Music industry

The Potential of NFTs for the Music Industry – Fin Tech

The music industry has undergone massive changes over the past twenty years. With streaming services overtaking CDs, music became publicly available for the price of a monthly subscription, which completely changed the way musicians made money from their music. When COVID-19 caused hard times for musicians, with almost all tours canceled or at limited capacity, the use of cryptocurrency in this area offered a welcome and rapidly growing opportunity.

However, while we are now beginning to see the potential of NFTs to shape the future of the music industry, the use of NFTs in this context is still far from disrupting the current system of art monetization.


In a nutshell, NFTs, or non-fungible tokens, are digital assets that are stored on a blockchain. Each NFT is unique (i.e. non-fungible) and cannot be replicated, making NFTs ideal for storing digital artwork, video, and music. Because NFTs create “original” copies of these works, they also produce rarity and value, just as physical versions do.1

That being said, when an artist creates – or “makes” – an NFT, they are writing the underlying smart contract code that governs the qualities of the NFT and adding those qualities to the relevant blockchain on which the NFT is run. The smart contract (which is essentially software code) linked to a specific NFT also indicates whether the owner of the NFT owns the copyright in the underlying work, i.e. whether it allows exploitation unlimited commercial use of the work underlying the NFT.2

To this end, it is important to understand that when someone purchases an NFT, they have not automatically purchased the intellectual property rights underlying the content linked to that NFT. The new owner of an NFT will only acquire the intellectual property rights to the underlying asset if: (I) the author of the underlying work has duly assigned all exploitation rights exclusively to the subject hitting the NFT (if not the same person) and (ii), the smart contract attached to the NFT provides that all the exploitation rights of the work are transferred with the NFT.


Musicians are exploiting NFT-based technology in a variety of ways. For example, what makes NFT technology very interesting for musicians is the fact that it can be encoded in a way that also allows royalties to be paid to the creator each time an item is resold on a marketplace. secondary.

Musicians mine NFTs in two main ways depending on whether or not the economic exploitation rights of the tracks underlying the NFTs are transferred to the buyers of the unique tokens.

Non-fungible music token as a utility

To date, the most common use of NFTs in this industry is simply to embed a certain piece of content – ​​an audio or video file, album cover, signed merchandise, or other items – into a digital token. unique non-fungible that can then be sold on a blockchain-based marketplace. This way, unless otherwise provided in the smart contract, the owner of the NFT has ownership of the digital token and the right to reproduce it for personal use only, as if you owned a particular edition of a vinyl album. These NFTs can serve as a new form of collectibles, such as those that fans can purchase at a concert to remember their experience or show their appreciation of a musician.

For example, rock band Kings of Leon’s latest album was released as a collection of NFTs.3 However, each owner of an NFT did not acquire intellectual property rights to the album. Thus, the owners of these unique tokens will not be allowed to commercially exploit the underlying tracks (for example, by issuing licenses for public reproduction or for advertisements); likewise, NFT owners won’t earn a dime from the royalties stemming from the album’s success on Spotify. Each will simply own an exclusive edition of the album that they can resell on the digital market at any time as a collector’s item.

Backstage passes and star encounters can also be attached to NFTs, which cannot be done with vinyl. Utility tokens, such as those offered by Spanish marketplace NFT Brots, can establish a deeper connection between musicians and fans, in addition to allowing musicians to earn secondary NFT sales.4

Distribution of music on the blockchain

Another fascinating aspect is the possibility of distributing music via blockchain platforms: this would really reshape the industry. The major music streaming platforms have hundreds of millions of monthly customers, but the money earned by musicians and producers remains marginal. Blockchain technology seems to have the potential to alleviate industry woes. Its proponents argue that decentralized technologies in music could represent a fair and transparent way to distribute music efficiently, streamline royalty payments, eliminate costly intermediaries, and establish a point of origin for music creators. music. In addition, fans and investors will be able to provide financial support to artists wishing to produce titles/albums. In exchange, investors will get shares of the royalties generated by these tracks.

However, this is easier said than done, given the way the mainstream music industry works and the number of parties and entities that may potentially have a copyright interest in a piece of music: authors of music and lyrics, musicians playing on the track, producers, label, etc. Under Italian law, each of them could be entitled to remuneration deriving from the communication to the public, the reproduction and other forms of exploitation of a musical project.

Thus, the development of an NFT-based contract transferring all or part of these rights requires reconciling all the different layers of rights related to a certain musical project and correctly transposing these different rights in the smart contract attached to the NFT containing a piece of music. Musicoin, for example, is a Hong Kong-based music streaming platform5 that supports the creation, consumption and distribution of music in a shared economy. The company’s blockchain platform enables seamless and secure peer-to-peer music transfer. Its coin, MUSIC, is a global currency that supports all trade surrounding music and music-related purchases. Musicoin eliminates the need for third parties, meaning 100% of all streaming revenue goes to the copyright holder. Another example is Authorized Bootleg Community Records, which creates a digital marketplace where users acquire commercial rights to various tracks when purchasing NFTs, allowing the owner to immediately obtain exclusive rights to use the music in their own projects. of social media. Similarly, Ditto Music launched the Bluebox suite aimed at migrating royalty payment processes to blockchain.6

Apparently, music collecting societies are also interested in the potential offered by blockchain technology. For example, in 2021 Italian collecting society SIAE announced the launch of “over 4 million NFTs on Algorand for over 95,000 creators”.seven This NFT project aims to “digitally represent the rights of the more than 95,000 authors who are members of the SIAE” by “digitizing these rights on a decentralized and transparent public blockchain”. This project looks promising on paper, but no further updates have been released since the first announcement.


Although NFTs are becoming a mainstream technology in the art industry, the uniquely complex nature of the music industry makes it difficult to get the most out of this technology when it comes to transferring and licensing. intellectual property rights. However, before long, new platforms will find solutions to all these legal complexities. Certainly, the drafting of the licenses in the smart contracts underlying these NFTs will require careful consideration and precise due diligence.


1. To learn more about NFTs, see Ethereum’s Introduction to NFTs at

2. See Ethereum’s introduction to smart contracts at

3. See

4. To learn more about Brots’ services, see

5. See

6. To learn more about this project, go to

7. Read the SIAE press release here: pi%C3%B9-di-4000000.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.