Musicians and record labels have seen the industry change from physical to non-physical streaming over recent years. Non-fungible tokens (NFTs) are one of those bridges between the physical and non-physical solutions. They have become extremely popular in the world of blockchain, but not everyone understands why they are so useful. Let’s take a closer look at how NFTs can help labels keep better tabs on their inventory and their returns.
What is a Non-Fungible Token?
NFTs are basically digital assets that can’t be exchanged or transferred between different owners. This makes them different from fungible assets, like conventional cryptocurrencies, which can be exchanged and transferred as if they were cash. Traditionally, supply chain management has relied on RFID tags and physical inventory lockups. Today, more companies are turning to blockchain to keep track of their inventory and facilitate end-to-end transparency. NFTs are a key part of this process. NFTs can be programmed to represent your products and other assets. For example, a pair of sneakers could become a unique digital token on the blockchain that’s unique to that particular pair. You can then track that pair of sneakers as it moves through the supply chain, from manufacturer to retail store.
Why Have Labels Turned to NFTs?
The above points all highlight the obvious supply chain benefits of blockchain and NFTs. However, there are three key ways that NFTs can help your label improve revenues. NFTs with smart contracts auto distribute publishing - Record labels make money from publishing rights when one of their artists’ songs gets played on the radio or streamed on a service like Spotify. However, record labels have a notoriously bad reputation for paying out their artists on time and in full. NFTs can help you automate the payments. NFTs allow your fans to own publishing rights and invest in your career - One of the most promising applications of blockchain is allowing artists to sell equity in their future earnings. For example, a fan buys a token that represents 5% of your future earnings. The token’s value would then increase or decrease depending on your success.
NFTs can help record labels improve inventory tracking and transparency throughout the supply chain. More importantly, they can help labels increase their revenue with automated publishing rights and equity token sales. If you run a record label and have not explored the benefits of NFTs, you may be missing out on revenue opportunities.