Headline: How might NFTs change the music industry?
Date:
Body: For decades now, there have been a relative few ways to get your music distributed. You sign on to a label, and essentially, you sign away to the corporate owners all or nearly all rights in your creation. In return, they leverage all of their relationships with radio stations and venues, and you get airplay and concert dates. NFTs suggest a new way to distribute music. When somebody purchases the NFT represented by your musical composition, it is recorded on the blockchain. (Depending on how the smart contract is written, this is usually bragging rights, not ownership of the audio or composition.) Otherwise, you give over your check to a record company, and you have very little left but the beginning of a GREAT country song, perhaps. (Provided that you crash your pickup, and have your partner leave you.)
What is an NFT for music?
The NFT is essentially a receipt, granting you ownership rights to that song or composition, and this receipt is recorded within the blockchain, and this is essentially immutable. Through the years, there have been countless court battles about who owns a certain song and this record-keeping makes court battles generally unnecessary.
Where can I find these music NFTs?
Opensea is the thought that comes to mind for NFTs. But, music is different and there are music-only platforms that seem to be preferred. Examples include Zora, Foundation, Catalog and Sound.xyz. In marketplaces such as this one, music NFTs can be paired with PDF documents that contain a transcript of the lyrics. The appeal to music writers is that as the song is sold from person to person, the original writer will continue to get a small amount of the sales price, as original owners are recorded in the blockchain. This is already happening. Recently, Jacques Green sold the rights to a song, called “Promise” for 13 ETH, or almost $23,000. Kings of Leon minted an NFT of an entire album, and paired it with a VIP experience to any concert the buyer might choose to attend. In another development, Universal Music Group has partnered with the Bored Ape Yacht Club to develop its own band within a metaverse.
Most interesting to me, is a community called Anotherblock. This group minted an NFT in a song called “Weekend on a Tuesday” and each of the 250 investors in the NFT get a .02% share in streaming revenues. In an issue of Cointelegraph, the CEO, Michael Traore was quoted as saying, “Music rights’ value is created by people loving and listening to the music, and doing things with it. Why shouldn’t [they] be able to own rights if they create the value by listening to it. They should be able to get some of the upside as well.” When they polled their Discord community, Anotherblock found that the most interest in NFTs was for EDM followed closely by hip-hop. Said one managing director of another online community, Shannon Heber, “The ethos and focus of Web3 is identity, ownership and community.” Maybe they’re on to something, maybe they’re on something, time will tell.
What’s the big deal here?
The big deal is 3-fold:
First, artists don’t have to pay off a huge record label for distribution of their music. The fans, if they are ardent enough, can make a direct financial contribution to the bands they like.
Second, if there is a lesser-known artist, the owner of the NFT is motivated to do whatever they can to promote the artist, in an effort to make their NFT more valuable, should they decide to sell it in the future. This benefits both the artists and the fans.
Third, the NFT allows the artist to gamify the experience to encourage interaction. As an example, one artist offered a cash prize of $50,000 for the best piece of content that could be created. This encouraged fans to create a lot of content that helped the artist, and helped them feel as if part of the team behind that artist.
OK, so what’s standing in the way of NFTs being very common in the music industry?
The technological learning curve for NFTs can be a “key barrier to entry,” said Lin Dai, CEO and co-founder of OneOf, an environmentally conscious NFT marketplace that champions emerging musical artists. “About 99% of all creators have not been able to really participate yet,” Dai said. “Do your own research” (DYOR) is a standard piece of advice within the NfT community, and setting up your own NFT is no different. You have to carefully consider which blockchain you wish to record your NFT, and then, which marketplace will be best to sell
The Verdict
When the Internet started, it took some time for people around the world to see the value of giving away information to others. Blogs also took a while to catch on, but now there are millions of them worldwide, and some of the content is quite good. On the other side of the coin, some of it is useless or even entirely mistaken in the information it conveys. It has taken us some time to become societally comfortable with this arrangement. Seeing this pattern, I don’t think it’s too much of a jump to presume that NFTs will also take some time to gain widespread public acceptance. But, I think that for the truly devoted fan, the NFT will allow for them to qualify for truly unique experiences that they might value very highly. In time, we shall see.
REFERENCES
https://cointelegraph.com/news/nfts-democratize-music-industry-and-redistribute-song-rights
https://www.coindesk.com/learn/the-web3-guide-to-getting-into-the-music-industry/
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.