Nft record companies, the future of music
Of CNBCTV18.com IST (published)
Mini
In this article we learn about NFT record labels and their function in an artist-first world.
Musicians have always received a large portion of the popularity but a very small portion of the profits from their albums and songs. Record companies who owned the rights to the music could license it out and line their pockets, while artists got very little in return. Often royalties were also divided unequally between the labels and the artist. NFT record labels can change this narrative. In this article we learn about NFT record labels and their function in an artist-first world.
What is a record label?
Record companies enable the production and distribution of music to the masses. They do this by discovering artists, funding their music, producing videos, organizing concerts and more. All this is done to bring popularity to the artist and ultimately increase record sales. Record sales refers to the revenue generated by music in its various forms, not the literal sale of records.
Over the past few decades, the music industry has been completely consolidated into a few major record labels, such as Sony Music and Universal Records. This consolidation was to the extent that no new musicians could make their mark in the industry without the support of a major record company. These large entities could also veto an artist out of the public domain because they controlled distribution. Make no mistake, artists got rich through record labels, but the record labels themselves got much richer because of the artists.
All this changed when streaming giants entered the picture. When music like Spotify and Amazon came in, artists could upload their work directly and get paid per stream, but they had to produce the record themselves, which was still a significant barrier to entry.
Enter NFT labels
NFT record companies act like their traditional counterparts. The only difference is that they produce the final result, a song or an album, as an NFT that is entirely attributed to the artist. This allows musicians to have complete ownership of their music and its respective rights. Now artists can syndicate, sell and build a community around their music, while keeping a large portion of the revenue.
Artists have already used NFTs to sell their music. For example, EDM artist and producer 3LAU recently raked in over $11 million from sales of his NFT album, with one song from the album selling for $3.6 million. Therefore, NFTs have already proven to be a powerful tool for artists, and NFT labels will only throw in the necessary guidance and technical know-how to make things smoother for upcoming artists.
Traditional record companies can own the artist’s music for life, as highlighted by the case of Taylor Swift and Scooter Braun. The latter now owns Swift’s first label, Big Machine, and earns money every time a fan streams or downloads songs produced by her then label.
On the other hand, the NFT record labels transfer the ownership of the songs and albums to the artists. They only help with operational requirements such as minting NFTs, paying gas tax, listing music NFTs on marketplaces, marketing the NFT collection, etc. In exchange, they charge a small fee for their services. This ensures that the relationship between artist and label remains mutually beneficial.
Changes that NFT record companies will bring
First, the barriers to entry will be shot down as the NFT record company takes care of all the production costs. At the same time, the result (a song or album) is marked as an NFT on the blockchain. This ensures that artists do not have to worry about their music rights being stolen or misused.
NFT labels can also bring a sense of community to the music scene. This can be done through music DAOs where the fan community is prioritized. These platforms can allow fans to vote on album art, choose which tracks will go on the album, decide the artwork for each single, and more.
They can effect a change in the way traditional record companies operate. This is because, after the introduction of NFT record labels, conventional record labels will not become obsolete. Instead, they would have to mend their ways to suit the Web 3 generation, ensuring a fairer and more democratic music industry.
