NFT Labs: Application Scenarios of NFT(Music)-4

How does NFT empower musicians？

For musicians, NFTs offer exciting possibilities to tokenize their work in entirely new ways by removing some of the intermediaries and third parties in the industry. For example, Linkin Park co-founder Mike Shinoda once auctioned off a 37-second trailer for an unreleased song, complete with an audiovisual NFT animation for ¥30,000.

The point is that if the full version of the song is sold to the leading DSP entertainment company, it is far from likely that most musicians will make $10,000 after the DSP and company take a cut plus marketing expenses. For most musicians, company managers, record comapny, publishers, etc. make far more money from their music than the musicians, leaving them with only a fraction.

After electronic artists first joined the NFT music industry (such as top earners 3LAU, Deadmau5, etc.), musicians of various genres are joining the nascent industry, including Kings of Leon.

It also opens up new possibilities for musicians. Grammy nominated musician Illmind recently released the world's first beat sampling pack as an NFT. Anyone can listen, but ownership and usage rights go to the highest bidder. This sales model could have a major impact on how music is licensed and sold.

Currently, music licensing and transfer of ownership is a rather cumbersome process for labels, publishers and their lawyers, and manual removal of sample usage or transfer of ownership can even delay the release date of the music. But using NFT can make music authorization and transfer as convenient and fast as online shopping, and document transfer is efficient and secure.

“YellowHeart's mission is to create a symbiotic relationship between artists and fans, empowering them to sell music and tickets directly to fans,” said Josh Katz, CEO and founder of YellowHeart.

“With NFTs and smart contract technology, we're changing the way fans interact with artists. We're excited to partner with Kings of Leon to create a transparent, fan-friendly experience that ultimately returns control to artists and fans.”

As the COVID-19 pandemic damages the music industry hard, NFTs are increasingly seen as a new way to reduce digital piracy and help generate revenue for musicians.

How does NFT empower music companies？

Andrew Gertler, manager of Shawn Mendes, has partnered with creative direction agency STRODY to launch a new NFT music marketplace called STRODY.Exchange, becoming one of the industry leaders. Before that, Gertler and Mendes had also ventured into the NFT market, selling exclusive accessories such as digital signature guitars with Fender.

Creative studio, record company, management company IAMSOUND, in collaboration with record company 88Rising and Zora, will hold the first NFT art exhibition with Toro y Moi, Yaeji and Mura Masa in February 2021. One of the best-selling artworks, Yaeji's digital pet fish sold for the equivalent of $27,000.

Warner Music Group has also been a supporter of NFTs for many years. In September 2019, long before the NFT music hype started, Warner's Innovation and Emerging Technologies division invested in Vancouver-based Dapper Labs, founder of CryptoKitties. Cryptokitties, a game that allows users to trade and sell virtual cats, the first non-fungible token game project. A year later, the two also collaborated with Warner-signed rock band Muse to launch two limited-edition NFTs inspired by the band.

NFT's empowerment scheme for the music industry

1. Intellectual property

We all know that digital media can be copied, shared, and stolen: torrenting and leaks have undoubtedly cut profits across the music industry, threatening traditional distribution and monetization models. By investing in NFTs, creators, curators, and other stakeholders in the music industry are trying to create and capture the value of “digital scarcity.” The value of an NFT song is not necessarily just its sound, but allows consumers to have unique ownership of the song file, transferring ownership directly from the artist himself to the buyer through the Ethereum blockchain. For superfans, this glory, bragging rights and power may be enough to make them fall; for the hundreds of speculators who have joined the NFT market, pushing up the prices of NFT assets such as GIFs and JPEGs, they hope that the novelty of NFT music media will continue to accumulate value in the secondary market over time, allowing them to make more profits through resale.

As can be seen from the successful sale of Illmind sample packs, NFTs can transfer intellectual property rights such as songs, recordings and samples more easily, faster and more securely than currently. The transfer of ownership via the blockchain is recorded in seconds via a “smart contract” and is processed.

2. Safe and Decentralized

Digital transactions are secure and instant, without intermediaries, and NFTs directly link musicians and fans. But instead of digital currencies, NFTs are traded, including concert tickets, limited-edition experiences, digital content, commodities, and music. Fans participate in an auction for these tokens, with the highest bidder depositing them directly in a digital wallet through a secure transaction.

On these exchanges that don't involve third-party labels, musicians can raise money for what they're auctioning off and keep it all. Fans spend money to acquire unique content, the proceeds are held securely in their own digital wallets, and auction funds can go almost to the musicians.

Additionally, the encoding within the blockchain makes the NFT music industry persistent, existing outside of any media platform. Once a file is encoded as an NFT, it is very difficult to steal or perform other breaches. NFT music will pretty much last as long as the blockchain is functioning properly.

Creators do not need to be subject to the ever-changing interference of Spotify, YouTube and other platforms. Creators can let original creations give full play to their full value, and sell them to fans who cherish originality and value originality under the condition of guaranteed dissemination.

3.Ticketing Events

Ticketing for live and virtual events has long faced many difficulties: inefficiencies, bots, scalpers, hidden fees, counterfeit tickets, and more. According to CNBC, 12% of people who buy concert tickets have experienced scams. However, the NFT supported by blockchain technology minimizes the possibility of fraud, the ownership transfer records are clear at a glance, and ticket verification is easily completed. NFT ticketing (or “smart ticketing”) could also revolutionize the secondary sales market. Smart ticketing could prevent ticket transfers by encoding non-transferable information in its computer code if the ticketing company prohibits resale and scalpers.

Future challenges

1. Emerging musicians

The demand for NFT music tokens in the market often comes from the demand for the works of specific musicians. Popular or established musicians have no trouble attracting fans and bidding at auctions. But for emerging musicians, this demand still takes a lot of time and energy to create. New musicians don't have as many opportunities to benefit from this new form of music.

So far, the number of emerging artists entering the NFT market is still small. Sales of NFTs are often driven by status and hype rather than level, so it's understandable that emerging musicians haven't exploded. In addition, many markets deliberately shut out lesser-known musicians. OpenSea.io, the most mainstream NFT exchange marketplace, and other marketplace platforms open to emerging NFT music often charge high up-front fees for minting or publishing compositions, raising barriers to entry.

2. Creating Scarcity

NFT can inspire new art forms, but if the value of art is purely its scarcity, then limited distribution and musician access is paramount.

Digital scarcity is very different from physEthereumrcity. Limited seating is an example of scarcity in live performance, a limitation imposed by physical conditions, but the number of tickets sold for NFT live shows also needs to create scarcity, and the number of tickets sold can be determined by the musicians themselves. nft relies on an artificial concept: make something that is not scarce scarce, and value will naturally follow. But too high a price may also create a sense of exclusion and turn many fans away. The decision on the level of scarcity still needs to depend on the scale.

3. Bubble

Will this be a new bubble？ Are we overestimating anything because of NFT's current hotness？ If the price of selling NFT is based on hype and scarcity, then the risk to those who buy NFT as an investment product is immeasurable once people's interest drops.

It can cost hundreds of dollars to own a song or album with an NFT label. NFT music items are no longer simply music or MP3s, but have entered more of a collector's item category, often selling for much higher prices. In addition, there are musicians who are creating copies of their work that have NFT labels. In theory, it does make each piece unique, but its value can also be greatly diminished in the real world. If, as a collector, you want to purchase an asset that will preserve and increase in value in the future, try purchasing works that are truly unique, not just copies with NFT labels attached.

4. Intellectual property

While Illmind's sampler pack NFT could demonstrate the potential benefits of using the blockchain to transfer ownership of intellectual property, there is still a lot of uncertainty involved. Given the technology's recent introduction and the extreme complexity of global copyright law, smart contracts in decentralized systems are likely to encounter problems that will need to be discovered and resolved along the way.

5. Sale mode

NFTs can be sold in the marketplace. The vast majority of music NFTs are sold using the auction model, but some are sold at a fixed price. Which method takes precedence depends on the seller's wishes. Most marketplaces do not accept payment by credit card or traditional cash, which somewhat discourages many fans from entering.

But if you really want to buy NFT, the best way is to follow the tweets of your favorite musicians closely. Most auction news for musical works is tweeted in advance.

6. Environmental issues

Currently, writing new transactions for the ethereum blockchain is extremely energy inefficient. To ensure the security and fidelity of the blockchain, large computer networks are scrambling to be the first to come up with complex algorithmic solutions that add new “blocks” of new transactions to the blockchain. These current “proof-of-work” processes place a premium on unilateral efforts, resulting in a lack of interoperability between servers.

In 2018 alone, Ether used as much energy to verify its blockchain as the entire country of Iceland. While engineers are working on a new consensus algorithm, it is designed to reward Ether's investors rather than aim to increase computing power, an upgrade that is likely to take at least another year. For example, buying a concert video could consume as much energy as it takes to power an entire community.

NFT music platform

If the above introduction has given you a basic understanding of the NFT music industry, then Sophia (ID: lovebit98) will introduce two relatively well-known NFT music platforms - ROCKI and Audius, to help you learn more about how NFT music platforms empower fans and musicians.

1.ROCKI

ROCKI is a digital music streaming service and payment network, the largest music platform on Binance Smart Chain, that aims to reward musicians directly through its in-app native token $ROCKS. The platform uses a hybrid user-centric operating model, where musicians can be rewarded with tokens. Notably, ROCKI is the first platform to reward both musicians and listeners for engagement.

ROCKI has launched two unique music NFTs on the ROCKI platform - ERC721 “Royalty Income Right” NFT and ERC1155 “Exclusive Listening Right” NFT. Its unique hybrid subscription model allows musicians to earn streaming revenue in monetary terms. The user-centric payment model, often referred to as the fairest payment model for online streaming, has garnered widespread media attention, driven by French streaming giant Deezer.

ROCKI opens up new revenue for artists while bringing new levels of fan engagement and value. The exclusive listening privilege of releasing music NFTs on ROCKI and the right to royalty income from music NFTs are the next development goals of ROCKI.

On ROCKI, regardless of the size of the initial audience of musicians, they can use their existing fan base to introduce music NFTs and unique payment models, allowing musicians to earn income even in uncertain times when the epidemic is still raging.

Additionally, ROCKI expands the definition of “fan-centric” by rewarding listeners with ROCKS tokens on the ROCKI platform for listening to sponsored and curated music. Listeners can earn ROCKS tokens when they create playlists, provide feedback, and host social events, a precedent set by the streaming platform.

ROCKI attempts to solve the following problems: • Eliminate middlemen and third parties, allowing fans and artists to build relationships directly • Work with musicians who own their music entirely, ie indie, the fastest growing category of musicians to date. • Use the power of blockchain to handle operations: transparency, security, trustworthy contracts, finance. • Pay streaming royalties with a hybrid model and share the majority of subscription revenue with musicians. • Reward listeners and attract more users to participate.

Meanwhile, the company successfully auctioned off royalties from Israeli progressive house DJ Guy J's song COTTON EYES via Bounce.finance, which sold for 40 ETH. This new exclusive track sold for a record 40 ETH (approximately $24,880 at the time of writing) for 50% of the work's future ERC721 royalties, auctioned via decentralized auction protocol Bounce.finance. The platform's native token, ROCKI, provides rewards for early participation of musicians and listeners, and the characteristics of the token can also encourage token holders to use the token not as a speculative asset, but to explore utility functions on the platform. For those individuals and collectives who can help with the operation of the platform, ROCKI will also issue tokens as rewards. In addition, ROCKI tokens are designed to build active and active communities and are an important part of the platform's development.

The platform's artists and musicians have a much-needed revenue stream. Although the platform is still only in beta, as of December 2020, the platform has thousands of independent artists and more than 30,000 tracks.

2. Audius

Audius is a decentralized streaming platform that runs on multiple nodes to ensure music is fully owned by the musicians themselves. With over 3 million monthly users, the platform aims to replace Spotify and SoundCloud. The platform opens up new possibilities: bringing your own NFT library into the network.

The platform calls itself as “the cornerstone of the creator economy,” a hub for musician/fan interaction. The platform also enables Audius Passport, allowing users to connect to the Web 3.0 ecosystem. This network does not require permissions. As a result, creators can take advantage of the entire library and use existing music to present new compositions with a new look and feel. Additionally, network participants can run nodes, contribute and receive rewards.

Unlike ROCKI, Audius does not sell NFTs, but rather a “collectibles” feature that allows participating musicians and users of a certain level (both musicians and users must hold at least 100 Audio tokens - as of About $240 at the time of this writing - to have a Silver Tier account and be eligible for the Collectibles feature.) Show off the NFTs they already own. This is a great opportunity for musicians to market and sell NFT collections, and a great opportunity for users to discover and buy their favorite digital items.

The collectibles feature sounds a lot like Lazy.com's NFT galleries, but Audius features an embedded music site. It's just that Audius can also be used to showcase various NFTs on a music-centric basis. Audius is currently compatible with NFTs from SuperRare, OpenSea, Zora, Rarible, Foundation, Catalog, and KnownOrigin, and cooperation is expected in the near future.

Audius allows musicians to distribute to fans and earn money directly, featuring:

1. Efficient token economy powered by Audius platform token ($AUDIO), third-party stablecoins and artist tokens. 2. Decentralized storage solutions and ledger accounts for sharing audio and metadata. 3. Programmable mechanism. 4. A discovery protocol for users to efficiently query metadata. 5. Decentralized management protocol, artists, node operators and fans can have individual or collective rights in decision-making of platform changes and upgrades.

The Audius platform can also recommend popular songs based on users' likes, followings and reposts, and players can refresh and get new pushes. The platform has also launched an APP version. At the time of writing this article, the platform's No. 1 song, Boss Up Remix, has already played 4k+, and the catchy melody has received many likes and retweets.

Audius' native token $AUDIO improves network security, brings access to exclusive functions, and promotes self-governance by the community. The Audius protocol gives every user the freedom to share, monetize and listen to audio. Users who hold $AUDIO can gain a voice and participate in the decision-making of the future development direction of the platform by making positive contributions to the network.

The Future is Here

As more and more companies recognize the value of the NFT music industry, this emerging market is gradually beginning to gain recognition. Most recently, Catalog is building a business model similar to Bandcamp, where musicians can upload, collect and trade unique digital entries. As the company emphasizes, the NFTs on the market will be certified and endorsed by the musicians themselves. The value of Catalog is that it creates a 1-to-1 entry marketplace based on uniformity and scarcity.

In addition, XLR8R, an established electronic music publishing company, mentioned developing its NFT market. Meanwhile, TUNE.FM will also launch its own marketplace. More marketplaces, such as STURDY.exchange, mentioned above, are currently under construction. Each marketplace has its own value proposition to help artists connect with fans and easily monetize their intellectual property.

If you are a musician trying to break into the NFT industry, you can design limited and meaningful NFTs so that backers are buying authentic and unique items. Not only will this add more value to them, but it will also build an intimate and trusting relationship between the two parties.

In short, NFT will be disruptive to musicians and the music industry. It gives musicians more control and decision-making power, and it provides them with a new revenue stream, which is especially important today when the epidemic is not over. At the same time, it gives fans the opportunity to enjoy the thrill of owning their loved ones' global singles and allows more fans to get closer to musicians while having safer and more secure access to verifiable NFT assets.

There is no denying that the emerging NFT music industry is facing many problems, and it remains to be seen whether this is a collective mindless orgy. Whether this will reshape the way musicians and fans interact remains to be seen. But we can think about what else music can be linked to besides NFT. Like music + DAO, like ...... Join our community and let's discuss!