Investors Should Notice that NFTs are Reshaping the Music Industry

Investors Should Notice that NFTs are Reshaping the Music Industry

Date, Prasantik

At Konzortia Capital, we want you to enhance your success rate and improve your operational efficiency by getting to good, matched deals faster! Follow us on Social Media Twitter Link as we provide useful research and information for Investors. We also recommend that you sign up to our InvestHub Deal Sourcing Platform so that you can find a Deal Flow with the best fit for your investment criteria.?

The NFT Market is Exploding

NFTs are essentially digital collectibles called “non-fungible tokens”. It is important to note that each token is theoretically unique, whereas cryptocurrencies such as Bitcoin and Ethereum are known to be “fungible”— as interchangeable as paper money. NFTs have unique metadata which separates them from fungible mechanisms. The ownership is recorded on the blockchain and can be transferred to a different person, allowing the NFTs to be traded and sold. In layman's terms, NFTs are assets that are stored digitally. NFTs hold the power to represent anything, including: videos, images, physical items like a plot of land, and songs, among a great variety of other things.?

Across the globe, people have gone absurdly crazy over these tokens and as a result the NFT market has quickly grown and has now surpassed a worth of $25 billion in 2021 according to Forbes. Just the same, tighten your safety belts as a new report by Grand View Research is predicting that the NFT Market will explode beyond the $211 billion threshold by 2030. This is astounding! Are you shocked? That growth is propelled by a CAGR of 33.9% projected from 2022 to 2030. Is this topic now catching your interest?

As an example, Bored Ape Yacht Club is a non-fungible token collection built on the Ethereum blockchain. The collection features profile pictures of cartoon apes that are generated by an algorithm. As impossible as it seems, these NFTs were valued at approximately $200 at launch and now they are sold for over half a million each. Sure… The Bored Ape Yacht Club and NFTs, in general, had a bad week, but market adjustments are part of the game. While the total global capitalization of cryptocurrency is valued at $1.76 trillion, NFTs are still at a nascent stage with plenty of room for future growth.

NFT Market Demographics

At this time, it seems that NFTs are most popular with men more so than women following the existing trends in physical collectibles. In addition, it is apparent that Millennials are the most active collecting NFTs, again similar to trends in collectibles. However, what is most interesting is that in the physical space Millennials are collecting at a greater rate than other segments and are collecting more NFTs by 3x more than the next group which is Gen X.?Baby Boomers, Gen Z, and women across the board have not jumped on the NFT wave as of the moment.

?

The following chart shows some insightful information as to where the growing interest is for NFTs. Surprisingly, NFTs from musical artists across all age groups are at the top of the chart… No pun intended! Interestingly, digital memorabilia from a concert attended is also a top performing category. In addition, there is also interest in NFTs of concert tickets and album covers.?

?

How are NFTs Reshaping the music industry?

Kristin Robinson, a music publishing reporter for Billboard Magazine, says, “Technology has always been a really big part of the music business, and has really dictated how we make music, how we consume music.” As a matter of fact, Forbes Magazine believes that the transformative power of NFTs is already reshaping the future of music. Songs, albums, music, lyrics, and soundbites can all be NFTs. Snoop Dogg announced that his Death Row Records label will be an NFT label.Grimes, Shawn Mendes, The Weekend and so many more artists have launched their own versions of NFTs.

More importantly, NFTs have been evolving quickly. Now there are Smart NFTs that can support multiple formats, music related NFTs can be displayed differently depending on how they are accessed, and an audio NFT can include a PDF as a resource containing lyrics to a song or a special message from a musician.

Interestingly, upgradeable NFTs can evolve and mutate over time which empowers artists to collaborate and expand on existing work. As an example, a musician can release a soundtrack, a chorus, or a bridge that fans and collaborators can legally build on working on new versions and remixes. With upgradeable NFTs, the original creator can retain control of the spin-off creation and profit from it.?This truly expands on the music industry’s trend of collaborative songs and albums.

Furthermore, NFTs allow fans to capitalize on new opportunities to develop deeper connections to their favorite musicians… and by creating limited editions, artists can play with the time-tested appeals to scarcity to drive valuation. One example of tokenization of collectibles related to music is CryptoPunks. These are a set of 10,000 algorithmically generated pixelated cartoon characters, some of which have rare lipstick or mohawks that somehow make them more valuable—and even the most ordinary CryptoPunk is still trading for about $100,000 these days. In addition, consider Haleek Maul’s annual earnings on Spotify of $178 versus his earnings from selling just five collectibles at $226,800. There are some definite advantages to NFTs for artists / entertainers, and these will cause the Music Industry to keep shifting in that direction.

??

Gripes and Challenges of the Music Industry??

The major problem with the music industry today is that artists are not satisfied with their compensation. According to Fortune Magazine, the typical total revenue split is 50% for the entertainer and the rest shared among agents, lawyers, and distributors. The reality is even grimmer when it comes to musicians who distribute their content via streaming services. The advent of technology has forced music to become available immediately and streamed instantly.?

Unfortunately, artists are only paid somewhere between $0.003 - $0.005 per stream, meaning that the song needs to be streamed a million times to make a living. Most of Spotify's top 0.8% of artists earn less than $50,000 in streaming revenue. According to the Recording Industry Association of America (RIAA) U.S. music streaming statistics (2021), music streaming accounted for 84% of total U.S. music industry revenues. Making matters even worse is 90% of that revenue goes to the top 1% of artists.

Conclusion

Some people call NFTs a hoax, others call it hype, but it does not matter what they call them because people are investing millions of dollars into this technology believing that NFTs are here to stay. It is still very early in the game, and there is a lot of risk. Nevertheless, the rewards can be interesting. As such, it may be of benefit to evaluate an NFT opportunity, especially in the music industry.?

About Konzortia

?

Konzortia Capital is a FinTech consortium providing VC/PE deal-sourcing for Investors and funding opportunities for Start-Ups. As part of our value proposition, we promise to Source - Match – Exit. Konzortia provides deal sourcing through our Distributed Ledger Technologies (DLT) and Intellectual Property (IP). The recent acquisition of Paraforge allows Konzortia Capital to provide differentiated services and greater operational efficiency through its InvestHub platform for the needs of the Deal Flow sector.??

Konzortia Capital’s solutions reduce the risk for investors by providing significant vetting thus eliminating much of the uncertainty of non-operational early-stage companies, combined with the assurance of market fit, but still within a very modest valuation giving investors the possibility of experiencing high growth.?

About InvestHub

InvestHub is Konzortia Capital’s platform for Source – Match – Exit. The platform leverages Paraforge, an applied learning artificial intelligence technology that perfectly marries large-volume data aggregation while leveraging machine learning (ML) and artificial intelligence (AI) for investors sourcing deals and Start-Ups interested in raising capital and achieving liquidity sourcing.

For more information, please contact [email protected] or visit our website at https://konzortia.capital/.