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

NFT Labs: Application Scenarios of NFT(Music)-2

Why the music industry loves blockchain and NFTs

Grammy Award-winning British singer Imogen Heap said, “Blockchain allows artists to control their music and what they want to express on a larger scale.” Its many advantages include: 1. Artists are independent of their income. 2. Brand-new income; 3. Solving royalty challenges; 4. Digital ownership.

Independent of their income

The music industry is a “superstar economy”, and artwork goes from nothing to complete, which involves record companies, musicians, performance managers, entertainment companies, etc. Very few musicians can personally obtain considerable benefits from the work. According to the “Investigation and Research Report on Musicians' Survival Status and Copyright Awareness” by Communication University of China, nearly 30% of musicians have not received a penny of income from music, and 70% of musicians must engage in part-time jobs. According to Digital Music News, more than 90% of musicians are unknown, and those who succeed take only 12% of the money the music industry makes.

Take Fenix as an example; an Ethereum-based one-stop platform, Fenix can meet the needs of all artists and fans. It has both mobile and PC applications and integrates all of the musicians' social media platforms, video, and audio players, allowing users to listen to their music and interviews, and purchase musicians' products and tour tickets. Musicians and bands can view an in-depth analysis of user engagement, while also accessing a range of services including marketing, social media, graphic design, tour itinerary services, which can be paid in native FENIX tokens. On top of that, the artist is paid fairly and gets about 87% of the profits.

It is worth noting that all services are centralized on one platform, which is novel and efficient, eliminating many intermediaries and reducing the time and economic costs caused by intermediary agencies such as social media and integrated systems. Reducing the share of middlemen will make the contributors of music creation mainly beneficiaries, thus ensuring the maximum income of the musicians.

Musicians make up just 12% of the $40 billion U.S. music industry revenue.

A new source of income

The production threshold of NFT digital assets is low. It is also convenient for resale transactions with buyers worldwide on the Internet. With the following of fans, the NFT issued by musicians has excellent potential for appreciation, and NFT has become the latest trend for musicians. Also the fastest source of income.

Fans who don't understand blockchain don't have to worry about how to buy. Take the deadmau5 digital collection card issued on WAX as an example. Deadmau5 fans can purchase directly with credit cards without converting cryptocurrencies. After a successful purchase, fans can easily and freely trade with other collectors and show their rare cards on multiple WAX marketplaces and social media platforms, as well as resell them on the secondary market.

Royalty challenges

The royalties are in the “producer list” issue. Almost all song recordings collaborate with lyricists, singers, musicians, producers, sound engineers and others. All contributors associated with the song shall be paid royalties when the music is played, performed live. But many producers or songwriters don't get royalties at all. When faced with violations, there is nothing they can do. While not getting royalties, artists cannot control their own income. Artist royalties go through multiple intermediaries, each with its own accounting process, fee structure and reporting standards.

In the music industry, blockchain can transform the distribution of music and facilitate its monetization. The transparent system created by the blockchain can track song ownership, digital assets, etc. Copyright will be automatically assigned to everyone who contributes to the album. Additionally, musicians typically wait six months to a year to receive royalties from streaming and distribution companies. With blockchain and smart contracts, payments for each streamer will be instantly credited, and musicians will have the capital to further invest in their careers.

Another attractive new option with blockchain in the music industry is shared ownership of music.

“Bringing Liquidity to the Music Industry” is the manifesto of ANote Music. ANote Music, a European marketplace for investing in music royalties, launched at the end of July 2020. ANote Music allows users to invest in the music ownership of their favorite independent musicians and profit from royalties. As a great way to earn passive income, ANote Music provides musicians, publishers, or record labels with a transparent record of music ownership rights on the blockchain, where the value of ownership is entirely determined by supply and demand.

Digital Ownership

One of the biggest obstacles to music artists today is the difficulty of getting paid when songs are played. Over the past few years, illegal downloads have been at their peak, streaming has become incredibly easy, and the entire music industry has lost millions every year. The main source of income for artists is ticket sales for live performances, but the pandemic has made the music industry more challenging than ever.

With the introduction of blockchain in the music industry, using or listening to music released by artists on the blockchain will be paid through encrypted, secure, and immutable smart contracts. The blockchain can be seen as a transparent ledger showing every transaction and movement of a song. On a public blockchain, artists and fans can see where and when a song is played.

A platform to buy digital music collections

OpenSea, the largest NFT marketplace by transaction volume, launched in 2018. OpenSea has a large collection of NFTs ranging from artworks, collectibles to domain names and more, and 2017's hugely popular CryptoKitties are also sold on this platform.

Nifty Gateway is a popular platform where users can buy and trade NFTs. Rarible is an emerging marketplace for creating and selling NFT artwork while having its own governance token, RARI.

In recent months, Blockparty has also launched its own NFT marketplace to bridge the gap between fine art and digital collectibles. The Blockparty marketplace also offers fans the opportunity to acquire rare collectibles, memorabilia, and merchandise from their favorite icons in the music, arts, and sports industries.

Launched last July, the Cargo blockchain allows developers and digital creators to define, mint, sell and trade digital assets, or NFTs, on the blockchain. The Cargo SDK (Software Development Kit) allows creators to replicate projects at scale at low cost, with the ability to update metadata for millions of NFTs at a price that suits them.

Reshaping the future of the digital music industry

Unique artworks and collectibles are more concrete expositions of blockchain concepts than empty and tedious explanations of monetary history, global economics, and monetary policy. Although the NFT art market is still relatively small, its booming development has reduced the value of the worldwide art market by 5% in 2019.

More than half (57%) of 18- to 24-year-olds prefer to buy collectibles online. As more people understand and use blockchain, the growing online art and collectibles market (currently over $4.8 billion) will continue to boom.

Therefore, whether blockchain can be a way to revitalize the entire music industry, only time will tell. However, blockchain technology can bring unprecedented surprises and challenges to the music industry.