Music streaming services are on the verge of collapsing due to NFTs
The rise of NFT-based platforms that enable artists to sell digital rights to music directly to fans may lead to the demise of existing streaming services such as Spotify and Apple Music. This is the conclusion reached by Saxo Bank, a Danish investment bank, in its shocking predictions for 2022. NFT promises to alter the structure and nature of owning modern art or any other token as well as the manner of its purchasing. As a result, the income of individuals who gain from the transaction will shift. This article explains the influence of NFT popularization on the traditional music industry.
First of all, NFT sales increased dramatically in March 2021. Then, digital artists and musicians used NFT auctions to sell NFT tokens linked to their works. The great majority of items in such auctions are digital art objects (jpg-artworks, gif-files, movies), but musicians are also enthusiastically taking advantage of the new technology’s buzz, successfully selling their NFTs for hundreds, thousands, or even millions of dollars. For example, DJ and producer 3Lau, Linkin Park’s Mike Shinoda, singer Grimes, and many more have already profited from the sale of their compositions linked to NFT-tokens. The Weeknd, a Canadian musician, has confirmed his desire to release the NFT of his new song. Given the artist’s popularity, there is every reason to expect that he will profit substantially from this deal.
Moreover, NFTs are gaining popularity because they provide a convenient option for artists to recuperate lost income due to the pandemic. Following COVID-19, musicians are obliged to seek alternatives to concert tours. Live broadcasts, fan clubs, virtual paid gatherings, and online master courses are all sources of additional revenue.
The discussion over how most musicians are unfairly underpaid on streaming services hasn’t died down. And the so-called NFT revolution occurred precisely when the notion of royalties became more widely debated. According to analysts, record labels and streaming providers collect more than 75% of fees for listening to streaming music. Performers are dissatisfied with the unjust revenue allocation mechanism.
According to Mads Eberhardt, an analyst at Saxo Bank, NFT-based music streaming initiatives are expected to acquire mainstream as early as 2022. For example, the blockchain-based Audius platform is a decentralized music sharing and a streaming system meant to eliminate intermediaries in the music industry and allow fans and producers to engage directly with one another. Thus, this concept should appeal to both music fans and performers. Furthermore, the introduction of such products, according to investment bank analysts, signals a fundamental shift in the sector. They anticipate that by 2022, more and more prominent musicians will withdraw their songs from conventional streaming platforms and that traditional services would suffer as a result.
Without a doubt, it would be advantageous for musicians and composers to sell shares of rights to their music directly to fans. However, there is yet very little credible information concerning the issuing of such tokens and methods of royalties distribution via NFT. A new startup named Vezt was selling such rights, but according to its abandoned social media, this application’s development halted long before the current NFT-boom.
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