How Web3 Is Going To Disrupt The Music Industry

Part 2: NFTs and Master Rights

Web3 and NFT are more than just a buzzword, NFTs are poised to revolutionize the music industry and change how music is created, shared and owned. They are arguably the largest disruptor since streaming platforms, and have the potential to shift the relationship between artists and their fans for good. Paving the way for a direct transaction to occur between people who create music and those who consume it, cutting out the middlemen completely. NFTs might just be the golden ticket for emerging and struggling artists. In this blog post we take a closer look at how artists can use NFTs for investment by trading their master rights.
Happy man wearing hip rounded glasses and putting both fingers in the air pointing at his earbuds

NFTs and Master Rights

An artist normally has a beneficiary contract and a master right contract for every song/album they create. These are legally binding contracts with all parties names and signatures. Imagine I am an upcoming artist and write a new song.
This song has the promise to become big but I lack funding for the marketing, music video and promotion.
To raise funding I decided to split my master rights to that song into 100 NFTs. Each NFT represents 1% of my master right to that song. I decide to put up those NFTs on a blockchain for the equivalent of 50 euros and ask my friends and family to invest in me, with each NFT giving them 1% ownership of the song master right.As the exchange of the NFT takes place on a decentralized platform, the money goes directly into my wallet. I am now free to use that money as I see fit, without being accountable to anyone else but my listeners.
Back overview of heads standing in front of a pop stage

The potential of NFTs Master Rights

In addition to this, your fans will likely do everything they can to promote you and your music, as it will help drive up the value of the NFT they own. This will create a positive feedback loop for both the artist and the fans. Every time the song is streamed via a platform like Spotify or Audius each holder of the NFT will receive an allotted percentage, benefitting the artist and the fans. Furthermore, as the creator of the NFT, the musician can also include the option to collect royalties each time the NFT is sold to a new token holder. You can add the option that 10% of every token sale goes back to the original creator for the rest of time. This way if early fans first acquired the master right NFT for 50 euros and later on traded it for 150 euros and then 300 euros, the creator would receive a kickback of 15 euros and 30 euros, respectively.

Are NFTs worth it?

Although NFTs are quite a hype at the moment, musicians need to do their homework first. It remains a fairly new realm, so it would be wise to research them a lot before stepping into this world of NFTs and see if your fans and listeners are willing and able to support you through NFTs before emptying your savings account. If you want to learn more about NFTs and how to monetize them for your career, make sure to get in touch with us.
By Jonathan Oudekerk