👍 Web3 and AI are both having a significant impact on the music industry, in different ways.
Question of the Day
🔥 Cons of web3 and AI for the music industry
Spotify is expanding its Web3 efforts by testing token-enabled playlists in several key markets.
Overlord, a Web3 gaming ecosystem, announced its partnership with Spotify on Feb. 22. The token-enabled community-curated playlist from Overlord may now be accessed via Web3 wallets of those who hold the Creepz nonfungible tokens (NFTs) on Spotify. Only Android users from the United States, United Kingdom, Germany, Australia and New Zealand can unlock the playlists.
👍 Web3 and AI are both having a significant impact on the music industry, in different ways.
Web3, or the decentralized web, is enabling new ways for artists to monetize their music and interact with fans. Through the use of blockchain technology and non-fungible tokens (NFTs), artists can sell their music directly to fans, without the need for intermediaries like record labels or streaming platforms. NFTs also offer new ways for fans to engage with music, such as owning a unique piece of digital art or a personalized song, this leads to fans promoting their favorite songs and artists and making money through royalty fractionalized ownership.
Web3 is also changing the way music is distributed and consumed. Decentralized music platforms allow for peer-to-peer sharing of music, without the need for centralized servers or platforms. This can help artists reach new audiences and reduce their reliance on traditional streaming platforms.
AI, on the other hand, is revolutionizing the way music is created, produced, and consumed. AI-powered tools can help musicians create new sounds and compositions, analyze trends and patterns in listener data, and even generate music autonomously.
AI-powered music recommendation systems are already a common feature on streaming platforms, helping listeners discover new artists and songs. These systems use machine learning algorithms to analyze listener behavior and preferences, and recommend music based on these insights.
Overall, Web3 and AI are both enabling new opportunities and innovations in the music industry, from new monetization models to new forms of creative expression. As these technologies continue to evolve, we can expect to see even more transformative changes in the music industry in the coming years.
“What features do you wish music streaming platforms offered that they currently don’t?” (Answer in the comments).
🔥 Cons of web3 and AI for the music industry
While Web3 and artificial intelligence (AI) bring many benefits to the music industry, there are also some potential drawbacks and challenges:
Accessibility: One of the biggest challenges of Web3 and AI is accessibility. These technologies require significant technical expertise and investment, which may be a barrier for smaller or independent artists and labels. This could result in a concentration of power and resources in the hands of a few large players, potentially leading to reduced competition and innovation.
Privacy and security: As with any digital technology, Web3 and AI raise concerns about privacy and security. The use of personal data and the potential for data breaches are significant risks that need to be addressed. Additionally, the use of decentralized systems in Web3 can create challenges in terms of regulating and monitoring the use of data, leading to potential ethical concerns.
Bias: AI relies on data and algorithms to make decisions, which can lead to biases if the data used to train the algorithms is incomplete or biased itself. This could result in unfair or inaccurate decisions, such as in the case of music recommendations, which could impact artists’ exposure and revenue.
Cultural homogenization: Web3 and AI have the potential to create a more centralized and homogenized music industry, with algorithms and market incentives driving content creation and curation. This could lead to a loss of diversity and creativity in the industry, as well as the marginalization of underrepresented groups and genres.
Job displacement: As with any technological advancement, Web3 and AI could lead to job displacement, particularly in areas such as music distribution and marketing. This could have negative impacts on the livelihoods of many people in the industry, particularly those in lower-skilled or entry-level positions.
It is important to address these challenges and risks in order to ensure a more equitable and sustainable future for the industry. It is also important to keep an eye on technology developments and learn how the ever-evolving tech space continues to shape music and every industry. This is in order to stay on top of trends and also be aware of potential drawbacks and damages.
This week we explored the world of Tokens and how tokenization can change any industry and the world.
Tokenization is the process of converting sensitive data into a unique identifier or token, that retains essential information about the original data without exposing it to potential security risks. In other words, tokenization replaces sensitive data, such as credit card numbers or personal identification information (PII), with a randomly generated string of characters that can be used in place of the original data in a specific context.
👍 Benefits of a Tokenized Economy
Improved liquidity: By tokenizing an asset, it can be traded on blockchain-based marketplaces, making it easier for buyers and sellers to find each other and complete transactions. This can improve the liquidity of the asset, making it easier to buy and sell.
Fractional ownership: Tokenization allows for the creation of smaller units of ownership in an asset, making it easier for more people to invest in and own a piece of the asset. This can open up investment opportunities to a wider range of individuals and institutions.
Transparency and security: Tokenization on a blockchain provides a transparent and secure ledger of ownership and transaction history for the asset, making it more difficult to counterfeit, manipulate or commit fraud.
Lower transaction costs: Tokenization can reduce the need for intermediaries such as banks or brokers, which can lower transaction costs and reduce fees associated with buying and selling the asset.
Increased accessibility: Tokenization can make investing in certain assets more accessible to a wider range of people who may not have had access to such investments previously, such as art or real estate.
🪙 Types of Tokens
Tokens are broadly categorized into the following two types:
Utility tokens: Simply coins or user tokens that allow future access to the products or services offered by a company. Utility tokens are, thus, not created to be an investment. (DAO Tokens, airline miles)
Security tokens: Digital assets that derive their value from a real-world asset (such as real estate, art, commodity, illiquid asset, etc.) that can be traded. Thus, security tokens are subject to federal laws that govern securities (shares in a company, digital currencies).
Fungible vs Non-Fungible Tokens
Fungible tokens are like identical Lego blocks that you can stack and use interchangeably with other blocks of the same size and shape. They are all worth the same and can be exchanged for each other.
Non-fungible tokens (NFTs) are like special edition Lego blocks that are unique and can’t be exchanged for other blocks of the same size and shape. They have different designs, colors, and patterns that make them one-of-a-kind.
Fungible tokens are used for things like buying and selling things online, while non-fungible tokens are used to prove that you own something special and unique, like a rare toy or a piece of art.
Think of fungible tokens as being like dollar bills, while non-fungible tokens are like rare collectibles, such as baseball cards or stamps.
🐕🦺 Enter TaaS — Tokenization-as-a-Service
Tokenization-as-a-service is a business model offered by Web3 companies that allows asset owners, brands, collectors, and intellectual property holders to create an NFT backed by physical and/or digital goods. There is no limit to what type of assets can be tokenized, but they’re usually assets of value like rare collectibles, art, or cultural memorabilia. The resulting NFT acts as a collectible in and of itself, as well as a representation of ownership of the physical item. When someone buys, sells, or trades the NFT on a digital marketplace, ownership of the physical item transfers along with the NFT.
✔️ List of Companies Tokenizing Arts, Real Estate, and Music
Arts and Collectibles
MasterWorks — The first platform for buying and selling shares (fractions) representing an investment in iconic artworks.
Konvi — Platform that enables users to gain partial ownership of luxury assets, such as fine watches, wine, whiskey, and more.
Otis — Marketplace for alternative assets such as collectibles, fine art, and physical spaces. On March 9th, 2022, Otis was acquired by Public.
Dibbs — Platform for people to sell and buy sports cards. Each sports card on Dibbs has a corresponding NFT (Non-Fungible Token) containing relevant data the assets.
FranShares — Digital platform specializing in wealth-building alternative investment opportunities and helps users invest in franchise portfolios.
Rally — Platform where unique, high-value assets are securitized, split into shares, and then offered up as equity investments to users of all income levels.
ArtSquare.io — Fine art & collectibles tokenization platform relying on the blockchain to allow users to buy and trade art like stocks on the financial market.
Art.sy — Platform for learning about and collecting art online, from top galleries, museums, art fairs, and auction houses.
Acquicent — Gives access to high-value luxury assets such as vintage cars and fine art while enabling owners of those assets to turn their equity into cash.
Mintus — Trading platform for contemporary artwork. Allows users to buy, share, and invest in contemporary art, asset mgmt, and alternative and fractional investment.
Fundrise — First crowdfunded real estate project in the US, leverages technology to raise funds to build real estate project.
reAlpha — Provides a digital marketplace that enables its members to simplify wealth creation through investments in short-term rental properties.
CrowdStreet — Online, commercial real estate investment marketplace. The company’s solutions allow real estate developers and operators to accelerate their fundraising processes.
YieldStreet — Aims to change the way wealth is created by providing access to asset-based investments historically unavailable to most investors.
CalTier — Operates an equity crowdfunding platform that opens the door to professionally managed institutional-grade multi-family investments not typically available to real estate investors.
Lev — Operates a SaaS-based lending marketplace. The company’s platform provides access to quotes from lenders and services include issuing non-recourse loans.
AlphaFlow — Automated real estate investment management service, offering automatic portfolio diversification for real estate investments.
AcreTrader — Offers a platform that connects buyers, like individual investors, family offices, or investment funds, to farmland that is available for purchase.
Roofstock runs an online marketplace where retail and institutional investors can buy and sell rental homes in the United States.
Groundfloor — Opens private capital markets to all. Groundfloor is qualified by the U.S. Securities & Exchange Commission to offer direct real estate debt investments.
Sound creates a more interactive relationship between artists and fans through its Web3-based NFT platform.
Digimarc develops solutions for licensing intellectual property for audio, visual and image content by integrating blockchain into its technology to help license music.
MediaChain (now a part of Spotify) is a peer-to-peer, blockchain database for sharing information across different applications and organizations. In addition to organizing open-source information by issuing unique identifiers for each piece of information, MediaChain also works with artists to ensure they are paid fairly.
Royal turns music fans into invested partners, providing a platform where listeners can purchase a percentage of a song’s royalties directly from an artist.
Open Music Initiative (OMI) — Nonprofit calling for open source protocol in the music industry. It explores the use of blockchain to help identify the rightful music rights holders and originators so they can receive fair royalty payments.
Musicoin is a music streaming platform that supports the creation, consumption and distribution of music in a shared economy.
OneOf serves as a space where users can buy and exchange NFTs related to the areas of sports, music and lifestyle.
Async Art is a creator platform that allows artists to develop music and sell songs in an NFT marketplace.
Mycelia is a collective of artists, musicians and music lovers looking to empower creatives in the music industry. Mycelia primarily wants to run an entire database on blockchain to ensure that artists are paid fairly and acknowledged quickly.
Zora is an NFT marketplace protocol where creatives can publish their work as tokens, sell them to buyers and collect profits. Rather than create copies of an NFT, Zora offers a model where an original NFT is accessible to anyone and sold repeatedly.
Before the emergence of blockchain and Web3, there were several companies that used centralized token systems for various purposes. Here are a few examples:
Disney Dollars: Disney Dollars were a form of currency created by the Walt Disney Company in the late 1980s. These colorful paper bills could be used at Disney theme parks, resorts, and stores, and were often used as souvenirs by visitors.
Chuck E. Cheese Tokens: Chuck E. Cheese is a popular chain of family entertainment centers that offer games, rides, and food. The company has used tokens as a form of currency since its inception, allowing customers to exchange cash for tokens that can be used to play games and redeem prizes.
Casino Chips: Casinos have used tokens or chips as a form of currency for many years, allowing customers to exchange cash for chips that can be used to gamble on various games and could be redeemed for prizes and/or more tokens.
Airlines: Airline miles, also called frequent flyer miles, are the airline’s currency (Tokens) that you can use by redeeming them for flights, hotel stays, and other rewards. Some airlines call their currency “points” rather than miles, but the concept is the same. Miles can be used to book flights — both on that specific airline and potentially on partner airlines.
These are just a few examples of companies that used tokens before the emergence of blockchain and Web3. While these tokens were not based on distributed ledger technology or smart contracts, they served similar functions in enabling transactions and incentivizing customer behavior.
👎 Tokens Drawbacks
Regulatory uncertainty: The regulatory landscape for tokens is still evolving, and there is some uncertainty around how tokens will be regulated in different jurisdictions. This can create legal and compliance risks for token issuers and investors.
Market volatility: Token markets can be highly volatile, with prices subject to rapid fluctuations in response to market sentiment, news events, and other factors. This can make it difficult for investors to accurately value and assess the risk of token investments.
Technical complexity: Tokenization requires specialized technical expertise and infrastructure, which can be difficult and costly to develop and maintain. This can create a barrier to entry for smaller businesses or organizations looking to tokenize assets.
Security risks: Tokens and their underlying blockchain technology are vulnerable to cyber-attacks and hacking attempts. This can result in the loss of funds or compromised security for token issuers and investors.
Limited adoption: Despite the potential benefits of tokenization, it is still a relatively new technology, and there is limited adoption and acceptance of tokens in the wider investment and financial industry. This can limit liquidity and access to capital for token issuers and investors.
Overall, tokenization can offer significant benefits, but it also comes with some risks and challenges that should be carefully considered before embarking on a tokenization project.