Open Questions re: The Future of Music NFTs

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December 3rd, 2021

Earlier this year I wrote an essay called Canons, Collectible and Copies. It outlined a web3 native “release mix” for songs, experimenting with the idea that the future of music would simultaneously embrace these three form factors:

CANON → Single edition. The digital master of the song. The internet’s source file.

COLLECTIBLES → Multiple editions. Collectible NFTs that allow superfans and/or regularfans to express their love for the song and opt into an ownership orbit ever closer to the artist(s).

COPIES → Infinite edition. This is essentially what we have today: streaming services create infinite copies of the song for all to listen to.

I explored this framework at the time with the release of my album Textures Of A Long Forgotten Assumption.

Since then, I would say the Canon NFT is the one that has found some success in the music x web3 space — at least in my little corner of the Internet. Catalog, a music NFT minting platform and marketplace that allows artists to mint and sell 1/1 NFT records, recently surpassed $1m USD in sales — 100% of which flows to artists.

More music NFT collectors are entering the space, and Catalog has been a home to many of them as they begin to see the value in collecting the 1-of-1 NFT for music they love.

Naturally, this isn’t as accessible to everyone. Many would-be collectors are simply priced out of the 1/1 NFT game on Catalog. Artists rightfully see a lot of value in their music, and thus are pricing their 1/1s to reflect that.

Enter in Collectibles. While there have been some music NFT collectible projects, I’d argue this layer has not yet been unlocked for artists. One notable platform is on its way called Sound. They intend to experiment with minting music NFTs as multi-edition releases, allowing a small community of collectors to form around a specific song. This will probably give artists a space to price their NFTs at a much more accessible rate.

Lastly there are Copies. Thus far, web2 has this area on lock. That said, we recently started our own little experiment in that area…

A few months ago, some of Songcamp & Catalog family and I built BPM — a web3 music bot that streams music from Catalog into Discord calls. Much like any discord bot or streaming platform, these songs can be “copied” an infinite number of times for free.

You could argue that NFTs allow this infinite copies business to go down in a musch more fair and valuable way, by transcending the supposed conflict between scarcity and abundance. Infinite copies of the song can flow freely and boundlessly throughout the Internet, all the while the song’s cultural value flows back to the 1-of-1 NFT record.

That’s all well and good. But is it enough?

A Million Open Questions For Ya..

We are at the very beginning of music NFTs. We know so very little about them. Here I lay before you approximately 1 million questions, related to what I’ve outlined above, regarding their future and how we define, value and use them...

So where were we? Ah yes… The single edition may in fact absorb the cultural value of the song, but is that value realizable by the artist and/or collector? We are yet to see much of a secondary market open up around 1-of-1 music NFTs. Even if one does open up over time, will it be liquid enough to flow sufficient value back to the artist (through a creator share) that reflects the relative impact that song’s copies is having on people?

I lean towards no. Thus we need other routes toward value realization.

Ok.. so should we monetize the copies? By that I mean, should we create consumption fee models that map to the current paradigm of streaming?

Here I get stuck. On one hand, I think yes.. we should naturally flow value to music as it gets consumed and thus arguably grows its cultural impact. But the other part of me says helllll no we shouldn’t monetize consumption. It is consumption fee models that create massive constraints about how and where music can travel.

This is the exact problem with web2 that led us to build BPM. Our inspiration for the bot came off the heels of YouTube sending legal notices to the top music bots on Discord to immediately stop their service. These bots were pulling songs from YouTube and Spotify without a license to do so, and YouTube wasn’t having it.

This is a problem I don’t think we should recreate in web3. Information wants to be free, music wants to be boundless across the Internet. By creating consumption fee models, we naturally create the need to police consumption.

Alright, so what else can we do to realize a song’s value? Well, we can create ample opportunities for people to express their love and support for a song and artist. Up until now, we’ve had Patreon and some features on Twitch to do this. But what if this was baked into listening experiences all over the place? Tip jars, collectible NFTs, token-gated engagement mechanics — the design space in web3 for making people feel like they’ve received something super valuable, when they’ve sacrificed something super valuable (ie money, tokens) is huge. It is the space in which Sound.xyz is playing, in the form of Collectibles. It is also a space that we wish to dabble in with BPM bot, which is naturally bringing up more questions. Read on…

Alright so hear me out. To build BPM we ran a small crowdfund on Mirror and issued $BPM tokens to everyone who supported the project. What is $BPM for, you ask? Well, it gets you into Club BPM — the hottest nightclub on Discord. Our plan with Club BPM is to create a token-gated voice channel on the BPM server in which we throw amazing virtual events and premiere new features of the BPM bot.

For our first official party at Club BPM, the idea is to sell ticket NFTs to those who do not yet hold any $BPM — granting them access to this party. The revenue off of those ticket sales would flow to the DJs, event coordinators and.. well… herein lies our next big question.

We want the remaining proceeds to flow directly to the ETH addresses of the artists and potentially collectors of those song’s NFTs. The question is: to whom and how much should flow to the artist and to the collector.

To gauge people’s thoughts on this, I took to Twitter:

At first, I agreed with the crowd: something around 50/50, or mapping to the creator share. But the more I thought about it, the more I felt the right answer was that we should default to paying 100% to the artist.

To answer this question, we must first ask ourselves another question… What does the Catalog 1-of-1 NFT represent?

Here too I have conflicting thoughts…

On the one hand, I believe in a future where a 1-of-1 NFT acts as the digital master for a song. It is the song’s window unto the Internet, and all economics would flow to that NFT. In this way, the 1-of-1 acts like a web3 music distributor that the artist themselves (or representative thereof) controls. All value and rights can plug in to this NFT, and the artist can have the control to modulate the rights, fees, permissions related to their creative work.

It would also make sense that this NFT and the value flowing to it can be sold, transferred, fractionalized, co-owned etc.

On the other hand, we are creating 1-of-1 NFTs of our songs right now on Catalog. But we are not explicitly agreeing to transfer any rights related to that song in that sale. This is understood by all parties (or should be) — that unless otherwise specified, master and publishing rights and royalties do not flow through this NFT.

But what about the web3 native royalties that do not exist yet? Are those baked into the Catalog NFT, or not? For instance, when we stream music from Catalog into Discord calls via the BPM bot, are we playing the NFT? Is the NFT the song? Or is it a 1-of-1 collectible that points to the song?

In my view, there is a place for both of these to exist. But I’m not sure they should be wrapped into the same thing. Artists should, by default, retain all rights to future economic layers of their work, even if those layers do not exist yet. Then again, it would make sense for collectors of Catalog 1-of-1s to be rewarded for their early conviction as well. This sort of curation deserves value realization as well, no?

Another fundamental question pops up here: As we build these web3 native economic layers for music, should they be built with the intention of monetizing the creative work for the benefit of collectors or artists or both?

If we look to visual art NFTs, the secondary market is by far the main source of value realization for collectors. Will this be the case in the future? Will there be more routes to liquid value without having to sell the piece? When galleries in virtual land rent an NFT to display it during an exhibition, does any of that flow to the artist? Or only the collector? Are music NFTs fundamentally different? Naturally, music has far more economics around its consumption and engagement than most visual art does.

Anyway, this is me throwing a lot of what I’m thinking about your way so we can have some public convos around this stuff. I believe in the potential for canons, collectibles and copies of music to have connective tissue to one another in the future of web3. So much potential can be unlocked from such architecture. But we’ve got a lot to figure out on our way to that world.

Let’s talk!

A lil summary of some of the open questions mentioned above (there were a lot more lolllll):

  • Is the cultural value of music NFTs realizable by the artist and/or collector outside of a secondary market?
  • Is it worth creating new consumption fee models in web3 that allow artists to realize more value for their work, or are those the very models we need to move away from?
  • Be it consumption or engagement fees via infinite copies or finite collectibles of the song, should all or any of those royalties flow back to the 1-of-1 NFT? To the collector, to the artist, to both?
  • Is the 1-of-1 NFT the source file of that song? Is it the song itself? Or is it a 1-of-1 “trading card” representing the song?
  • Should these different layers — canon, collectibles, copies — have connective tissue?
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