Visual art is the first thing that comes into mind when people think of NFTs. From Beeple’s USD 69 million digital collage to Bored Apes Yacht Club collection, visual arts are the dominant face for NFTs. The fact that digital art is easy to view and replicate has created some confusion. So, what exactly are clients buying as NFTs?
The idea that this is my image from now and I have it in my computer photo collection looks so obvious. According to Justin Blau, a DJ and NFT art collector, the other person looks sort of foolish when there is a real, true owner in the Web3 community.
Blau, who goes by the name 3LAU, is the co-founder of Royal, a startup that allows people to invest in tokens via its marketplace. Then, they are able to start earning streaming royalties on their favorite songs. Royal was able to raise USD 55 million in Series A round from Andressen Horowitz’s crypto investment in November 2021. This funding came only months after getting another USD 16 million in seed funding through Founders Fund and Paradigm.
Value from Different Types of NFTs
NFTs on Royal are the representation of two things: intrinsic value and emotional value. Therefore, Blau argues that NFTs have a bigger use case beyond the art world but is unsure about the same for other media.
Take the example of music. Since it is invisible, music NFTs would not apply the same way we do NFTs for visual artwork. Music is not commoditized, as it started with CDs and then shifted to streaming. So, music collection is theoretically the same for all after paying a subscription.
So, how do you know if a piece of music makes sense? Blau suggests that if a behavior is available in reality and is possible to replicate; it is possible to transform that into an NFT. If the behavior of the media is non-existent, perhaps it is not the best option for manifestation as NFT.
According to Blau, the music example is interesting because it does not appear to make sense to collect audio for thousands of dollars. It is because of this that his company, Royal, opted to apply NFTs to copyrighted songs. Here, what is scarce is the copyright of the copyrighted song as opposed to audio that any user can stream.
Working with Middlemen Disadvantages Music Artists
Although the biggest chunk of music income, about 84%, comes from streaming, artists get so little of it. The problem with this is that middlemen, such as labels, are quick to take their cut, which is so huge.
Because he is independent, Blau gave the example of his “Is It Love” song. He turned down an offer that would have earned him USD 15,000 for 50% ownership. However, the song ended up generating more than USD 700,000 in revenue.
Royal will ultimately allow crypto holders to engage directly with artists and get exclusive perks, like gated shows, added Blau.