Music Albums as an Asset Class

NFTs enable 6 major shifts in the music industry, which could lead to new investment opportunities for clients of financial advisors.

AccessTimeIconMay 11, 2023 at 2:15 p.m. UTC
Updated May 11, 2023 at 5:23 p.m. UTC
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The music industry has always been a space for creativity, but with the rise of non-fungible tokens (NFTs), the industry is experiencing a transformation like never before.

NFTs are unique digital assets that are verified on a blockchain network, which has opened up endless possibilities for the music industry and for investment.

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Unique ownership

The most significant advantage of NFTs in the music industry is the ability to grant unique ownership of digital content. With NFTs, artists can issue limited edition digital albums that have unique ownership and can be sold for a premium price. This enables fans to own exclusive digital content and gives artists an additional revenue stream. As a result, musicians may start to produce music that is more geared towards creating one-of-a-kind pieces that fans will want to own and collect.

Royalty payments

The traditional music industry model has seen artists receive a small portion of the revenue generated from music sales. However, with NFTs, the ownership of music is made clear on a blockchain network, allowing for transparent royalty payments. This means that artists can receive a larger portion of revenue generated from music sales, which in turn will result in a change in the way music albums are published. Artists may choose to release music albums through NFTs to ensure that they receive a fair share of the revenue generated from music sales.

Tokenization of music

NFTs enable the tokenization of music, which means that the music can be divided into smaller, more manageable parts. This enables artists to monetize specific parts of their music, such as the rights to use a specific beat, the lyrics of a song, or even a single guitar riff. This means that artists can sell their music in smaller parts, which can be more accessible to fans.

Fan interaction

NFTs provide artists with the ability to interact with fans in ways that were previously impossible. With NFTs, artists can release exclusive digital content to fans, such as backstage footage or recordings of live performances. This allows fans to feel more connected to the artist and creates a sense of exclusivity, which can result in increased fan engagement. Because of this, artists may start focusing on creating digital content that can be shared exclusively with fans.

Digital collectibles

NFTs allow music albums to be released as digital collectibles. This creates a new way for fans to own music and creates a sense of exclusivity, which can increase fan engagement. The unique ownership of NFTs means that they can be sold as a rare higher priced item, which creates a new revenue stream for artists. This will result in artists aiming to create unique digital content that can be sold as collectibles.

Protection of intellectual property

NFTs enable artists to protect their intellectual property, which has been a challenge in the music industry. With NFTs, the ownership of music is made clear on a blockchain network, which makes it difficult for others to copy or plagiarize music. This provides artists with greater protection of their intellectual property and enables them to control the distribution of their music. With artists being able to create music with greater freedom, knowing that their intellectual property is protected they may write music in a completely different way.

Music as an investment?

As NFTs continue to revolutionize the music industry, financial advisors should be thinking about ways to potentially invest in music albums for their clients in the future.

The tokenization of music and the ability to create unique digital content means that music albums can now be viewed as an asset class, providing a new investment opportunity for clients.

Investing in NFTs that represent ownership of music albums can provide clients with exposure to a unique asset class that is not correlated with traditional investments. This can help to diversify their investment portfolios and reduce risk.

Financial advisors can work with their clients to identify high-quality music albums that are likely to appreciate in value and generate potential revenue streams. They can also work with music industry experts and analysts to identify emerging artists and music trends that may represent investment opportunities. This can be particularly relevant for clients who have a passion for music and may be interested in investing in emerging artists.

However, investing in music albums through NFTs does come with risks. The value of music albums and NFTs can be volatile and can fluctuate based on the popularity of the music and the artist. Furthermore, the lack of regulatory oversight in the NFT market can make it difficult for financial advisors to assess the risks associated with NFT investments.

Edited by Henry Bond.


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DJ Windle

DJ Windle is the Founder and portfolio manager at Windle Wealth, where he manages the Income Growth and Crypto portfolios. He is a contributing writer for CoinDesk's Crypto for Advisors newsletter.

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