Have you ever heard of an NFT? Of course you have, everyone seems to be talking about them lately… but what actually is an NFT? More importantly, what good are they to songwriters, performers, and creators?
What could NFTs mean for the future of music production, distribution, and monetization? Thankfully for us all, we don’t have to ask ourselves these questions any longer.
Join us on this NFT and Blockchain episode of “The Mix”, as Cari and Silvia ask Stella every question you’ve ever wanted answered on the subject. From UI’s to blockchains, to why it should matter to you.
Silvia Olivieri: So what would be the process for an artist who wants to start selling their NFT? What would they do, what are the steps?
Cari Quoyeser: Hello and welcome! You're listening to The Mix, a Musixmatch PRO podcast hosted by yours truly, Cari Quoyeser, in Artist Community and Services.
Silvia Olivieri: Silvia Olivieri, in Publishing.
Stella Tavella: and Stella Tavella, in AI.
Cari Quoyeser: We’re here to bring you the scoop on what's new in music innovation to help you navigate the modern music industry. Enjoy!
Silvia Olivieri: Welcome to The Mix. We’re sure you’ve heard the buzz around NFTs, but do you understand them? In today’s episode, we will go step by step, first explaining some of the hot words we keep hearing around the subject, such as fungible, non fungible, blockchain, and decentralized web.
We'll then try to understand how the music industry is adapting to this new world and explore some of the ways artists can benefit from this new, exciting technology. You want to know more? Then stay tuned for The Mix.
Stella Tavella: Hello ladies, welcome to the metaverse! Oh, wow. Can we say this?
Cari Quoyeser: We can say metaverse, it’s ok.
Stella Tavella: So, today I will talk a little bit about NFTs. Have you heard of it?
Cari Quoyeser: Yes, it's been kind of a scary subject for me. I can tell people are getting really excited about it - I've really been earnestly trying to learn about it by myself for a while. And every time someone explains it to me, I’m like, “Ok, so what?”
Silvia Olivieri: So the real question is, have you heard of them and have you understood them, because that’s another question!
Stella Tavella: Yeah, the internet is exploding with all these concepts. I'll try to give you a little bit of an introduction of keywords and key concepts to elaborate on that.
So, an NFT is a nonfungible token. Maybe I should start from the concept of what a fungible token is.
Cari Quoyeser: Yeah, has anyone ever heard the word fungible before? It's a really funny word to me.
Silvia Olivieri: (laughs) It's not in my vocabulary.
Cari Quoyeser: What would a fungible token be?
Stella Tavella: So the fungible token is a coin, just like the euro, the dollar, etc. Bitcoin is also a fungible token i.e. assets that always have the same value.
So if I exchange one euro with you and you give me back one euro, we still have one euro in value, right?
Cari Quoyeser: Fungible!
Silvia Olivieri: Or if I give you back two 50 cents, it’s still going to be worth one euro.
Stella Tavella: Yeah, exactly. It’s the same.
So a nonfungible token has some value that changes depending on the data and information that are stored in the NFT, right? So, it could be an image (usually it's an image), or an audio file, a video, a piece of art, anything that's digital.
So this NFT basically runs on a blockchain.
Cari Quoyeser: Here we go…
Stella Tavella: (laughs) dropping the bomb!
Cari Quoyeser: It’s one of those words that floats around and I nod my head at, but what is a blockchain?
Stella Tavella: So, the blockchain is simply a network of computers. It’s basically a decentralized ledger. Let’s set the word decentralized aside for the moment.
You can think of a ledger as a piece of paper, a digital piece of paper in which you can record all transactions that have been made in the network. So, if I give one bitcoin to Silvia, it is recorded. Everything is recorded on the ledger. So my account is giving one bitcoin to Silvia’s account.
Silvia Olivieri: It's like a document.
Stella Tavella: Yes, it's a record of all transactions and activities.
Cari Quoyeser: Is this transactions by the purchaser or is this collective transactions by the marketplace?
Stella Tavella: So, the marketplace is just this website, in which through a UI, you can connect to the blockchain and execute all kinds of transactions and actions.
So even the NFT creation is a transaction actually. And when I sell my NFT, so when someone buys it, this is also a transaction and it's recorded.
Cari Quoyeser: So essentially the NFT is the transaction, and the data from the NFT is stored on the blockchain. And the blockchain is just the recording of all the transactions.
Stella Tavella: So, the blockchain is the recording of all the transactions. NFTs are created through smart contracts. A smart contract is just a program, a piece of code, that is stored on the blockchain and runs every time you make an action on this NFT.
So, the code is stored on the blockchain together with the record of all the transactions. The content of the NFT is actually not on the blockchain, and is stored somewhere else.
So, for example, if I buy an NFT, like the JPEG of an image, all the metadata and the image itself is stored somewhere else. It's not stored on a blockchain as of now. From the smart contract, you can recover the image that's stored somewhere else in this, think of it like a decentralized Google drive. And I can recover it anytime I want, in theory.
Silvia Olivieri: I wish they could see our faces like Cari’s and mine, because we’re like “Uh-huh, uh-huh..”
Cari Quoyeser: Can we pause for a second just to talk about the advantages of having something decentralized, or having something on the blockchain, or actually using an NFT in general?
So this is a lot of background information, which is super helpful because this is all new, certainly to me. But what is the advantage of having a smart contract, are smart contracts secure?
Stella Tavella: Okay, so there are a lot of advantages in using a blockchain, not just for NFT, but for a number of other things. A blockchain is a way of creating trust between different entities on the web.
Right now, if I want to send some money to a stranger online for any type of reason, right now it’s more secure for me to go to a bank, right? Before the blockchain, you would send some money through the bank. So the bank is the middle person in between that’s actually assuring me that the recipient exists, that I can send some money safely. And it also assures the other person that I have money to send to them, so it’s not fake money or something.
So, the blockchain is a way to create some trust without the need to have a middle person in between. And also its decentralized structure means that there is no owner of the entire process. So the bank owns all my metadata, all my money, and if I need to do a transaction I need to go to them and ask them, can I make a money transfer, can I get some of my money back, stuff like that?
Silvia Olivieri: So in that case, the bank would be a centralized entity.
Stella Tavella: Yes. The bank is a centralized entity.
Silvia Olivieri: Because everything is in their hands basically. And with the blockchain, there's not just one entity that owns all the data.
Stella Tavella: Exactly, yes. And also what happens if someone hacks the bank? And steals all my money? I mean, this can happen. They can steal your data from social media or something like that because also social networks and all these kinds of companies are of course centralized. This means that all the data in their possession is in their private servers and you are not in control of your data.
Cari Quoyeser: So in this case, if we're relating it to the music industry, in terms of tangible fungible money going through an agency that we know and trust (like a company or a bank) it would be like, what’s the term? Web 3?
Stella Tavella: Web 3.
Silvia Olivieri: Web 3, yes.
Cari Quoyeser: So any sort of entity, like a social media or a streaming service that you put your music through, that would be the middleman in this sort of situation. So you're cutting out that person, correct?
Stella Tavella: Yes.
Cari Quoyeser: And you don't give any of your own personal data. So, it's a secure, I guess more private way of doing your business.
Stella Tavella: Yes, for example, if I create my crypto wallet and I want to pay Silvia some money, I will only need a wallet address and I don't even need to know Silvia’s name or surname or anything. I just need the wallet address, which is this alphanumerical long string. This is also the reason why it’s really private and secure.
Cari Quoyeser: That's a whole new subject as well. Cryptocurrencies - is that usually what people use?
Stella Tavella: Yeah, so, to buy NFTs you need cryptocurrencies.
Cari Quoyeser: And do they have a certain market value? Like, do you use a certain crypto over another? Are they worth different amounts?
Stella Tavella: Yes. So depending on the blockchain you are buying or doing your activity on, there exists a different currency that has a different value compared to for example the dollar.
Cari Quoyeser: Is it a fair assumption, if I can think in mind just metaphorically that these different cryptocurrencies or these different blockchains are like different countries, therefore different currencies?
#Silvia Olivieri: Oh, I like that!
Cari Quoyeser: So you have them in different places and they don't equate the same and they may vary in worth?
Stella Tavella: Yeah, you can think of it like that, but the variations or fluctuations of cryptocurrencies with respect to the dollar or the euro are very volatile, which means that it can change literally every second.
Cari Quoyeser: So it’s not regulated?
Stella Tavella: Exactly, it’s not fixed, as of now.
Silvia Olivieri: So what would be the process for an artist who wants to start selling their NFT. What would they need to do, what are the steps?
Cari Quoyeser: Where would they go as well?
Stella Tavella: Okay. So if you want to do it by yourself…a lot of artists are doing this by themselves, just going on Catalog.works which is a marketplace for music specifically. Or maybe one of the biggest ones is OpenSea, in which you can find literally everything. They need to have a wallet, and there are some ways you can connect your crypto wallet to the browser.
So think of the marketplace as a UI (user interface) which lets you connect to the blockchain in an easy way. So you would go there, do the login with your wallet, and literally upload your music audio to the interface, add some metadata, and that’s it! It’s ready to go.
But yeah, it’s a little bit more complex than that because depending on the blockchain you’re using, you are also in some cases paying a little bit of money just for uploading and creating your NFT.
Silvia Olivieri: Like a sort of fee to the marketplace.
Stella Tavella: It’s not a fee to the marketplace itself, it’s a gas fee. The thing is, updating the ledger of the blockchain requires a lot of computational power. There are a lot of computers all around the world working a lot to make this happen.
Silvia Olivieri: I think this is something that we definitely want to discuss later, like the environmental impacts of blockchains and NFTs and all this world.
Cari Quoyeser: I'm just kind of marveling that this is happening everywhere right now. And that it seems all of a sudden, I'm sure it's been building for a while, but I have so many questions.
Like, first of all, what benefit does the purchaser get? Like what incentive do they have to buy NFT instead of going through all these services that are already established?
Stella Tavella: Okay, to me, there is a double benefit in doing so. So, if your favorite artist publishes an NFT, you are directly paying and supporting the artist that created that piece without going through other streaming services.
Silvia Olivieri: It’s direct money to the artist.
Stella Tavella: Exactly. And since the NFT is thought of as a unique asset, you would have a contract stating that you (and only you) are the owner of that piece of art. And this increases the value of the purchase, right?
Cari Quoyeser: So you can resell it?
Stella Tavella: Exactly, if you want, you can resell it.
Cari Quoyeser: Or pull it out at parties, and brag to your friends that you own something?
Silvia Olivieri: Yeah! I think that’s part of the whole point. If you’re a collector and you own something that no one else has, it’s like, I don’t know, a record signed by David Bowie.
Cari Quoyeser: That is so strange to me. It's hard for me to imagine our world transferring into this digital space in this way.
Silvia Olivieri: Yeah, it is kind of weird. I think the concept as it is, is quite easy. I think our problem is that we need to apply it to the digital world and that's where it gets complicated. And obviously, we don’t have the knowledge that Stella has of all these terms.
And I was reading something very interesting, actually, that there are some established artists that are offering NFTs that are sort of mixed between a digital asset and also real life. So if you buy an NFT, then connected to that, you also have some real life experience. Like, you have a free ticket to our concerts for the rest of our lives.
Cari Quoyeser: What!
Silvia Olivieri: Yeah, I think Kings of Leon were doing something like that. I think it's really interesting because obviously something so new and kind of disruptive for the industry and for the relationship between artists and fans, obviously you need to help people to understand, to make this transition from the real world to the digital world. So it's really interesting to have this mixed situation.
Cari Quoyeser: I was saying to you guys yesterday when we were just chatting about this, that when I was listening to this interview on Time of DJ Aoki. So, he was referring to live concerts as IRL concerts, and he kept talking about IRL as opposed to this, which really bothered me.
It’s like when you think of the word nonfiction to refer to real stories. I think that's like part of the nervousness - it’s like, wait, are we leaving reality now? Is reality the past?
And now we're going into the metaverse and that's the now and the future, and that's where we'll be operating?!
Silvia Olivieri: I mean, reality is not that great. No, I'm joking! No, but it is weird.
Cari Quoyeser: Yeah, it’s strange. But what I’m getting from this conversation is, it’s kind of scary when you don’t understand, but the more you understand it and you start seeing how you can apply it, it gets really exciting.
I don't know how developed the infrastructure is for emerging artists, like people that are not huge like Kings of Leon. But I can see that in the future - is there a way for emerging artists to really make a living income on NFTs right now? Is that possible?
Stella Tavella: So, I will introduce another concept, which is the concept for a decentralized autonomous organization. In simple words, this is just a community of people in which each member has the right to vote on proposals, changes, and they can contribute to making decisions over community activities.
So, it’s like a company that has all its employees on the board of directors. It’s a really interesting concept. For example, I am thinking of Sound.xyz, which is one of the first and most famous decentralized autonomous orgs that are emerging now. They are directly connecting the artists with their fans.
There is a forum, and if you want to participate in their community, you can join and really actively participate in their decisions. But also there is a forum for artists to send their music so that the community can discuss releasing it and selling it as an NFT.
And also they are developing some other things to connect to different tokens and NFTs, like exclusive listening parties, the possibility to leave a comment attached to that song forever. So that maybe you can be famous because you are the first one commenting on that song. And other interesting things. So yeah, there is a possibility to do that and actually Sound.xyz is becoming the main channel for these kinds of experiments in music.
Silvia Olivieri: If I understood it right, if you’re an established artist, obviously it’s easier for you to sell an NFT because everyone knows you and you have a big fan base. And in fact, in that case, a fan would be happy to buy your NFT because it’s more like a collection thing, something that only they own.
While for non established artists, upcoming artists, this community works more like investors. So I believe in your talent, I believe that eventually this NFT will become a collectable digital piece. So I’m investing now for the future when I’ll get my investment back.
Stella Tavella: And also there are some other platforms, very interesting also for you Silvia, in which fans or investors, let's call them fan investors, can buy some shares of songs. And they actually can earn some money.
Cari Quoyeser: Wow, that’s crazy!
Silvia Olivieri: So the better the music performs, the more money they get.
Cari Quoyeser: OK, so this is interesting in terms of investment on royalties for the purchaser, but that does lead me to another question for you Silvia. Coming from a musician, musicians are quite protective of their creative works.
When you’re selling an NFT and there’s the option to resell it for the purchasers to get a percentage, does that mean you’re also selling them a percentage of your copyright? Is that how that works?
Silvia Olivieri: Mm, not really. So, let’s say you buy a Picasso for your collection. You will be the owner of that Picasso, of the physical painting, but Picasso owns the intellectual property rights because he is the person who created that painting.
The same for an NFT. The person who created the NFT has the intellectual property, and you are simply the one who possesses the digital art. Now, to connect to what Stella was saying, buyers who own NFTs can essentially have a cut of the royalties (if the artist agrees obviously) but that would simply be a share of the revenue, and not the intellectual property.
Now this is the simple answer, and obviously there’s more that needs to be tackled and there’s more that we need to understand when it comes to this new technology. For example, what’s the status of smart contracts now?
Stella Tavella: To be honest, as far as I know there is no official protocol for smart contracts that manages the royalties and copyright. So, each marketplace at the moment can play with it a little bit, for example on OpenSea if you are the owner of an NFT and that NFT gets resold multiple times, every time it gets resold the original owner gets a percentage.
Silvia Olivieri: Yeah I would say in terms of royalties and copyrights and smart contracts, I think everything is still so new so that it’s hard to have an answer. I think it’s going to be really interesting to see where this is going to go and how the industry will adapt. As you said, smart contracts still don’t have real legal value. So short answer is, we will see.
Stella Tavella: And Cari, from the perspective of your colleagues and friends, musicians and writers, what’s the discussion about all this Web 3?
Cari Quoyeser: I think it’s overwhelming at first if you don’t come from a background of tech or you’re not necessarily tech-savvy. But the idea of being able to get paid the total amount for your music, just that concept in itself, it’s so disruptive to the whole industry as we know it. So because it’s something we don’t know, it’s scary.
But that’s very exciting, especially because artists have always struggled to make a living with their music, even if it’s doing well. So I think it is cause to be excited.
And I also want to say that if there are no legal boundaries developed yet, now is the time to really get into it and learn about it. It’s ok - at least I’m telling myself this - it’s ok that up until this point, I haven’t known what’s going on. Because with this knowledge, I think that it could be a really great thing for art in general.
Silvia Olivieri: And just going back to something we mentioned earlier, what’s the issue with the environment, blockchain and the environment?
Cari Quoyeser: Yeah! If this is not IRL, if this is all non fungible, how is it affecting the IRL?
Stella Tavella: Yeah, in IRL, everything relating to blockchain is super cool but there are still some little problems in terms of energy. There are servers processing stuff all the time. But there are already some types of blockchain which have different methods for updating data on this ledger. They are testing it, and some of them are already used and integrated into the marketplaces. So, this issue is going to be solved.
Silvia Olivieri: Yeah, because I was reading that Ethereum works in a proof-of-work method, I don’t know Stella if you know anything about it?
Stella Tavella: Exactly. So this proof-of-work is exactly this, a bunch of computers processing stuff. I don’t know exactly when, but it is scheduled for the Ethereum protocol to switch to proof-of-stake, which is another method which should be less consuming and should lower the gas fees.
Cari Quoyeser: Awesome! Well, I feel like I learned a lot.
Silvia Olivieri: Yeah, my brain is burning a little.
Stella Tavella: So I found this amazing tweet on Twitter that explains all this stuff in a nice metaphor. So it goes,
“If you’re a millennial struggling to understand crypto, just recall Harry Potter from your intellectually impoverished childhood. The houses are DAOs, the points are tokens, the magic is the Blockchain. So choose your DAO, learn some spells, get some tokens. See you in the metaverse. Bye.”
Thank you girls!
Cari Quoyeser: Thank you so much!
Silvia Olivieri: Thank you, see you next time.
Cari Quoyeser: The Mix podcast is powered by Musixmatch Pro. See you next time.
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