NFTs in the music industry

In recent weeks, some interesting developments have emerged from the still recent ecosystem of non-fungible tokens ( NFTs) in the music industry.

A fraction of Rihanna’s “Bitch Better Have My Money” song’s streaming rights has recently been tokenized for a unique and non-fungible digital representation of rights (NFT), fractionally in F-NFTS (Fractional NFTS).

The NFT was created by the Web3 Anotherblock startup using Ethereum blockchain and listed for sale in F-NFTs through the Opensea trading platform.

Each F-NFT was initially sold in Initial NFT Offering (INO) for 210,00 $ and grant to the holder 0.0033% of streaming royalties generated by music.

In this type of cases, each F-NFT acts as a digital certificate of the ownership of a certain digital representation of value or right(s) and is stored in a given blockchain which, in turn, is a transparent and secure decentralized registration and data storage network (in this case of digital representations of rights).

Whenever music is transmitted, the use of this type of technology allows automatic and transparent royalties payments to their holders.

As happened in this case, F-NFTs generally are initially sold in primary market (INO) by music artists through NFT negotiating platforms and are later transacable in secondary market by the holders (in form of F-NFT trading). In this last case, in principle, with a view to obtaining capital gains from the disposal with profit. In this stage, the value may vary depending on the demand/ supply.

This new business model seems to present some advantages to both artists and fans themselves.

To artists, it offers an innovative way to monetize their own music and perhaps reach a wider audience.

To fans, it offers a unique and collectible way to hold a small part of the streaming rights of their favorite music and thus receive a certain percentage in royalties.

In fact, it seems that it really offers some advantages, as Rihanna’s music streaming rights have rapidly running out and the INO has generated about 63,000.00 in revenue.

And Rihanna was not the first artist in the music industry to explore this ecosystem. Other artists such as Diplo or The Chainsmokers already proceeded in 2022 to the tokenization of streaming rights of some of their songs.

As a Portuguese proverb says, “but not everything are flowers, nor does every day have sun”.

Just two days after the release of Rihanna’s music streaming rights, Opensea blocked its negotiation, allegedly due to platform trading restrictions as regards NFTs promising fractional property and future profits.

According to what was reported by the news, Anotherblock publicly communicated that Opensea has “ignored” its attempts to “solve the problem” and that the NFT of other music NFT creation platforms that offer similar fractional ownership models in F-NFTs as, for example, Royal.io and Corite, remain negotiable.

Still according to what was reported, Rihanna’s music streaming rights F-NFT holders expressed their concern through Anotherblock’s discord account, specifically that the blockade imposed by Opensea may affect prices.

However, at least at the time this article was written, the F-NFTs remain blocked and no more news came about.

That said, although it is interesting to follow the growth of the NFTs ecosystem in the music industry, as well as the various ways of use that offer new opportunities for both artists and their fans, this recent situation highlights the importance of understanding the risks associated with this type of investment, but not only.

There are also two considerations worthy of special mention.

First, the need for NFT negotiating platforms to disclose clear and complete terms and conditions that, above all, clarify the doubts of both investors and people or entities that want to create and list NFTs.

Secondly, and to conclude, it emphasizes the (blatant) need for transparent and efficient communication between negotiating platforms and creators.

This text is an English translation of an opinion article in Portuguese published on 27.02.23 in the newspaper Observador (https://observador.pt/opiniao/nfts-na-industria-da-musica/).

JPG: https://www.cryptopolitan.com/rihanna-bh-better-have-my-money-generate-63k-revenue/