Three ways the music industry can reduce NFT speculation
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Now that the market is in turmoil, NFT market participants expect more than just a quick return. These use cases show what NFT looks like when utility is prioritized over speculation.
The recent downturn in the market has had a significant effect on non-fungible tokens (NFT). Most NFT floor prices have fallen by 75% or more in recent months. As prices have fallen, many investors have lost faith and are now wondering if the whole NFT craze was just speculation.
This chain analysis report suggests that the meteoric increase in 2021 was partly caused by “laundry trading”, which is when someone sells an asset to themselves to make it look like there is market demand.
But even in this chaotic situation, musicians find new and interesting ways to use non-fungible tokens. Let’s look at three examples of how NFT can be useful income rights, digital tickets and VIP access and NFT-based charity efforts.
Share revenue from streaming
Investors who buy an artist’s NFT can also get rights to the revenue generated by their music. This is the idea that can be realized by tokenizing income rights. Artists get paid right away to pay for production and marketing costs, but they still own the rights to their music.
For users, it’s like giving money to artists they think have a chance to do so, hoping they’ll be able to share their success.
Alan Walkers Unit Campaign, which began in May and raised $ 25,000 in a matter of days, exemplifies how this model works in practice. The song is on track to reach its streaming goal earlier than expected, and it has inspired a second, even bigger campaign around Walker’s Origins EP.
This crowdfunding model can also include “fan missions”, which reward users with extra airdrops and benefits for performing specific tasks.
As the value of the rights increases as the artist becomes more popular, investors have a reason to wait until the artist succeeds.
Tokenized tickets and exclusive membership
Another growing trend is to use NFTs as digital tickets or passports that give owners special benefits. A great example of this is how FTX and Coachella worked together to create the Coachella Collectibles series. The series offers unique opportunities such as lifetime passes, meeting and greeting and more.
The Way Out West (WOW) Festival is also working on a similar collaboration to create an exclusive NFT collection of festival goers’ captured moments. Web 3.0 experiences seem to be in demand at events around the world. So, organizers are making an effort to provide more of these types of opportunities to encourage people to keep their digital tickets for longer.
Several music groups have also launched NFT collections to turn their most devoted fans into VIPs. Avenged Sevenfold was one of the first bands to take advantage of this concept, releasing their Deathbats Club NFT collection. The band has given owners IP rights to their own Deathbats and continues to provide options, such as integration of three Deathbats into Iron Maiden’s mobile game “Legacy of the Beast”.
HEAD5 Collection by deadmau5 is another good example. Those who had previously held official deadmau5 NFTs were offered the chance to start imprinting other fan club NFTs ahead of schedule. It shows how blockchain technology enables artists to thank their most loyal fans.
People who have passports for exclusive events or fan clubs are more interested in using them than in selling them, which makes speculation less likely.
Use NFTs to solve world problems
Last but not least, revenue from NFT sales can be donated to verified charities. Grimes, a Canadian musician and producer, did this in 2021 when she released the WarNymph Collection. The sale of the collection raised more than $ 6 million, and an undisclosed portion of the money went to Carbon180, an NGO that works to reduce carbon emissions and combat climate change.
Another notable example is UNICEF, which launched an NFT fundraiser to raise money for school connections.
If investors put their money in tokens for such purposes, it is unlikely that they will use them to speculate in the future.
The speculation will not end
Changing how people think about NFTs takes a long time, but projects with real benefits and major effects on the world should definitely try to do so. Slowly but surely, the industry will move past speculation and into the realm of profit.
Mattias Tengblad is an experienced CEO and entrepreneur with over 20 years of unique management, business development and marketing experience from telecom and games to music and media.
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