Musicians have always gotten a large slice of popularity but a very thin helping of the profits from their albums and songs. Record labels who owned the rights to the music could license it out and line their pockets, while artists received very little in return. Often, royalties were also divided unequally between the labels and the artist. NFT record labels could change this narrative.
What is a record label?
Record labels are companies, large or small, that manufacture, distribute, and promote the recordings of affiliated musicians. Essentially, record labels work to sell the brand of the artist and the products they create. There are various different departments within record labels that work together to best sell their products and artists.
In the past few decades, the music industry has entirely been consolidated into a few major record labels, like Sony Music and Universal records. This consolidation was to the extent that no new musicians could make their mark in the industry without the backing of a major label. These large entities could also veto an artist out of the public domain because they controlled distribution. Make no mistake, artists got rich through record labels, but the labels themselves got a lot richer because of the artists.
This all changed once streaming giants entered the picture. With the likes of Spotify and Amazon music coming in, artists could directly upload their work and get paid per stream, but they had to produce the record themselves, which was still a significant barrier to entry.
Enter NFT labels
Musicians in the NFT world are able to get a certificate of ownership for a unique piece of music that can then be sold on to another outlet. But, it's worth noting that the owner of the NFT has the exclusive right to control how the work is used.
In the music sphere, an NFT grants the owner the right to music, album art or videos created to go alongside music, as well as exclusive access to content.Now, artists can syndicate, sell and build a community around their music, all while holding onto a large slice of the revenue.
On the other hand, NFT record labels transfer ownership of the songs and albums to the artists. They only help with operational requirements such as minting the NFT, paying the gas fee, listing the music NFTs on marketplaces, marketing the NFT collection, etc. In exchange, they charge a small fee for their services. This ensures the artist-label relationship remains mutually beneficial.
Changes that NFT record labels will bring
First, the barriers to entry will be shot down as the NFT record label will take care of all the production costs. At the same time, the outcome (a song or album) is minted as an NFT on the blockchain. This ensures that artists do not have to worry about their music rights being stolen or misappropriated.
NFT record labels can also bring a sense of community to the music scene. This can be done through music DAOs where the fan community is given priority. These platforms could allow fans to vote on the album artwork, choose which tracks go into the album, decide the artwork for each single and more.
They could affect a change in the way traditional record labels function. This is because, after the introduction of NFT record labels, conventional record labels will not become obsolete. Instead, they would have to mend their ways to suit the Web 3 generation, ensuring a fairer and more democratic music industry.
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