Everyone has heard of Bitcoin and other cryptocurrencies that have become very popular, both on the stock market and as alternate forms of currency. Many stores are now accepting these cryptocurrencies in exchange for cash or card.
There are some very interesting developments coming from this cryptocurrency popularity, but not in just paying with Bitcoin, but paying for NFTs. What are these NFTs, and how can they change up the music industry? Let’s explore what they are and how they can benefit artists and fans alike.
What are Non Fungible Tokens (NFT)?
Fungible assets are what many people know and understand; money, cash, and cryptocurrencies like Bitcoin. “Fungible” simply means to be able to be replaced at a certain value. This is the idea of purchasing a CD for $10 and that CD having a value of $10 and no less or more.
Non-fungible assets, called NFTs, are assets that are wholly unique and valuable due to their individuality. They might have been purchased through fungible means, but they hold non-fungible value. This is much the same as rare collectible items, like Beanie Babies. NFTs use “Blockchains” which are a data set to record sellers and buyers, and are wholly unique to the purchaser. Any interaction with the media such as viewers and listeners is recorded. Anyone can view this Blockchain data as well, but might not be able to view the NFT.
For example, concert tickets are non-fungible items. Once paid for, the paper slip or digital code holds no special value, but the purpose of the ticket holds the value. This value is determined by the select ticket number, seat and placement, and the outside valuation of the show. Because of this, the ticket’s value can change as demand for it rises.
Who Already Uses NFTs?
NFTs are being incorporated into the art and media industry slowly, but with surprising results. Ever heard of Beeple? He’s not a music artist, he’s a digital artist that makes computer illustrations that anyone can view on his Instagram that currently has 1.8 million followers. His “The Complete MF Collection” of digital art recently sold for $777,777.77 dollars. The main purchase is of the artwork rights, with the addition of a physical titanium plate with the identification and authentication numbers associated with the artwork.
Many would question the purpose of buying digital content that anyone can copy from the web. The reason comes down to exactly why people collect Beanie Babies or famous paintings. The physical value of the item doesn’t matter as much as the valuation that other people give it.
In the music world, Jacques Greene, under the LuckyMe label, recently sold NFT publishing rights to a new song. In a breakthrough way, he first posted a small sample of his song “Promise” and followed it up with an auction for the NFT publishing rights. The song eventually sold for 13 Ethereum coins valued at $23,000.
Before the auction, Greene stated on Twitter, “The [NFT exchange] platform is a promise. You can buy the copyright here. In purchase, you will own the publishing of the song, but I reserve the right to approval. That’s the promise.”
Why NFTs Could Make Sense for the Music Industry?
Jacques Greene’s sale offers an interesting perspective on how NFT music can create a more direct platform for artists to sell their music. Instead of complicated contracts and legal regulation, the direct sale as a NFT utilizes the Blockchain data to verify the exchange. Greene sold it to the buyer, and the buyer holds the valuation of the NFT and can use it with Greene’s acceptance.
This direct sale removes the middlemen needed, allowing the fan buying the NFT to more directly contribute to the artist, and the artist receiving the full payout. Mike Shinoda of Linkin Park, upon selling one of his songs for around $30,000, stated this on Twitter: “Even if I upload the full version of the contained song to DSPs worldwide (which I can still do), i would never get even close to $10k, after fees by DSPs, label, marketing, etc.”
Mike Shinoda offers this as well, “And reminder: the NFT isn’t the song—it’s an NFT containing the song. You can even rip the audio and video. And if the contained song becomes more popular, then arguably the NFT becomes more valuable.”
NFTs also offer security beyond what the normal digital music industry has. The NFTs themselves cannot be copied, and anyone viewing the content leaves a specific digital signature and tracking. They are much like a singularly unique downloadable song, even if the same song was sold to 100 buyers, they each have their unique copy that has built-in security.
NFTs then offer artists an interesting way to market their work because of the direct sale, the security between the artists and buyers, and how they sparkle with unique properties. It’ll be interesting to watch how NFTs develop the music industry, even though such a transformation is not to be taking place quickly and simply.
Managing a music business today
Many innovations are being integrated in the music industry, as we are relying only on digital streams of revenue. It’s even more interesting to see new means to pay artists as we’re remodeling music streaming models. But this also means that our management of the music business continuously evolves.
Navigating through new streams of revenue, catalog management, royalty payments, releases, musical works… This can be a lot for a team in record labels and music publishers. We’ve created Reprtoir exactly for these reasons: making administrative tasks and operations easy and optimized so you can focus on your main activities and growing your business. Get a free demo of our solution and discover how Reprtoir can help!