Benefits of Decentralized Asset Ownership
In the old world, centralized entities owned the content and rented it to users. For instance, after an artist created a song, she might sell it to the record labels, who would in turn license it to a platform such as Spotify who in turn would “rent” it to the user.
NFTs, on the other hand, allow artist to retain ownership of their work and sell it directly to the users. This is immensely powerful because it removes the intermediaries from all transactions.
One of the biggest benefits to this is monetary, as cutting out the middleman yields substantial financial benefits to both artists and consumers.
For instance, after removing the cut taken by record labels, producers and streaming platforms, the average singer receives ~12% of total music sales. By removing the middleman and leveraging blockchain-based platforms such as Audius, this number could increase to over 90%!
NFTs also allow artists to experiment with new streams of revenue, including the ability to sell: 1) original works as collectibles, 2) unique album art, 3) tokens with real-world benefits such as access to shows and 4) memorabilia (such as Snoop Dogg’s “Doggies” –, digital avatars designed for the metaverse)
NFTs don’t just benefits artists, they will also allow consumers to monetize content. For example, a user could purchase all or part of the rights to a song directly from an artist and then receive royalties every time someone streams it. They can even make money by playing video games and selling the assets they collect on the open market. For example in late 2021, people in the Philippines were earning an average of $400 per month playing the blockchain game Axie Infinity – that’s more than a local teacher, construction worker, security guard or office assistant!
In addition, many NFTs offer users additional benefits that well extend beyond possession of the underlying assets, such as: 1) access to a community (which can include anything from Discord membership to private party invites), 2) the right to receive royalties if someone wants to use their art for any reason, 3) the right to create and sell derivative works) and 4) the potential to receive an ownership stake and governance rights of the collection itself.
In addition to these monetary benefits, cutting out the middleman:
Eliminates Censorship: The entertainment giants can no longer censor artists or consumers. Artists are free to upload any content, no matter how controversial, to any platform they so choose
Creates Interoperability: Holders of an NFT truly own their content, which means they can use it to interact with other games, applications, or blockchains and they can also lend out their in-game assets, port them to another application, or gain access to real-world events
Transparent: In contrast to the traditional system of royalty management – which is often complex and opaque - NFTs make it very easy to track the ownership and usage of digital assets, making it easy to determine exactly who gets paid and how much
Programmable: Using smart contracts, NFTs can be programmed to automate payments based on the completion of user actions (such as streaming a song) and automatically approve licensing by users agreeing to preset terms and conditions
Lower Costs: NFTs can greatly reduce costs by automating many processes traditionally done by intellectual property lawyers, including: drafting patent, copyright and trademark contracts, interpreting complicated IP laws and enforcing rights across multiple jurisdictions
Instant: Traditional art is tough to sell - it requires specialized brokers or auction houses, and even when the sale is made someone has to arrange shipping, storage, security and insurance to ensure safe delivery. Digital art, on the other hand, can be listed online, sold within minutes and delivered instantly
Liquidity: NFTs allow for the creation of “IP markets”, where things such as patents, copyrights, trademarks, brand names, etc… can be traded in real-time
Finally, and perhaps most importantly, breaking down the barriers between artists and consumers may usher in a new era of collaboration. Although, users have long created derivative works including fan fiction, remixes, etc… it’s been difficult to monetize them. By transferring ownership and allowing users to profit from their creations, NFTs could unlock new forms of cooperation that allow artists and fans to merge ideas, build off each other’s efforts and create new forms of interactive content.
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