Web3 is the Future of Music, but also the Wild Wild West: Pitfalls to avoid
Web3, social tokens, NFTs and DAOs dominate almost every music business conversation. The gold rush is certainly on, but like that original hidden treasure you have to be careful where you mine or the fallout can crush you.
By Bryce Carr, Director of Music Partnerships at social token, NFT platform Rally
In recent weeks, people following the crypto industry have been up in arms about NFT platforms like Cent, where minted tokens are running afoul of intellectual property rights at the expense of creators and rights holders. The problem became so severe that the platform went so far as to halt transactions, citing “rampant” fakes and plagiarism. Cent is just the tip of the iceberg though, representative of a larger problem across the industry.
In yet another case of NFT marketplaces gone amok in the new year, HitPiece was discovered to be scraping data from Spotify to mint NFTs of different songs from various artists. However, it appears that deals and licensing rights weren’t sorted to compensate the artists or rightsholder affiliated with the songs that were being sold. This led to a huge amount of backlash and legal issues for the platform, with what will most likely be a death sentence for the company.
For some, these situations represent many of the concerns with blockchain technology, while for others, it represents why this technology is needed now more than ever. While the Web3 music world is today viewed by many as the Wild West, adhering to regulations that respect creators and right holders will be key to driving more mainstream
“innovations aren’t always well received right out of the gate”
Over the years music and technology have had a relationship filled with ups and downs. From the emergence and popularity of new instruments and recording tools, to the now-common occurrence of having 80+ million songs accessible on a device in your pocket, we’ve seen many of these trends lead to sonic innovations and broader audiences for artists. These innovations aren’t always well received right out of the gate, and in some cases they push the limits of intellectual property laws. Look no further than Bob Dylan going electric at Newport Folk Festival or Metallica vs. Napster – both prime examples of this potential tension. To a certain extent, issues like what we saw with Cent and HitPiece are unfortunately to be expected.
“much of what we’re seeing is again advancing music in ways that benefit creators”
Looking at the current music landscape, the technological trends shaping the industry are rooted in blockchain. From new fan engagement strategies to transparent rights tracking and shared ownership, much of what we’re seeing is again advancing music in ways that benefit creators. The idea of streaming was a pipedream 20 years ago — and blockchain has the potential to similarly revolutionize the music industry over the next decade. But while the potential for these wonderful advancements exists, there still needs to be a rulebook.
For the naysayers of crypto, much of their skepticism comes from key moments around illegal activity tied to the use of cryptocurrency. For an unfortunately significant amount of the population, bitcoin is synonymous with “Silk Road” and “ransom-ware.” For those who believe in the promise of these tools and are fighting for the future, it’s incredibly important to understand that the rules of the real world do in fact apply in the world of Web3. This is something that we need to advocate for and work together to enforce. By doing so, we increase adoption while advancing society.
Web3, NFTs and Intellectual Property
One of the most important areas where this holds true is around intellectual property. With more and more people innovating in the Web3 space comes a new class of bad actors who are trying to exploit creators and rights holders. Recently, NFT platform OpenSea ran into some issues with their free minting tool and noted (per their Twitter) that over 80% of the NFT items created with it were plagiarized works, spam, or fake collections. A quick peruse through popular platforms reveals a plethora of IP issues ranging from artist name, image and likeness (NIL) issues, to copyright infringement, and instances of audio and visual infringement.
“vet the foundation and communities”
As artists and their teams begin exploration into this space, it’s important to vet the foundation and communities that exist where they want to gather your fanbase. Look deep into the history of these platforms and how they address (and respect) the rights of other creators. In a world where the phrase “supporting artists” seems to be tossed around so freely, stop and ask what that really means. If that platform does anything that runs afoul of regulatory requirements, think about the impact that might have on your community.
As we see more advances in the Web3 space and increased adoption from consumers, we’ll likely encounter more situations where artists and rights holders are implicated by those that don’t respect the laws of intellectual property. And for those who so deeply care about the future of this space, don’t jeopardize the long term benefits by taking questionable actions today. With time and with a united community, we all might just make it.