How NFTs are Changing the Music Business

Name:
Instructor:
Course:
Date:
How NFTs Are Changing the Music Business
NFTs or non-fungible tokens are cryptographic assets stored in a blockchain using unique identification codes in the form of a distributed ledger. These identification codes make them singularly identifiable and allow the tokens to represent ownership of digital assets, including artworks, video recordings, music, and even virtual real estate. They are called non-fungible tokens because they have singular properties that cannot be defined in terms of value. Unlike currencies or cryptocurrencies, which are defined by their value and therefore exchangeable, NFTs cannot be exchanged or have two owners. The uniqueness and non-transferability of NFTs eliminate the problem of originality: it is difficult to counterfeit the tokens because they are encoded with a digital signature of the creator, thereby heightening traceability to the owner (Kaczynski and Kominers). Because of their ability to replicate the properties of uniqueness, scarcity, and proof of ownership, NFTs have found application in artistic businesses where exclusive ownership is a necessary component. This essay theorizes that the ability of NFTs to revolutionize the music business lies in the exclusive ownership of work as well as artistic freedom given to musicians.
The music industry has long been linked with the persistent economic exploitation of music artists by corrupt record labels, accountants, and managers. This exploitation resides in unfair advances/forwards, management of artistic direction, artistic development deals, corporate control of copyrights, as well as advertising and merchandising deals. Artists entering into the music scene are forced to transfer ownership of their work along with the rights to sell and promote the same to record labels in exchange for artistic development, marketing of their music, and upfront financing. While streaming companies have revolutionized the music industry by paying royalties to artists every time their music is streamed, the payment rates set by these file-sharing companies are also exploitative. For instance, only 0.8% of the most streamed artists make $50,000 a year, while 61% of musicians report that the wages they receive from their work are not enough to sustain them. Another example is that of Spotify, which registered more than $10 billion in revenue last year even as it paid artists between $0.003 and $0.005 per stream: musicians have to record 250 streams just to earn a dollar (Johnson).
Music artists are underpaid by streaming companies because the lion’s share of the revenue generated by their work is split between the file-sharing company, record labels (who hold full rights over the original recording of the song), lawyers, agents, and other investors in the artists’ music. Moreover, serious restrictions are put on the creative freedom of music artists: not only does the artist have no say over when and where his or her music is played, but also which advertising and merchandising deals to take. Fortunately, the non-fungibility and immutability of NFTs give them the capacity to change how artists create, fund, own, and promote their music (Leising). All NFT transactions are stored using a tamper-proof ledger: ...