Until recently, the terms "NFT", "crypto" and "blockchain" were mainly used in the FinTech world, but in 2021 they are finally being widely used in art and music. Why is NFT (Non-Fungible Tokens) and digital ownership one of the most important technological trends of the year, and how will it change the world of music and showbiz? - We look at the technology and the most successful cases.
What are NFTs and can they kill labels
Blockchain and cryptocurrency have changed the balance and nature of payments between different groups of counterparties, but it has been particularly radical in the field of art. The concept of smart contracts and "quick" transactions has come to the taste of artists: after all, they not only simplify payments, but also help create new legal relationships with fans by offering unique objects for a new digital "currency.
What is NFT in terms of technology? - It is essentially a blockchain record to which a metadata bundle is attached. It is not just a digital object that can be easily replicated: the package includes a record of its origin, who owns the digital original, what are the rights of the buyer and how he can dispose of the acquired artifact.
This is somewhat similar to the DRM protection that is put on movies and free music on hard drives, or on platforms like Amazon or iTunes. But in the case of NFT, the control is on the client side. It's the buyer who gets the proof of ownership, not the seller.
As for the elements that can be included in a package, they can be infinitely varied. In addition to the actual tracks of the album and its digital artwork, the musician can sell so-called unlockable content (a unique link that can only be opened once), and it can contain anything, such as rights to get an exclusive box set or merch, rights to make copies, revenue from future sales or broadcasts, sampling rights, and so on.
From the point of view of the average listener, the difference between a "normal" track and an NFT track is indistinguishable by ear. Everyone can listen to it on Spotify, iTunes or YouTube, but from the NFT point of view it's like taking a picture of an original painting and hanging a print on the wall. Copies may look exactly the same, but they're not as valuable because they don't bear the mark of authenticity and can easily be reproduced.
Marketplaces are used to aggregate and sell tokens: Musicoin, Rarible, Nifty Gateway, OpenSea offer artists different earning mechanics and provide verification of sales.
The NFT market is growing at a cosmic rate: according to a report by JP Morgan analysts, monthly sales of digital tokens on various marketplaces will be around $2 billion in 2021. Forbes estimates that total NFT trading volume will reach $23 billion in 2021.
In the coming years, tokens are expected to radically change the relationships within the ecosystem of musicians, labels, publishers, distributors and royalty collection agencies, revolutionizing the monetization of art. Projects that create artist collaborations on blockchain are growing rapidly.
At the same time, there are fears that NFT could become the biggest disruptor of the music industry since streaming: smart contracts actually remove labels, agents and rights aggregators from the "food chain" - that is, those who have been underpaying musicians and artists for decades, concentrating all distribution channels of music in their hands. But do not be fooled: after all, in terms of traditional rights transfer, it is simply a question of creating marketplaces with royalty auctions. For example, a startup called Royal promises to "overturn the traditional relationship between music labels and artists," but in reality simply offers all musicians to register the rights to their music on the platform - without any legal guarantees from the platform itself. Similar marketplaces, Royalty Exchange, Revelator, SongVest, and dozens of others, also rely on the musician's word of honor.
And of course, as soon as the majors realize the potential of NFT platforms, they immediately invest in this promising sector.
This review didn't include new artifacts from Sliipknot, who released "The Chapeltown Rag" as part of the Slipknot NFT collection, Ariana Grande and the Super Mario games' cool project, Anthrax drummer Charlie Benante's project, who released his "Monster Art Series" in August, Belave's "does the bird fly over your head?" album and many others. But I hope you've already figured it out: NFT is with us for the long haul, and it's a very cool tool for monetizing music. And if the purchased artifact also increases in value, that's great!