The music industry is undergoing a significant transformation as streaming services continue to reshape how music is enjoyed by audiences. Forbes data reveals that streaming now makes up 84% of total music industry revenue, exceeding $17 billion annually. Yet, the digital landscape offers more than just streaming services for the music industry. Web3 technologies like blockchain and tokenization are slowly revolutionizing opportunities for artists, fans, and distributors alike.
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. In an interview at the Proof of Talk 2024 conference in Paris, Mottola explained how blockchain technology can transform music distribution, intellectual property management, and revenue generation.
The rise of streaming poses a dilemma for the industry as Mottola questions how to encourage people to purchase music in a streaming-dominated market. Traditional models like Patreon offer additional revenue streams, but they fail to address the core issues of music distribution and intellectual property monetization. Mottola sees the solution in bringing music onto the blockchain through tokenization.
Tokenizing music intellectual property allows major industry players like Universal Music, Warner Music, and Sony to digitize and distribute catalogs on a blockchain, enabling users to buy licenses and utilize intellectual property for creative projects. This move could have a profound impact on virtual environments like the metaverse, enhancing user experiences and creating new revenue streams.
Mottola highlighted potential collaborations with metaverse developers in the Web3 space, emphasizing the importance of case studies to drive total adoption of the tokenization model. Music Protocol is set to launch an open innovation campaign in July, paving the way for real-world asset tokenization and licensing in 2024.
The process of music catalog tokenization involves identifying intellectual property on the blockchain, issuing licenses for purchase, and empowering users to create unique music experiences. This approach not only enhances music accessibility but also provides a framework for data availability and revenue generation.
Artificial intelligence also plays a significant role in the music industry’s future, presenting challenges related to copyright violations. Mottola believes blockchain technology and digital assets can improve capital efficiency, liquidity, and rights management in the industry.
While other music applications may have different visions for the industry’s future, Mottola is confident that tokenizing music royalties as NFTs could revolutionize the industry, potentially benefiting artists like the next Taylor Swift.