The music industry is undergoing a significant transformation with the increasing popularity of streaming services, altering the way music is enjoyed. Forbes data from earlier this year reveals that music streaming now contributes to 84% of total music industry revenue, surpassing $17 billion annually. However, beyond streaming, digital tools like blockchain and tokenization from Web3 are slowly reshaping the landscape for artists, fans, and distributors.
Sergio Mottola, CEO of Music Protocol and the Web3 Music Association, envisions a future where music catalogs are tokenized, introducing a new era for the industry. Speaking at the Proof of Talk 2024 conference in Paris, Mottola discussed how blockchain technology can revolutionize music distribution, intellectual property management, and revenue generation.
Mottola highlighted the challenges faced by artists and industry stakeholders in monetizing their work within the current streaming-focused model. He emphasized the potential of Web3 tools like non-fungible tokens (NFTs) to engage fans with new releases and exclusive content.
By tokenizing music intellectual property, major labels like Universal Music, Warner Music, and Sony can digitize and distribute catalogs on a blockchain, enabling users to purchase licenses and leverage IP for creative projects. This move could have a significant impact on virtual environments like the metaverse, where music is currently inaccessible.
The process of music catalog tokenization involves bringing IP onchain, issuing licenses for purchase, and allowing users to create unique experiences with the music. This approach not only enhances accessibility to music but also establishes a framework for data availability and revenue generation. Additionally, it offers better capital efficiency, liquidity, and transparent rights tracking in the industry.
Mottola acknowledged that various music applications have different visions for the industry’s future but emphasized the potential of tokenizing music royalties as NFTs to support artists like the next Taylor Swift.