Scandinavian music streaming success is losing out to NFT sales
For the last 15 years, the music industry in Scandinavia has set the pace for music sales in the digital era. Following years of struggle during the 1990s while facing the growing threat of online piracy, the industry found its silver lining in the form of revenues from music streaming, largely propelled by digital service providers such as the Stockholm-based Spotify.
Now the tides are changing once again as artists and record labels find new revenue possibilities in the metaverse, while Danish music streaming service Moodagent has gone into insolvency, restructuring to avoid bankruptcy. The sale of non-fungible tokens (NFTs) within music is once again transforming the industry, while there are warnings of legal pitfalls for both artists and labels.
Would you pay $1 million for an unreleased demo by a 17-year-old Whitney Houston? This was the market price for an NFT sale earlier this year, providing one lucky fan with an NFT of a previously unreleased song recorded as a demo before Houston was signed by her label.
Houston’s estate chose to sell this demo as a unique one of a kind piece of digital music through block chain technology rather than via traditional distribution channels, and it appears that the trend is here to stay. Earlier this year, David Bowie’s musical legacy entered into this world when fans were able to purchase exclusive music and photos of the deceased superstar as NFTs. Current hip-hop artist Travis Scott has similarly reported earnings in excess of $20 million from NFT ticket sales for a virtual concert in the metaverse game Fortnite.
This is just the beginning, Scandinavian record label contracts may not always be up-to-date with the fast-paced change of the digital era, and many have failed to sufficiently address, or even understand, the recent rise in NFT sales, or the exploitation of rights in the metaverse.
This is partly due to copyright laws in the Nordic countries, which favour the original copyright holder in cases where there is doubt about what rights were actually assigned by the artist to the label.
The music industry has tried to combat such issues for decades by collecting so-called ‘360 degree’ rights from artists. In other words: the acquisition of the records themselves, but also rights to the underlying composition, live performances, brand partnership rights and merchandise sales. However, these often fail to take into account that artists can now communicate directly with fans, sell exclusive content as NFTs and even perform concerts directly in the metaverse, all without the need for the distribution or marketing power that was traditionally provided by the record label. This effectively eliminates the intermediary and maximises personal profits.
Artists themselves may be vulnerable within the metaverse. It is recommended that artists seek trademark registration, as well as legal counselling in the drafting of the ‘smart contracts’, before selling their next exclusive piece of music as an NFT. This can help to ensure that they are sufficiently protected, and compensated, for both current and potential future sales.
The music industry has once again received a wakeup call and, given the lessons it was forced to learn in the 1990s, is moving much faster to catch up this time. The industry will be desperate to embrace new technology in order to target its young and profitable fan group within the metaverse. One thing is for certain: the need for effective IP and entertainment lawyers is greater than ever.
This is an insight article whose content has not been commissioned or written by the WTR editorial team, but which has been proofed and edited to run in accordance with the WTR style guide.
Copyright © Law Business ResearchCompany Number: 03281866 VAT: GB 160 7529 10