To better understand why Music NFTs are revolutionizing Music NFTs, it’s important to call back a critical cryptocurrency element– decentralization.
By design, a decentralized system removes any centralized chokepoints, which profit-seeking intermediaries usually dominate. These intermediaries make money by providing access or facilitating a market between two groups (i.e., Music NFTs artists and their fans.) With decentralization artists directly connect with their audiences and monetize their creativity.
Artists involved in the record company system are offered an alternative route for their back-end administrative tasks such as collecting royalties and enforcing licensing rights since the blockchain does this by the nature of its programming.
NFTs and Streaming Royalties :
Technologists view today’s music industry in one of two ways:
Symbolically, an oligarchy on its last legs, where a few dozen companies squabble with their artist partners over record sales, music use and rights, licensing deals, and streaming revenue.
A caterpillar undergoing metamorphosis, adjusting to the oscillations and changes in consumer preferences due to technological innovation.
Each revenue channel is carefully watched to ensure everyone gets their pre-agreed cut, but this system can be largely inefficient and hardly fair, as artists tend to get the shorter end of the stick.
The industry has changed significantly in the last two decades thanks to the democratization of access by the Internet, whether through legal means such as streaming or illicit means such as piracy.
Long before the Spotify and Apple Music models, and prior to the Napsters and Lime wires, the music industry largely revolved around centralized entities like record labels, which would provide resources to seek and elevate less-known artists to a level of profitable and commercial appeal.
Being discovered, within the record-label dominated ecosystem, was a godsend for an average unknown artist, but “making it big” came with strings– mostly all of which carved a significant slice of the artist’s pie for the label itself.
However, with the Internet, artist discovery went direct to consumers. Discord Music listeners started going to sites like Pandora, Youtube, Grooveshark, and Spotify, and up-and-coming artists usually took their marketing efforts into their own hands, often to great success.
Streaming, rather than physical album sales, is one of the last remaining cash cows that guarantees royalties paid in perpetuity, meaning they can scale in proportion to their popularity.
Physical album sales are a one-time payment to the royalty holder done at the time of sale. While the purchaser doesn’t buy the rights to the music with the album, they can sell the physical copy (not reproduce it, legally at least) as they please, and the royalty holder receives nothing in the secondary and tertiary sales.