“A true fan might want to own something way earlier than a speculator would even get wind of it. Democratizing access to asset classes is a huge part of crypto’s future.”
— Electronic DJ and Royal founder Justin Blau (aka 3LAU).
So, what’s he saying? He’s explaining the dynamic impact of NFTs on the music industry for artists, investors, and fans. And what’s an NFT? Non-fungible tokens (NFTs) represent ownership rights to digital assets on everything from songs, photos, and video clips, to digital artwork, such as the record-breaking sale last year of Everyday’s — The First 5000 Days for $69.3 million.
Much like the impact streaming had decades ago, NFTs are now giving that same jolt to the music industry. NFTs are revolutionizing how artistic expression is monetized and are changing music release strategies forever.
This form of blockchain cryptocurrency proved its worth last year — and became an integral part of the music release process — when 3LAU auctioned 33 non-fungible tokens for Worst Case, the first token-based album in the U.S., for $11.7 million. The 33 buyers received certified digital rights and one-of-a-kind ownership for each token. Here’s the current value.
But what meaning does any of this have? Investors have an insatiable appetite for new, non-traditional investments that offer better-than-market returns. Remember mortgage-backed securities and synthetic CDOs? In case you forgot, let actress and recording artist Selena Gomez explain.
Here’s what it all comes down to: who owns your favorite song? Do you care? Sony currently owns The Beatles’ song catalog; before that, Michael Jackson did. Did that make a difference to you when you dropped the needle on your vinyl copy of Abbey Road? Distribution is what matters. If music NFTs include exclusive distribution or no distribution rights, then we’re in some interesting territory. Otherwise, I don’t see an impact on the public unless an NFT owner intends to limit distribution.
With more bidders, the sale of an NFT on an open exchange will certainly drive-up prices. But it’s also important to keep in mind that an artist can only sell their work once. What happens after that — good or bad — might not affect the artist one way or the other.
Digital technology has undoubtedly changed the music industry by leveling the playing field for all, and that’s a positive development. Even I have original music published on the internet. If anyone would like to purchase an NFT, let me know.