This week in Explizik, by Pierre Niboyet
I would like to talk to you about a topic that has come up with insistence in recent weeks or even months: Non Fungible Token or NFT. What is it ? How does it work? What are the benefits for the music industry? We will try to answer all these questions.
If you do not yet know what a non-fungible token is, listen for it I will explain.
Let us first explain what a token is.
It is a cryptographic token, also known as an authentication token.
This token indicates a value element in Blockchain.
It is a kind of cryptocurrency.
This token is non-fungible, which means it can not be replaced. Can not be replaced by another item of the same kind.
I imagine it remains quite abstract for you.
I read a top article from Consequence of Sound this week that made an analogy for understanding what an NFT is.
Consequence of Sound compares this type of cryptocurrency, which is NFTs, to a box.
A very nice box that is completely safe. It can not be forced or broken. Information is stored inside this box.
So the boxes can contain everything you want to put in them: money, art, music, contracts, etc … interchangeable or non-fungible items.
Think of Bitcoins, they are boxes that contain money. They are therefore fungible tokens. They can actually be easily replaced or replaced.
Conversely, NFTs are not easily interchangeable or replaceable.
Consequence of Sound takes the example of the Mona Lisa.
There is only one instance of the array that can never be duplicated. Some may try to repaint it, copy it or photograph it, but they will never get the same result as the original.
Moreover, the mere fact of copying it or taking a picture of it does not diminish its value.
This painting is unique and that is what makes it so interesting and valuable.
Well, NFTs are like the Mona Lisa. And these boxes can hold all sorts of things.
The music industry recognized the opportunity and began using this technology to create digital merch, art or music for the purpose of selling them.
Why have you positioned yourself on this technology?
For the guarantees it provides in terms of security.
In the fully decentralized blockchain system.
In 2008, Bitcoin was created, which was a revolution in finance as it eliminated intermediaries in the financial world.
In fact, individuals in a traditional system rely on banks and states to protect their transactions. This has a cost. In addition, during financial crises, you are threatened at the institutions that your accounts lack.
In Blockchain, the technology used in Bitcoin, transactions are protected by consecutive boxes that form an information chain. It is a kind of public register that puts all the boxes and the information they contain end to end. Because the registry is public, the history of transactions, owners and sellers and all other information is public.
I hope you now understand how it works in general.
I told you these NFTs were selling.
So how does it work?
There are markets for NFT.
Most of these markets operate according to the auction model. More rarely, the price is fixed.
Most of these markets do not accept traditional means of payment and require exchanges to be made in cryptocurrencies.
The growth figures circulating are staggering, the market for musical NFT has been multiplied by 150 in the last 6 months.
The attraction for NFTs is such that they take very different forms.
We exchange concert tickets, whether they are physical or virtual, but also beatmakers’ market samples and artists sell excerpts from unreleased songs or live albums.
This is the case with Kings Of Leon, who last week became the first group to release an album in the form of an NFT. With the album you had exclusive artwork as well as a limited edition vinyl version.
But also Mike Shinoda from Linkin Park, who auctioned off a 37-second teaser of an unreleased piece accompanied by animation and raised $ 30,000 in the process.
Producers and beatmakers also see the benefit of this technology.
This is the case with Illming, who marketed a beat in NFT.
Of course, everyone could listen to it, but the rights and the opportunity to use it only went to the highest bidder.
If you think about it, NFTs could be a much easier way to clear music than it is now.
Many other artists are interested in it and have partnered with digital creation studios to create exclusive works of art intended to become NFTs.
We are in full swing with the subject, and before getting started it is necessary to have the pros and cons of NFTs in mind.
The benefits are many:
– Create an additional source of income for artists.
On the intellectual property side, Blockchain in general and NFTs in particular can be a solution that revolutionizes the acquisition of music rights.
– Selling tickets, it is a completely safe solution. Given the amount of existing scams, this would be a big step forward.
But there are also disadvantages, and they are not insignificant:
– NFT assumes a strong notoriety of the artist or at least a strong hype. If you are an artist in development, you are not sure if this is effective for you.
– There is a great risk that the rarity is artificial. For example, if you are selling tickets for a physical concert with reduced track gauge, the scarcity is very real. On the other hand, if you artificially restrict access to a virtual concert to increase the value of tickets, then you are creating scarcity. You are somehow cheating your fans.
– There is also a great risk of a speculative bubble, as the enthusiasm for the subject is turning into hysteria.
– Finally, and to complete what I said about the benefits of intellectual property, the complexity and differences between the rules that apply worldwide will make this process complicated and potentially fallible in the beginning.
NFT is therefore a strong opportunity that deserves to be observed and tested. It will suit some more than others and will have its share of disappointed people and its share of followers.
Come on, it’s all for this week As usual, if you have not done so yet, sign up for the newsletter. To support me, give me 5 stars on Apple and subscribe wherever you listen to us.