Music NFT: A New Battleground for Capital and Creators

In early 2017, just in time for Trump’s inauguration, I wrote about Brian Eno’s new album, Reflection, the latest in a series of music he’s been writing since 1975. work. The album was released with a controversial (and since deleted) Facebook post. In the post, the composer called for an end to “knee-conscious nationalism,” which he sees as a “double-edged sword.” Beyond that, Eno sees Reflection as a “good medicine” for eliminating identities such as Republicans and Democrats, capitalists and creators.

When making music, Eno created his generative system, essentially “generating” music through software algorithms he designed, in a way that is not dissimilar to the generative systems that musicians create for NFT projects. (Note: The generative system is a technology that is driven by a large and diverse audience and has the ability to spontaneously change. Due to different rules and forms, concepts and examples such as generative music and generative art have been derived.) But when the name of Eno recently When he appeared in the web3 music scene, his attitude towards NFTs was slander: “It’s a way for artists to get a share of global capitalism”. “How ambiguous, now artists can also become minions of capital.”

Music NFT: A New Battleground for Capital and Creators

Brian Eno

The relationship between capital and creators has always been delicate. When the music industry is embodied as a company, it doesn’t care much about the person who actually creates most of its value: the artist. Bad contracts and false promises tip the scales in favor of the company, and survivorship bias obscures the fact that very few musicians can make a living from their creations.

Steve Albini’s 1993 paper outlines the flow of capital through the music industry value chain. After in-depth analysis, he concluded that it was dilapidated: “Unreliable contracts that play with numbers can only prove how the artist can be slaughtered.”

Fast forward to the nearly 30-year-old streaming era, and things got even worse. The streaming payment model makes it difficult for artists to make money without a large fan base, and the platform’s interface design makes building a fan base on the platform itself infeasible. This paradox is also reflected in the statistics: 90% of albums get only 1% of traffic. 98.6% of Spotify artists earn just $36 per quarter.

Spotify has been in the spotlight after Neil Young and Joni Mitchell left Spotify for opposing Joe Rogan’s anti-vax rhetoric. Alex Ross of The New Yorker said there were many other reasons unrelated to the Joe Rogan affair that drove Neil Young and Joni Mitchell out of Spotify, according to people familiar with the matter.” Ben Sisario in The New York Times: The Joe Rogan Incident Just “the last straw that broke the complex and fragile relationship between the company and the artist. “

Andy Cush said on Pitchfork: “It won’t be long before the public’s attention will be diverted from this matter,” “But now that it has gotten attention, why not take this opportunity to stand up on behalf of the creators?”

Kay Hanley, co-founder of Songwriters of North America (SONA) and frontman of Letters to Cleo, wrote on Variety: “We’re going to take this opportunity to explore some of the issues: Spotify’s institutional exploitation, demeaning, and injustice. Respect music creators.”

Spotify was born from a fragmented and exploitative system, the innovation through peer-to-peer (P2P) file resource sharing was a paradigm shift, and suddenly people were able to sit at home and listen to all their music for free. Dependency, it’s fundamentally changing the way we value music, and streaming is trying to take back the “territory” taken by platforms like Napster and The Pirate Bay, but this only reinforces the belief that music should be all (or almost) free concept. (Note: Napster was the first widely used peer-to-peer music-sharing service, which made it easier to share MP3 songs among music lovers, but has also been accused of infringement. The free Napster is now out of history.)

Music NFT: A New Battleground for Capital and Creators

“Evil” Napster

Spotify operates on a freemium model, where the basic service is free, while additional features are provided through paid subscriptions. So its revenue comes from advertising subscriptions to Premium users and third parties. Daniel Ek and his company are savvy enough that they license from the major labels (who have large stakes in Spotify) and do the math for the freemium business model. This is essentially competing with piracy, so in order to stay ahead of the competition, they have to be as cheap as possible, which means even smaller margins. Also because record companies are involved in the process from the very beginning, which leaves the creators with little say. So the structure that Steve Albini denounced in that 1993 paper is still preserved and passed on.

Criticizing only Spotify seems biased, and its many competitors, such as Apple, Google, Amazon and other tech giants, are also in this “squeeze” streaming business. This makes profit margins less important. In order to keep up with the involution, Spotify needs to use every opportunity to further reduce prices (such as getting Spotify Premium membership for three months for free), and the living space downstream of the value chain can only be further reduced by compression.

Albini’s lingering voice is hard to understand, why can an industry system that seems to be riddled with holes still survive after decades? This reality is close to despair.

“Is there any hope for a better music industry system?” asked Will Butler of Arcade Fire in a recent article for The Atlantic. “Unity is a good response to technological change, but my tired brain can’t see the rules of this age…in the end, technology will overwhelm us.

At this point, it seems hard to believe that technology will save culture. But given the hype surrounding NFTs as a new source of revenue for music creators, it seems like an oversight in the aforementioned article not to mention them.

The full name of NFT is a non-fungible token, which is a data unit called a blockchain digital ledger. Each token can represent a unique digital data as a digital file of ownership of virtual goods (music, visual art, sports), it is like a physical asset and can be bought and sold.

Last February, Jacques Greene minted and auctioned his single “Promise” (at 13ETH, around $34,000 at the time of writing) as an NFT.

Music NFT: A New Battleground for Capital and Creators

《Promise》by Jacques Greene

Less than a year later, on January 20, Cooper Turley, one of Web3’s prominent figures and advocates, tweeted a map of the music NFT landscape, depicting an already unstoppable industry ecosystem, covering ticketing, streaming, Collectibles, tags and fan clubs. The opportunities embraced by web3 builders and believers are enormous.

There are numbers to back this up. Since June 2020, more than 1.6 million music NFTs have been sold, with sales of approximately $100 million. Catalog, a 1/1 NFT platform built on Zora (Ethereum’s NFT marketplace protocol), has generated $2 million in sales since its launch in March 2021 — with an average selling price of $3,707.

Sound.xyz (one of the music NFT platforms) said on February 6 that the platform has recruited 38 artists and paid $400,000, and the number has now exceeded $600,000, which is about 150 million streams.

Success stories abound. Rapper Haleek Maul’s NFT sales were $226,800, while he was only earning $178 on Spotify. Indie artist RAC said on Twitter that he made more money in one NFT than his entire 15-year music career.

Putting aside the perspective of author income, Ethereum surpassed traditional web2 giants such as Patreon with a market value of $3.5 billion, and was second only to Etsy and Youtube Music. With so much appeal, why aren’t more artists embracing NFTs?

One of the reasons is the stigma of NFTs. NFTs are currently more speculative and therefore full of scammers, and there are many more other problems, from unnecessary living environment pressure to lack of inclusivity, to the gradual absorption of traditional corporate giants. More realistically, NFTs are also expensive and have a lot of friction in their use.

Perhaps the most disappointing was the incident with HitPiece, a new NFT platform that scrapes track information from Spotify’s catalog and auctions NFTs without the artist’s permission.

French producer and founder of the RAAR brand Maelstrom told me: “Something like HitPiece makes it difficult for us to promote web3 solutions outside of the music realm.” But it’s not hopeless, there’s a lot more to do. “

The crypto community has always stepped into the muddy waters of the law with confidence, and has grown rapidly as the specter of government regulation looms in the shadows. The speculative mentality is a driving force that keeps scammers and treasure hunters alike, and many are still in the business because it represents hope for a fairer future.

“I don’t think a lot of people want to admit it,” Los Angeles-based artist Carter Reeves shared with me. “My struggling career over the years has driven me to sell NFTs, putting in a lot of effort and seeing no benefit.” An independent artist who chose to remain anonymous used the proceeds of the NFT sale to buy PR they could not otherwise afford, allowing them to grow their community.

Out of respect for artists like Neil Young, Joni Mitchell, and Brian Eno, they can choose to ignore NFTs or remove music from the streaming platform. But when these streaming platforms charge $9.99/month for music and tell artists to “obey, or quit,” 98.6% need to find another way out or die.

The rise of web2 creator platforms like Patreon (now a multi-billion dollar company) illustrates creators’ embrace of alternatives. The same reasoning applies to NFTs. “I think it’s a fair way to make money, at least not in a squeezing way,” said Reeves, who sold his first NFT on Catalog to Cooper Turley for 1 ETH. In less than two days, Reeves achieved the equivalent of a million views.

It’s a good demonstration, but Turley’s background from Reeves’ “deal” is both exciting and sets it apart from Patreon, while also illustrating the long road to mass adoption of NFTs.

On Patreon, fans pay for premium content and perks, such as limited-edition merchandise, early access, and engagement. People like music or appreciate the producers, and then they pay for the music extras. As streaming platforms devalue music itself, it requires artists to create consistent content beyond music.

In theory, an NFT could represent an original piece of music, except for the extra “perks”. When fans buy music NFTs, they are also buying value-added assets for themselves and the artist, and success becomes mutual. Because each NFT usually contains the creator’s share, that is, every time the NFT is resold, there is a percentage profit of the artist, that is, the artist will continue to receive benefits. The blockchain’s ledger verifies and automates these transactions, theoretically denying any “bad contracts” or “false promises.” But the reality is much more complicated.

Before NFTs entered the stage, music ownership was complex enough: each recording had multiple copyrights, and playing a song, copying it, broadcasting it, playing it in sync with visual content, and so on, required multiple entities to prove copyright. In short, there is currently no concept of so-called legal property in digital files.

Music NFT: A New Battleground for Capital and Creators

How to make musicians see red

However, by entering into a contract, both parties can still agree that digital ownership exists, like the kind of relationship facilitated by the Catalog platform. But simply creating an entry on the blockchain doesn’t actually prove ownership of the original work, which requires verification in the virtual world.

This is especially true when NFTs are packaged with intellectual property (or future royalties from IP). Last April, pop artist VÉRITÉ became the first artist to auction the perpetual rights to a recording. In February, she raised $90,000 by selling 39% of all future streaming royalties on her song “He’s Not You” to 505 people on NFT platform Royal.

Royal is built on co-ownership of music, with artists and fans sharing future royalties (NFTs on catalogs and sounds currently do not include royalties or any IP). Achieving community-based fractional ownership through NFTs is an exciting idea, but it’s also been hotly debated, as any token that implies a right to future profits is more likely to violate securities laws – the key to the future of NFTs question.

Understandably, in order to reduce friction and complexity, the NFT market oversimplifies contracts, ignoring “how the owners who have purchased (or invested in) NFTs get their due income”, i.e., payment frequency, acceptable Specific issues such as cryptocurrency type, gas fees, etc.

Another example is “small perks” other than NFTs themselves. Reeves added things like VIP access to his Discord, several “incredibly embarrassing unpublished business ideas” and “a 15-minute FaceTime opportunity (should someone like…?)” in his new creation and so on. In her Royal drop, VÉRITÉ also offers experience services such as 5 1-on-1 video chats with her.

But in NFT contracts, there are hardly any criteria for how, when, or even if these additional “benefits” are provided. Water and music detailed the many gaps “between understanding legal ownership of music copyrights and recording ownership on the blockchain.” Don’t forget this is only in the US (because the concepts of “ownership” and “copyright” vary from country to country).

Music NFT: A New Battleground for Capital and Creators

Water and Music

The moral of the story is that while all this is promising, the new entities (NFTs) that web3 is introducing do not quite fit the traditional legal framework, so the SEC is also waiting to see what stance to take. . So the working philosophy of the whole situation is basically LFG (looking for group) and WAGMI (We are all gonna make it).

But the sincerity of web3 explorers is worth recording. This is also why Turley calls buying music NFTs a “spiritual experience”. To just buy someone’s art (regardless of any legally defined, technical notions of ownership) and then share it, is to bring the buyer and the artist closer together.

“The most interesting thing is that posting music NFTs also fosters human interaction and interaction, which doesn’t happen in the web2 world,” said Maelstrom, who has met numerous collectors and artists through his NFT experience.

In fact, web3 and web2 are almost two worlds. For example, on mainstream social platforms like Instagram, creators of all types, from gamers and musicians to tattoo artists, have to play a zero-sum game, where they compete with each other to gain attention.

The creator economy of web2 is marked by the incentive of excess supply: there is always a creator willing to create content, and if we don’t play the game, the algorithm will steadily provide an alternative creator.

It is this ruthlessness that drives artists to choose web3. Despite some concerns, the fact that people are willing to pay thousands of dollars for music NFTs clearly shows that there is an unmet need for listeners to support their favorite artists.

Maelstrom said: “It’s interesting how the interaction is also part of the creative process itself.

For example, producer Timbaland is releasing samples of individual vocals, drums, bass, tracks as NFTs, which allow access to a web-based mixing app where owners can remix these parts to themselves in the creation. Many artists see NFTs as identity rights for specific DAO governance and access, further expanding the relationship between artists and fans. Generative music NFT platforms like EulerBeats are enabling complex interactive gamification architectures that reimagine how people interact with, own and benefit from music.

The ethos of these creators is similar to the experimental ethos that Brian Eno himself espouses — generative or even a shared mechanism: delivering works through algorithms that produce unpredictable results. “Once the system is up and running, I spend a long time, days or even weeks in fact, to see what it does and fine-tune the materials and rulesets that run the algorithm,” Eno said in Reflection wrote at the time of publication. “It’s a lot like gardening, planting seeds and then continuing to tend them until it develops into a garden.”

The NFT space is overgrown with weeds, but its future is still bright because of the presence of gardeners. People like Reeves (who is helping people set up wallets and log into web3 with Discord, Crane Road Surf Club) and VÉRITÉ are pioneers in the NFT space.

“There is still a lot to do with digital ownership,” VÉRITÉ told me.

It is hopeful that every artist I talk to has a fantastic idea for NFTs. Web3 encourages dissent, and the special effects of the industry ecology make dissent manifest as improvement, which is different from the single, top-down organization of web2.

Music NFT: A New Battleground for Capital and Creators

TRUE

Although, the scale and convenience of web2 is unquestionable. Because of the above-mentioned issues of newcomers and financial frictions, the music NFT platform inadvertently acts as a gatekeeper. And when they really scale, for the millions of people who need it, community-driven governance mechanisms will be the most important part, and on a platform like Spotify, that work is mostly handled by algorithms. At the same time, if problems such as anonymous fraud in web3 are not properly resolved, it will take a long time for people in web2 to adapt to accepting web3, no matter how good web3 is intended.

Currently, the lack of a clear legal framework is an opportunity for both innovators and cheaters, which undoubtedly adds to the sense of confusion. In another Eno idea about NFTs, it is full of information asymmetry: “If I just wanted to make money at first, I would choose to pursue a different career (music creator).”

But having NFTs as a source of income doesn’t mean artists are just for the money. Artists also live in the real world, there will always be those who make more money, and there will always be bad creators, but if the inequality gap can be reduced and more artists have a better life through web3, Isn’t this something worth pursuing?

Eno said of his generative system in a 2005 interview, “I’m not going to interfere with the final formation of a system, but if the end result is not good, I’ll give it up and do something else.”

That’s exactly what “gardeners” are doing.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/music-nft-a-new-battleground-for-capital-and-creators/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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