The music industry is currently undergoing a significant transformation with the increasing popularity of streaming services revolutionizing the way music is consumed.
Forbes data from earlier this year revealed that music streaming now contributes to 84% of the total music industry revenue, amounting to over $17 billion annually. However, the digital landscape is not limited to streaming alone. Web3 tools like blockchain and tokenization are gradually reshaping opportunities for artists, fans, and distributors.
Sergio Mottola, the CEO of Music Protocol and the Web3 Music Association, envisions a future where music catalogs are tokenized, ushering in a new era for the industry. Speaking at the Proof of Talk 2024 conference in Paris, Mottola explained how blockchain technology has the potential to transform music distribution, intellectual property management, and revenue generation.
In a world where streaming is dominant, Mottola raised the question of how to incentivize people to purchase music. The current model heavily relies on streaming, posing challenges for artists and industry stakeholders in monetizing their work effectively. However, tools like non-fungible tokens (NFTs) within the Web3 ecosystem offer new avenues for artists to release exclusive content and engage with their fans in innovative ways.
Mottola emphasized the importance of bringing music onto the blockchain to address core issues related to music distribution and IP monetization. By tokenizing music intellectual property, major industry players like Universal Music, Warner Music, and Sony can create a digital infrastructure for users to purchase licenses and utilize IP for creative projects.
The potential impact of tokenizing music IP extends to virtual environments like the metaverse, where music integration is largely absent. By making music catalogs available in Web3, developers can enhance user experiences and create new revenue streams within virtual worlds. Collaborations with metaverse developers in the Web3 space, such as Animoca Brands and Mythical Games, are envisioned to drive adoption of these innovative practices.
As Music Protocol gears up to launch an open innovation campaign in July, the process of music catalog tokenization involves on-chain identification of IP, issuance of licenses for purchase, and enabling users to create unique experiences with the music. This approach not only enhances music accessibility but also establishes a framework for data availability and revenue generation.
The integration of artificial intelligence into the music industry presents challenges in terms of copyright violations. Mottola believes that blockchain technology and digital assets can offer better capital efficiency, liquidity, and transparent rights management in the industry.
While different music applications may have varying visions for the future of the industry, Mottola believes that tokenizing music royalties as NFTs could potentially benefit artists like the next Taylor Swift.