The real value of NFTs for musicians and all creators
Despite their often irrationally high prices, NFTs are filled with potential benefits for musicians and other creators at all levels writes Allen Bargfrede of Verifi Media.
By Allen Bargfrede, Co-Founder & Chief Strategy Officer of Verifi Media
From the attempted sale of the viral Fleetwood Mac-soundtracked skateboarding TikTok to the successful $69 million sales of Beeple’s digital art piece every day, NFTs (non-fungible tokens = unique digital assets whose ownership is tracked on the blockchain) have been widely in discussion this year and bringing in huge money for their creators. Given our role in tracking ownership of intellectual property using the blockchain (but not with NFTs, at least yet), we get asked about this often at Verifi Media. While some might write the NFT concept off as a fad or simply a way for the digitally wealthy to spend their cryptocurrency, there is nonetheless real potential behind this new kind of digital asset that deserves to be examined seriously.
First, the recent “irrational exuberance” around the auction prices of NFTs has people justifiably questioning their credibility. Taking a look at the 14 most expensive NFTs sold to date, you might find yourself questioning how, exactly, these digital files sold for over $1 million each or more. More importantly, though, is the innate reproducibility of this digital media. NFTs are a valiant effort to reintroduce scarcity into the online world, but the fact remains that every single one of these NFTs is a digital file that can easily be reproduced with 100% accuracy and distributed widely across the internet. It’s not the same as buying an original Picasso painting or the Wu-Tang Clan’s single-copy Once Upon a Time in Shaolin album. Purchasers are essentially buying a certificate stating that they own the original copy of the file. Is that really worth $1 million?
“a new revenue stream for artists and legitimized digital art as a medium”
However, NFTs do hold a lot of promise for creators. First, the initial wave of multi-million-dollar NFTs has opened a new revenue stream for artists and legitimized digital art as a medium.
Rewarding superfans and tracking ownership
The real value of NFTs, though, comes from (i) opportunities they provide for artists to reward their superfans with additional, exclusive, one-of-a-kind experiences, and (ii) the opportunities for copyright owners to have all of their IP ownership tracked by these tokens and potentially earn revenue each time they are resold.
For example, those who help crowdfund a band or artist’s album could receive an NFT that certifies their contribution. That NFT could then be the key to access a host of exclusive offers, discounts, fan-only releases, concert pre-sales, and more throughout the artist’s career – offline complements to the digital file and certificate of ownership. Those who crowdfund at a high level could also be given regular opportunities to meet the band and participate in unique experiences with them. In this case, the NFT itself doesn’t hold the value – instead, it is the associated real-life benefits unlocked by the blockchain-secured NFT. Meanwhile, companies who want to purchase or sell a block of media assets could also have that block of assets represented by an NFT, which can provide better tracking and clarity over time about media ownership.
To achieve lasting value, NFTs must become a means to an end, not the end itself. Once we eventually move away from the ridiculously high prices currently being paid for these digital ownership certificates and instead make them the gateway to better transactions and portability of assets, as well as one-of-a-kind experiences, we can redeem their standing in the eyes of the skeptics and provide real value to artists and their fans. And at Verifi, we will continue exploring their possibilities while remaining focused on our core principles of providing a unique data engine for the management of IP asset ownership.
Allen Bargfrede is Co-Founder and Chief Strategy Officer at Verifi Media, the authoritative data hub for the music industry. In this role, he oversees all strategic initiatives for the company, helping to build a platform that enables artists and their teams to quickly and easily store, locate, correct, and share verified media metadata, ownership information, and underlying asset files with all stakeholders across the digital value chain, including labels, publishers, distributors, DSPs, PROs, and CMOs. Over the course of his career, he has served as a lawyer for both startups and S&P 500 companies, created multiple initiatives as an educator and researcher at Berklee College of Music, managed independent and major-label artists, invested in a variety of music rights projects, and authored three editions of the book Music Law in the Digital Age. He is based in Biarritz, France.