How NFTs could redefine the future of the music industry

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This article was provided by Jack Fraser, Head of Business Development at Mogul Productions,

Sales of NFT skyrocketed in 2021. With a transaction volume of USD $ 40.69 million in 2018 alone, NFT trading volume increased to $ 44.2 billion in 2021 and is constantly breaking records and reaching new heights. The NFT segment is expected to reach a market cap of $ 80 billion by 2025. In December 2021 alone, NFT transactions were recorded at 4 billion.

Despite the speculation and suspicion surrounding the apparently unstable and uncontrollable nature of NFTs, one thing is certain – they are here to stay. NFTs are particularly popular with Millennials and Jane-Z, and they’ve emerged as a way to connect with their favorite artists.

While the merger for art NFTs and metavars has ceased, NFTs are also said to be transforming the music industry.

The dark side of the music industry

Music is a universal experience. By the end of 2020, the global music industry generated total revenue of 21.6 billion, the sixth consecutive year of growth in the industry with a CAGR of 7.4% since 2019. Despite this successful track record of the industry, it suffers. With a bunch of issues.

Musicians find it extremely difficult to sustain themselves in the industry and make a living through their music. It is no secret that artists are not properly rewarded for their talents and efforts. These arrangements are usually reinforced by record deals and complex legal agreements that they make to be signed by the record label at the time of onboarding.

The artists who made it big have come out frequently and talked about the dynamic power between the record label and the artist. Take Kanye West, for example, who went so far as to call record deals.Modern slaveryThe label is signed for all the rights of the artist with the temptation of upfront financing, strategic advice and marketing.

Here’s what Akon had to say about the exploitation of artists: “Throughout my career, I’ve always believed that artists never really got their fair share of profits from their work and from listening to people.” “If you do not own your master, your master is your master.” Said the Prince A falling stone or a revolving stone In 1996.

According to reports, only the top 1% of artists receive 90% of all streams, and only 0.8% of celebrities and top artists earn an average of USD 50,000 per year from streaming. This is mainly due to the overall revenue in artists’ music divided between artists and record labels, agents, lawyers, distributors and other “stakeholders”. Moreover, with a record label having full rights to the “Masters” or the original recording of a song, the producer has no control over where and when it is played. This also places serious restrictions on the artist’s creative freedom.

This has led to the discovery of overturning the entire model of record labels in the music industry. While social media platforms like TikTok, YouTube and Instagram have empowered creators somewhat as a way to promote and market their music, there is still a long way to go for artists to properly monetize through a competent tool.

The NFT Revolution: Changing Tides for the Music Industry

While the COVID-19 rules put a complete ban on live sports, concerts and entertainment, blockchain-based non-fungible tokens have emerged as a way for fans around the world to connect with the companies, teams and creators they like.

The NFT Revolution started as a profile picture collection (PFP) that shoppers can display on their social media handles to show that they are part of a specific NFT community. This PFP dominates the story with celebrities and other NFT enthusiasts buying popular digital collections such as board apps, cool cats and cryptopunks.

But what is it about NFTs that makes them so distracting and novel?

For starters, NFTs are non-fungible (or unchangeable) digital files on the blockchain that are separate and irreplaceable. Hosted on blockchains like Ethereum, Solana, and Binance Smart Chain, NFTs are rare, verifiable, and valuable. However, most large NFT projects such as Decentralland and Ax Infinity are valued not for their art but for their utility which comes from the underlying smart contract and use case. For example, on Decentland, digital land can be purchased in-game as NFTs that can be used for event hosting, leasing, etc.

For the media and entertainment industry, through this medium, NFTs provide a new medium for artists and creators to present their work, market their work on the blockchain through the NFT Marketplace, and engage their fan community. NFTs have the ability to establish a shortage of digital assets and thus allow creators to set their own rates for creation, as well as control the secondary market for them. Therefore, they democratize access to new markets for creators globally.

Artists and fans take the pie

NFTs can also restore power to creators to control the supply chain and rights associated with masters and related integration.

NFTs bring scarcity to music and give musicians complete control over the distribution of their work and the rights associated with it. Therefore, NFTs offer musicians the opportunity to connect with their audiences on a more main and granular level with greater honesty and establish communities around them, as well as giving them complete autonomy over their work. Artists retain all of their music rights even when their NFTs are sold in the secondary market, and receive the royalties they choose to set on each NFT transaction. This music creates a global market for NFTs.

In January 2022, BTS, in conjunction with the popular K-pop boy band, Dunamu, is set to launch its own NFT set in the form of photocards, a digital version of the integration card featuring photographs of K-pop band members.

Popular singer Akon also seems to be digging up record labels and leaving his next album as NFT to monetize it from day one!

On the other hand, the fans who buy these collections or compositions have full authenticity and originality in what they buy. In this sense, NFTs allow anyone to purchase art or music property rights while allowing artists to test their work outside the limits of the legacy music industry.

In addition, NFTs allow for new ways of raising funds by allowing audiences to participate in the musical process. Fans become investors in the project for many reasons. While many can only invest and buy in NFTs as a consolidation, others can do so for speculative reasons, some to learn HODL, some to learn royalties, and others to trade in the secondary NFT marketplace for profit. . This can help artists get funding in advance without waiving the master’s rights and without incurring significant revenue cuts like TLC, Kanye West and Taylor Swift. In addition, it allows them to share in the profits of their success.

Fans will be able to invest in Nass’s music by buying shares in the royalties from the streaming of his two songs. This investment can be made by purchasing an expanded version of Royal in NFT Form Invariant of “Gold,” “Platinum” and “Diamond” digital tokens for each song. Interestingly, token owners will receive a portion of the royalties whenever the tune is streamed forever!

What’s next for NFTs and the music industry

Asset tokenization allows a huge pool of people to hold assets on a blockchain. In this sense, even ordinary fans are immersed in the value and morality of the artist or creator they support, without intermediaries such as streaming platforms or record labels. Thus, this enables fan communities to participate in the growth of their favorite creators as never before.

In addition, music NFTs may have additional value in addition to their own. Autographed physical copies of the collected items, forever music royalties, backstage passes, special remixes and private parties are the iceberg’s peaks of rewarding the fan community who have invested in the composer’s compositions. The possibilities for artists to connect with their audiences and investors are truly endless.

Some artists are testing the waters of NFTs, such as creative music maker 3lau, which sold 33 NFTs on the third anniversary of their album. Ultraviolet For over $ 11.7 million, which makes it one of the biggest music NFT deals. 3lau is considering allowing NFT owners to collaborate with him on the net song and maybe even feature in the song! Moreover, there are recent examples of artists thinking of making paparazzi photos in NFT so that they can monetize them in the form of royalties. These NFTs applications have the potential to transform the music industry into a level playing field for all artists.

Jack Fraser is head of business development at Mogul Productions.

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