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. In this article, we learn about NFT record labels and their function in an artist-first world.
What is a record label?
Record labels enable the production and distribution of music to the masses. They do this by discovering artists, funding their music, producing videos, organising concerts, and more. All this is done to bring popularity to the artist and ultimately boost record sales. Record sales refer to the revenue generated by the music in its various forms, not the literal sale of records.
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
NFT record labels function like their traditional counterparts. The only difference is that they produce the final outcome, a song or an album, as an NFT which is attributed entirely to the artist. This allows musicians to have complete ownership of their music and its respective rights. Now, artists can syndicate, sell and build a community around their music, all while holding onto a large slice of the revenue.
Artists have already used NFTs to sell their music. For instance, EDM artist and producer 3LAU recently raked in over $11 million from his NFT album sale, with one song from the album selling for $3.6 million. Therefore, NFTs have already proven to be a powerful tool for artists, and NFT record labels will just throw in the necessary guidance and technical knowledge to make things smoother for upcoming artists.
Traditional record labels can own the artist’s music for the rest of their lives, as highlighted by the case of Taylor Swift and Scooter Braun. The latter now owns Swift’s first record label, Big Machine, and makes a profit every time a fan streams or downloads songs produced by her then record label.
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.
