Music is a highly centralized industry, and three major record labels - Sony, Universal, and Warner - control the lion’s share of the industry with an estimated 66–80% of market share, a figure that varies slightly from year to year. Just like blockchain technology and cryptocurrency are applying the disruptive ethos of decentralization to the traditional finance sector, the music industry is ripe for a radical reorganization of value capture. With the ability to put more money in the hands of musicians upon the initial release of an album or song - and the ability to guarantee payment of predetermined blockchain music royalties from that point on - NFTs make a strong case for reinventing the music industry’s dominant payment model altogether. These processes are cryptographically secured and guaranteed by smart contracts, which eradicate the need for costly middlemen and gatekeepers. Original artists can now keep the majority of their profits when selling their work the first time - current standards see NFT artists retain approximately 80–90% of sales - in addition to royalties represented by a percentage of every subsequent future sale. NFT-enabled creative works use automated smart contracts (automatically executing programs on the blockchain) that authenticate a work and track its provenance and value as it changes hands - a process which, prior to blockchain, was laborious, slow, and error-prone. That’s why NFTs have achieved such remarkable notoriety in such a short time. Whether it’s a fine art auction house or a record label, NFTs present a unique opportunity for an antiquated system to be completely re-wired to be more equitable, not just for creators, but consumers and fans as well.
Whether it’s the art world or the music industry, creative industries are saddled with middlemen and intermediaries that siphon a huge percentage of profits from artists in exchange for distribution, marketing, or accessing scale. Non-fungible tokens (NFTs) present an opportunity for creators to capture value for their work in unprecedented ways.
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