W3M. Due to the no security right, W3M is not to be construed, interpreted, classified or treated as debentures, stocks or shares issued by any person or entity, rights, options or derivatives in respect of such debentures, stocks or shares, rights under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss, units in a collective investment scheme, structured products, units in a business trust, derivatives of units in a business trust.

Possible migration of the $RECORD Token.

W3M may migrate the $RECORD Token to another protocol and generate replacement tokens on the new protocol if deemed necessary or useful. In such a case, support for pre-existing tokens or any other operational matters may cease, except during the migration process.

Reliance on the Internet.

$RECORD Tokens and the project heavily rely on the internet. However, the public nature of the internet means that it may be unreliable or unavailable at any given time. Data transmission via the internet may be subject to interruption, delay, corruption, loss of confidentiality, or other issues.

Reliance on Blockchain Platform.

The $RECORD Token holders need to have sufficient understanding of the functionality, usage, storage, transmission mechanisms and other material properties of cryptographic assets, wallets and other token/asset storage mechanisms, public and private key administration, blockchain technology, and blockchain-based software systems. The $RECORD Tokenholders understand, recognize and acknowledge that such understanding allows the $RECORD Tokenholders to appreciate the implications and risks of purchasing $RECORD Token. The $RECORD Token Tokenholders understand and accept the risk that the smart contract system concept, the underlying software application, the software platform and ecosystem architecture are at an early developmental stage and yet to be proven. There are no warranties or guarantees that the process for creating $RECORD Token will be uninterrupted or error-free and there is an inherent risk that the software could hold weaknesses, vulnerabilities or bugs causing, inter alia, the complete loss of the contributed value and/or $RECORD Token.

The blockchain technology is experimental, and risks associated with reliance on it include technical flaws, malicious targeting, changes in consensus protocols or algorithms, decreased community or miner support, existence of competing networks or platforms, existence of forked versions, flaws in scripting languages, disputes, and regulatory actions.

No liabilities.

W3M, its officers, directors, advisors, agents, partners, representatives, consultants or employees will not be liable for any direct, indirect or consequential loss, or damage suffered by any person relying on any representation or omission made in the Documentation and, to the fullest extent permitted by law, all conditions, warranties and other terms which may be implied by law and any such liability are expressly excluded.

Market and industry information.

The Documentation may contain market and industry information obtained from a variety of sources, including internal surveys, reports, studies, market research, and industry publications. While reasonable efforts have been made to ensure the accuracy and completeness of this information, there is no guarantee of its reliability.

General comment on risks.

Purchasing $RECORD Tokens carries inherent risks, including but not limited to blockchain-related risks, project abandonment or lack of success, regulatory risks, and jurisdiction-related risks. These risks, and additional risks arising either now or in the future, could result in the failure of the $RECORD Tokens transfers, the destruction of the $RECORD Tokens or the utility of the $W3M Tokens, and/or the termination of the development of W3M.

There is a possibility that the purchase amount may be unrecoverable and/or that the $RECORD Tokens may cease to have inherent intrinsic value. Many factors, most of which are beyond the W3M's control, will influence the value of the $RECORD Tokens and the price, if any, at which market participants may be willing to purchase or sell $RECORD Tokens in the secondary market. The purchase of $RECORD Tokens involves the risk that subsequent changes in relative market performance may adversely affect the value of $RECORD Tokens.

IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR LEGAL, FINANCIAL, TAX, OR OTHER PROFESSIONAL ADVISOR(S).

THE DOCUMENTATION IS FOR INFORMATION PURPOSES ONLY AND MAY BE SUBJECT TO CHANGE.

Last update: 11 April 2024

PREAMBLE

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4. W3M is helping build the future of the music industry alongside its members. W3M exists to lead and define the next technological evolution with its members to provide opportunities to protect and monetise music IP in new ways.

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*****

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1. W3M has the right to:

   1. modify, update, suspend, limit or interrupt the operation of the Site at any time, or change and/or replace its domain name;

   2. analyse the traffic on the Site (g. detect the most visited pages, the number of visitors per hour or per day, the geographical origin, the average connection time, the browsers used, the origin of the visitor – from search engines or from other Sites -, phrases and words searched for, etc.) in order to understand how it is used and manage, optimise and improve it, or even just for statistical purposes;

   3. solve operational or technical problems (e.g. anomalies in page loading);

   4. perform monitoring activities to repel and/or prevent cyber-attacks and/or fraud.

2. If W3M notices any violation by You with respect to the provisions of the ToS, W3M may, at its own unquestionable judgement and without this entailing any obligation to pay compensation to You, take any action against You, including actions to claim compensation for damages.

3. Notwithstanding anything contained in the Agreement, We reserve the right, without notice and in our sole discretion, to terminate Your right to access or use the Site at any time and for any or no reason, and You acknowledge and agree that We will have no liability or obligation to You in such event.

4. WARRANTY EXCLUSIONS AND NO ASSISTANCE

1. The Site is provided on an “AS IS” and “AS AVAILABLE” basis and W3M makes no warranties, express or implied (including the implied warranties of non-infringement, merchantability and fitness for a particular purpose), and may be temporarily inaccessible or otherwise defective or delayed.

2. W3M will make every reasonable effort to ensure that You has continuous and uninterrupted access to the Site but will not, under any circumstances, be liable if one or more of content made available to You(even free of charge) is temporarily or permanently inaccessible.

3. In particular, W3M makes no warranty as to:

   1. the suitability of the Site with respect to the needs of Visitor;

   2. the availability of, and the absence of errors in, the Site;

   3. the quality of the Site;

   4. the correction of any technical errors of the Site.

4. Any material accessed, downloaded, or otherwise obtained through the use of the Site is done at the Visitor’s own discretion and risk and the Visitor will be solely responsible for any damage to the Visitor’s computer system or loss of data that results from the download of any such material. No advice or information, whether oral or written, obtained by the Visitor from W3M or through or from the Site will create any warranty not expressly stated in the Agreement.

5. Except as otherwise expressly provided in the Agreement, W3M does not represent or warrant that

   1. the Site will meet the Visitor’s requirements;

   2. the Site will be uninterrupted, timely, secure, or error-free;

   3. the results that may be obtained from the use of the Site will be accurate or reliable;

   4. the quality of any products, services, information, or other material purchased or obtained by the Visitor through the Site will meet the Visitor’s expectations;

   5. any errors in the Site will be corrected.

6. W3M will not be liable for any errors, inaccuracies, omissions and, more generally, for damages caused, directly or indirectly, by decisions taken or initiatives undertaken by the Visitor or by Third Parties on the basis of (and/or as a result of) the contents of the Site.

7. W3M does not guarantee the provision of technical assistance in relation to the Site.

8. Nothing in this Agreement shall limit or exclude the liability of W3M, its employees, agents or third-party content providers for death or personal injury caused by fraud or fraudulent misrepresentation or any other matter in respect of which it would be unlawful to exclude or restrict liability.

5. LIMITATION OF LIABILITY

1. If W3M modifies, updates, suspends, limits or interrupts the operation of the Site, no liability will arise in Your favour.

2. W3M is not liable for errors, omissions, interruptions, deletions, defects, operative or transmission delays, malfunction of the communication network, theft, destruction, unauthorized access or alteration of any content concerning Site.

3. W3M is not liable for any possible technical issues or problems concerning telephone networks or lines, online elaboration systems, servers and providers, IT appliances, software, errors in emails or software that negatively affect Site’s functionalities.

6. CONTRACT CHANGES

1. W3M reserves the right at any time to modify this ToS and any legal document present on the Site (including, by way of example, the Privacy Policy, the Cookie Policy, etc.), or to add at any time new or additional terms or conditions on Your use of the Site. Such modifications and additional terms and conditions will be effective immediately and incorporated into this Agreement. Your continued use of the Site will be deemed acceptance thereof.

7. INTELLECTUAL PROPERTY

1. Unless otherwise indicated on the Site with specific reference to certain items on the Site, W3M is the exclusive owner of all Intellectual Property Rights in the Site and the content on the Site.

2. All W3M trademarks, services marks, trade names, logos, domain names, and any other features of W3M brand are the sole property of W3M or its licensors. The ToS does not grant You any rights to use any of such features whether for commercial or non-commercial use.

3. The provision of the Site by W3M will not be considered as an assignment or licensing by W3M in favour of You of any Intellectual Property Right on the Site or on the contents present on the Site.

8. CONTACTS

1. For any information regarding the use of the Site and these ToS, You may contact W3M at the contact details contained in the Site.

2. W3M will process the data transmitted by You when contacting W3M for the sole purpose of executing the contract governed by the ToS, and therefore on the basis of assumptions of a contractual nature, in accordance with the provisions of the Privacy Policy.

9. MISCELLANEOUS

1. If any term, Clause or provision of the Agreement is held invalid or unenforceable, then that term, Clause or provision will be severable from the Agreement and will not affect the validity or enforceability of any remaining part of that term, Clause or provision, or any other term, Clause or provision of the Agreement.

2. The ToS regulates the relationship between W3M and You and does not create rights in favour of, nor obligations against, Third Parties.

3. Any tolerance by W3M of the conduct of You in violation of the provisions contained in the ToS does not constitute a waiver of the rights arising from the provisions violated, nor the right to require the exact fulfilment of all terms and conditions therein.

4. W3M does not provide content to individuals who do not have the legal capacity to act to accept the ToS as set out in their home country’s legislation.

5. The rights and remedies included herein are not exclusive, but are in addition to any other rights and remedies available under applicable law.

6. Any limitation or exclusion of liability provided for in favour of W3M in the ToS will apply to the fullest extent permitted by law.

10. PROCESSING OF PERSONAL DATA

1. W3M will process data of Users in accordance with the Privacy Policy.

11. APPLICABLE LAW AND JURISDICTION

1. You expressly agree that the ToS is exclusively governed by Swiss Law. Any dispute concerning the interpretation, execution, termination or validity of the ToS will be submitted to the exclusive jurisdiction of the Zug Courts.

2. Should the provisions of this Clause be inapplicable according to the mandatory rules of the country of Yours, then the applicable law and the competent Court will be determined according to the laws of such Country.

Last updated: 11 April 2024

This document provides detailed information on the use of Cookies and similar technologies, how they are used on the https://musicprotocol.finace website (the “Site”) and how to manage them.

Visitors of the Site (the “Visitor”) have the possibility to configure their browser (the "Cookie Banner") in order to be notified of the receipt of Cookies and to decide whether to accept, reject or manually manage their preferences regarding the use of Cookies. The acceptance of Cookies by the browser can be disabled by changing the aforementioned settings.

For further information on the processing of personal data by the Data Controller click here.

1. Definition

1. Cookies are short text fragments (letters and/or numbers) that allow the web server to store information on the browser to be reused during the same visit to the Site (session Cookies) or later, even after a few days (persistent Cookies). Cookies are stored, according to the Visitor’s preferences, by the individual browser on the specific device used (computer, tablet, smartphone).

2. Types of Cookies

1. There are different categories of Cookies, with different characteristics and uses:

   1. Technical Cookies: these are Cookies that are essential for the proper functioning of the Site and are used for the sole purpose of carrying out the transmission of a communication over an electronic communication network, or to the extent strictly necessary for the provider of an information society service explicitly requested by the Visito to provide such a service;

   2. Analytical Cookies: these are Cookies used to collect and analyse Site traffic and usage in an anonymous way. These Cookies do not identify the Visitor, but they allow us, for example, to detect whether the same Visitor returns to the Site at different times. They also allow us to monitor the system and improve its performance and usability. These Cookies can be deactivated without any loss of functionality.

   3. Profiling Cookies: these are persistent Cookies used to identify (anonymously or otherwise) the Visitor’s preferences and improve the Visitor’s browsing experience; they are often used to create profiles of the user and are used to send advertisements in line with the preferences expressed by the Visitor while browsing the web.

   4. Third-party Cookies (analytical and/or profiling): these are Cookies generated by organisations that are not part of the Sitw, but which are integrated into parts of the Site’s pages. Examples include Google widgets (e.g. Google Maps) or social plug-ins (Facebook, Twitter, LinkedIn, etc.).

2. The handling of information collected by “third parties” is governed by their policies, which You should refer to, and which for Your convenience are indicated in the links below.

3. Types of Cookies Used

1. The Site uses the following Cookies:

ATTENTION: If You navigate on the Site from a Google Chrome browser and/or while logged into your Google account, further Google Cookies may be installed without your consent and without the possibility for us to prevent this. Similarly, this could happen by using browsers or by logging into accounts provided by other companies. In all these cases, the Processing of Personal Data is not carried out by us and we do not assume the status of Data Controller for such Processing. We do not have any control over such Cookies, nor shall any liability arising out of the installation of such Cookies on your devices be imputed to us.

4. MANAGEMENT

1. The main Cookie management tool we recommend is the Cookie banner we provide, which allows for Cookie management in compliance with the world's most stringent privacy and data protection legislation, such as the GDPR (including the guidelines of the French authority CNIL) and the California Consumer Privacy Act (CCPA). Through this tool you will be able to:

   1. accept the full installation of all Cookies;

   2. accept only those Cookies that are necessary for the operation of the Site, rejecting all others;

   3. or manage your preferences manually by grouping Cookies by purpose of use.

2. The Visitor can decide whether or not to accept Cookies by using the settings of his or her browser. In this case, the setting can be defined specifically for different websites and web applications. Furthermore, the best browsers allow different settings to be defined for different types of cookies:

   1. Firefox: Cookie Management | Firefox Support

   2. Internet Explorer: Deleting and Managing Cookies in Internet Explorer

   3. Chrome: https://support.google.com/chrome/answer/95647?hl=en-

   4. Opera: Web preferences - Opera Help

   5. Safari per Mac: https://support.apple.com/en-ca/guide/safari/sfri11471/mac

   6. Safari per iOS: How to delete history and cookies from Safari on iPhone, iPad or iPod touch

3. The usability of the contents is also possible by completely disabling cookies, with the exception of 'session' cookies in the event that the Visitor wishes to authenticate himself, and disabling 'third-party' cookies does not affect the navigability of the Site in any way.

4. If you do not install the Cookies that are strictly necessary for the operation of the Site, you will not be able to proceed to browse the Site. These Cookies alone are by default ready to be installed on the device you are browsing from and do not, by law, require your express consent for installation.

5. We cannot guarantee the perfect functioning of the aforementioned tools, but undertakes to evaluate from time to time the most suitable tools for the purposes of compliance with the GDPR and applicable privacy and data protection regulations, possibly even replacing the tools currently in use with others that are more suitable or better functioning.

CHANGE YOUR PREFERENCES

1. You can change your preferences at any time by accessing our banner from here.

16 October 2023

Dear User,

This policy informs you of the Personal Data Processing activities we perform as a result of providing the Services (see in the Glossary what we include in the definition of "Services").

“Processing of Personal Data” means any operation concerning any information relating to an identified or identifiable natural person. For example, first and last name, or an email address with a “user name” that identifies you (e.g. johndoe@….) is considered “Personal Data”, and the actions of collection, registration with us and use of your Personal Data to send you a communication are considered “Processing” operations; same applies to communication of Data to other organisations and storage.

As our entity provides the Services, and establishes purposes and means of the Processing of Personal Data relating to You, it qualifies as “Data Controller” under the GDPR.

If You, the User, are the individual whose Personal Data are processed by us, you are referred to as a "Data Subject," and you have the right to receive the following information about who we are, what Personal Data we process, why, how and for how long we process it, and what obligations and rights you have regarding it. If the actual User of the Services is some type of entity (e.g., company, association, etc.), the Data Subjects are the natural persons who materially use the Service on behalf of the entity (e.g., the entity's legal representative and/or its members and/or workers). In the latter case, information strictly related to the entity (e.g., VAT number) is not considered Personal Data, while other information referring to individuals (e.g., identification data of the legal representative) is Personal Data.

Depending on the Services that You use, we may need to process certain Personal Data. In some cases, specified below, we may have an interest in processing Personal Data for purposes other than the provision of the Services: in these cases, we will process only where there is an appropriate legal basis and, where required by law, on the basis of the Consent of the Data Subject.

The following grid and clauses explain how the Company, as Data Controller, will process Your Data.

This Privacy Policy is in force from the date indicated in the header. We reserve the right to modify its content, in part or in full. Such updates will be in force from the date of their publication. You are therefore invited to visit this section regularly.

We do not knowingly collect personal information about natural persons who, according to their national law, lack legal capacity to act for the purpose of entering into contracts, except for requests relating to minors made by persons exercising parental authority or custody over the minors concerned. If information on such persons is recorded, We will delete it in a timely manner at the request of the Data Subject or the person exercising parental authority over him or her.

GLOSSARY

“Applicable Law”: means any provision, of any source, forming part of the Swiss Law or European Union applicable to the Site and to the legal relationships arising as a result of the interactions between the Company and the Users.

“Authorised Agent”: means the natural person, under the direct authority of the Data Controller, who receives instructions from the Data Controller on the Processing of Personal Data, pursuant to and in accordance with Article 29 of the GDPR.

“Authority”: means a body or organisation, public or private, with administrative, judicial, police, disciplinary or supervisory powers.

“Browsing Data”: means the data that the computer systems and software procedures used to operate the Site acquire, during their normal operation, and whose transmission is implicit in the use of Internet communication protocols. This information is not collected to be associated with identified Data Subjects, but given their very nature, this information could, through processing and association with data by third parties, allow users to be identified. This category of data includes IP addresses or domain names of the computers used by users who connect to the Site, URI (Uniform Resource Identifier) addresses of the resources requested, the time of the request, the method used to submit the request to the server, the size of the file obtained in response, the numerical code indicating the status of the response given by the server (successful, error, etc..) and other parameters relating to the operating system and computer environment of the user. This data is used for the sole purpose of obtaining anonymous statistical information on the use of the Site and to check its correct functioning and is deleted immediately after processing.

“Committee” o “EDPB”: means the European Data Protection Board, established by Article 68 of the GDPR and governed by Articles 68 to 76 of the GDPR, which replaces WP29 as of 25/5/2018.

“Common Data”: means the Personal Data concerning Your personal details, including, but not limited to, Your first and last name, e-mail address, telephone number, tax code, VAT number, as Well as any other data You may provide us with, for example through the forms or contact details of our organisation available on the Site.

“Company”: Web3 Music Verein (Web3 Music Association), a company duly existing and incorporated under the laws of Switzerland, with registered office in Zug, Baarerstrasse n. 141 registered at the Registrar of Companies of Zug with Number CHE-184.859.454.

“Consent of the Data Subject”: means “any freely given, specific, informed and unambiguous indication of the Data Subject’s wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her” (art. 4, paragraph 11, GDPR).

“Cookie”: means short fragments of text (letters and/or numbers) that allow the Web server to store information on the browser to be reused during the same visit to the Site (session cookies) or afterward, even after days (persistent cookies). Cookies are stored, according to the user’s preferences, by the individual browser on the specific device used (computer, tablet, smartphone). The following categories are considered:

• Technical cookies: these cookies are essential for the correct functioning of the Site and are used for the sole purpose of transmitting a communication over an electronic communication network, or to the extent strictly necessary for the provider of an information society service explicitly requested by the subscriber or User to provide such service.

• Analytical cookies: these cookies are used to anonymously collect and analyse the Site’s traffic and usage. These cookies, while not identifying the user, allow, for example, to detect if the same user logs in again at different times. They also make it possible to monitor the system and improve its performance and usability. The deactivation of such cookies can be performed without any loss of functionality.

• Profiling cookies: these cookies are persistent ones used to (anonymously or otherwise) identify Your preferences and improve Your browsing experience.

• Third party cookies (analytical and/or profiling): these cookies are generated by organisations not part of the Site, but integrated into parts of the Site page. For example, Google widgets (e.g. Google Maps) or social plugins (Facebook, Twitter, LinkedIn, Google+, etc.).

“Data”: one or more of the categories indicated as Personal Data.

“Data Controller”: means "the natural or legal person, public authority, service or other body which alone or jointly with others determines the purposes and means of the processing of personal data", as defined in Article 4, subsection 1, no. 7, of the GDPR.

“Data Processor”: means "a natural or legal person, public authority, agency or other body which processes personal data on behalf of the controller", as defined in Article 4, subsection 1(8) of the GDPR.

“Data Subject”: “an "identified or identifiable natural person", as defined in Article 4, subsection 1, no. 1, of the EU Regulation 2016/679 (so-called "GDPR").

“Disclosure”: the making of personal data to unspecified persons, in any form whatsoever, including by making them available or consulting them.

“GDPR”: means the EU Regulation 2016/679 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC (General Data Protection Regulation).

“Limitation”: means the marking of personal data stored with the aim of limiting their processing in the future, as defined in Article 4(1)(3) of the GDPR.

“Privacy Law”: the EU Regulation 2016/679 ("GDPR"), the UK GDPR, and Federal Act on Data Protection (FADP) of Switzerland, as well as the measures adopted by the Data Protection Authority, guidelines, and other applicable sources.

“Privacy Policy”: means this policy on the Processing of Personal Data.

“Profiling”: means "any form of automated processing of personal data consisting of the use of such personal data to evaluate certain personal aspects relating to a natural person, in particular to analyse or predict aspects of that natural person's professional performance, economic situation, health, personal preferences, interests, reliability, behaviour, location or movements", as defined in Article 4, subsection 1(4) of the GDPR.

“Personal Data”: means "any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person", as defined in Article 4, subsection 1, no. 1, of the GDPR).

“Processing”: means "any operation or set of operations which is performed upon personal data or sets of personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction", as defined by Art. 4, subsection 1, no. 2, of the GDPR.

“Publication”: means the action by which the Data Controller communicates information on the Site, without the implementation of procedures requiring the User to view it.

“Recipient“: means “a natural or legal person, public authority, agency or another body, to which the personal data are disclosed, whether a third party or not”, as defined in Article 4, sub-paragraph 1, no. 9, of the GDPR.

“Services”: means the the services offered by the Company through the Site, including the provision of the Site itself.

“Site”: means the web pages displayed through www.web3music.org, including subdomains.

“Supervisory Authority”: or “Data Protection Authority”, means the independent public authority established by a Member state of the European Union, Switzerland, UK or another country, in charge of supervising the application of the Privacy Law in its country of establishment.

“Third Party”: means "the natural or legal person, public authority, service or other body other than the Data Subject, the Data Controller, the Data Processor and the persons authorised to process personal data under the direct authority of the Data Controller or Data Processor", as defined in Article 4, subsection 1, no. 10, of the GDPR.

“User”: means any individual, or legal entity using any of the Services.

$RECORD and $nRECORD function together to create a comprehensive investment system within Music Protocol, where each token enhances the utility and effectiveness of the other. $RECORD supports the platform’s stability by mitigating risk through staking mechanisms, while $nRECORD facilitates market participation with its liquid and flexible structure. Together, they create a balanced ecosystem that combines security, liquidity, and access, driving the flow of capital into music investment pools.

The collaborative nature of these tokens allows Music Protocol to offer a unique blend of benefits that traditional financial systems struggle to provide. $RECORD’s role in risk sharing and due diligence underpins the reliability of investment opportunities, while $nRECORD’s liquidity opens the door to a broader range of participants.