How web3 is going to disrupt the music industry, part 2

Web3 and NFTs are more than just buzzwords. NFTs are poised to revolutionise 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 direct transactions between the 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.

NFTs and master rights

An artist normally has a beneficiary contract and a master rights contract for every song or album they create. These are legally binding contracts with the names and signatures of all parties. Imagine I am an upcoming artist and write a new song. The song has the promise to become big, but I lack funding for the marketing, music video and promotion.

To raise funding, I decide to split my master rights to the song into 100 NFTs, each representing 1% of my master rights. I put those NFTs up on a blockchain for the equivalent of 50 euros each, and ask my friends and family to invest in me, with each NFT giving them 1% ownership of the master rights. As the exchange takes place on a decentralised 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 but my listeners.

The potential of master rights NFTs

In addition, your fans will likely do everything they can to promote you and your music, as it helps drive up the value of the NFT they own. That creates a positive feedback loop for both the artist and the fans. Every time the song is streamed on a platform like Spotify or Audius, each holder of the NFT receives an allotted percentage, benefitting the artist and the fans. 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 holder. You can add the option that 10% of every token sale goes back to the original creator for the rest of time. If early fans first bought the master rights NFT for 50 euros and later 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?

NFTs are quite a hype at the moment, but musicians need to do their homework first. It remains a fairly new realm, so research it well before stepping in, and see whether 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 monetise them for your career, get in touch with us.