Billboard asked top professionals working at the intersection of Web3 and the music industry to answer these frequently asked questions regarding the applications and potential uses of cryptographic technology in business
What are the most common use cases for blockchain technology in the music industry today?
“As of today, they are almost entirely focused on digital products and collectibles. While this is a natural starting point, we believe the next generation of products will leverage blockchain technology to make the music industry more efficient.We will move away from digital merchandising and offer true ownership of music to fans – an approach that ushers in a new era where artists and fans have aligned incentives and consider each other as partners —Justin “3LAU” Blau, Co-Founder/CEO, Royal
What are some of the most common cryptocurrencies and what are the main differences between them?
“Three of the most popular cryptocurrencies today are bitcoin, ethereum, and solana, with the latter two being most widely used in the NFT/Web3 ecosystem to date, but nonetheless all retain a fair share of the former growing pains. While bitcoin retains the largest market capitalization of any digital currency by a significant margin, the main differences between these currencies have to do with their technical architecture. Ethereum is currently leading the pack when it comes to integrating digital currencies. ‘Web3 applications – real-world utilities – but solana gives Ethereum a run for its money both in terms of transaction speed and costs per transaction Transaction fees, known more simply as “gas fees are of the highest priority in the blockchain landscape today, given the need to drastically reduce these costs to enable wider adoption. s generalized. —Shara Senderoff, Partner/President, Raised in Space; Founder, Something Gold
Can NFT trading be regulated like securities?
“While some NFTs may fall under the Supreme Court’s definition of ‘title’, the use cases for NFTs continue to evolve. An NFT of a [master recording] may be split and sold to multiple holders to fund its production and provide equity in its hopeful success, and another NFT of an individual’s doctoral degree may be minted for the purposes of authentication and personal preservation. While the former NFT might fall under the definition of an investment contract, the latter probably would not. Even when an NFT does not have a clear economic use case, its definition as a security may depend on how it is marketed to potential buyers. For example, if the seller advertises future profits due to its own management efforts, this could be considered a security, whereas an NFT advertised for recreational use rather than investment should not be considered a security. . The hope is that existing regulatory frameworks continue to evolve to allow innovation to continue to progress. —Gai Sher, Senior Advisor, Innovation and Technology Group, Greenspoon Marder
If I buy an NFT, do I own the copyright to what I bought?
“Not necessarily. An NFT is a unique sequence of code on a decentralized digital ledger called a blockchain. When you buy an NFT, you are buying that sequence of code which is separate from any assets associated with or linked to the code, [such as] artwork, music, videos and physical collectibles. Intellectual property [IP] the rights in any work underlying an NFT are owned by the author, unless such rights are assigned or licensed. When you purchase an NFT, your license to all assets linked or associated with your NFT will be provided by the applicable seller or creator of your NFT and will determine your rights and restrictions on its underlying assets. While most NFT sellers grant buyers a limited license to exploit the underlying work for personal use, some notable NFT collections like Bored Ape Yacht Club, CryptoKitties, or World of Women also grant buyers broader licenses, including the right to commercialize associated works. As a buyer, understanding what rights you receive with your NFT could change your assessment of its value. —Gai Sher, Senior Advisor, Innovation and Technology Group, Greenspoon Marder
Why are cryptocurrency prices so volatile?
“Although not all cryptocurrencies are volatile, [such as] stablecoins like USDC, USDT and DAI, in the simplest terms, cryptocurrency prices are often so volatile because most of the currency’s value is based on whether or not people want to buy it or sell it. Often, these decisions can be made based on short-term gains and losses and not the underlying technology that the tokens represent. The United States has had exchanges since the late 1700s, so comparatively crypto is a whole new asset class. In general, the older an asset class, the less fluctuating the market is. While the crypto has seen its share of dramatic spikes in both directions, as they say, “Zoom out!” And if you zoom out far enough, you’ll find that the charts for the different asset classes aren’t too different. —Ian Galdy, Marketing Director, Serotonin
Why do some music companies, like UnitedMasters and Prescription Songs, offer artists and writers the option to get paid in cryptocurrency?
“Giving artists diverse tools helps build their independence, and that includes how artists get paid and their ability to transact in different ways. It also helps to financially strengthen their success. As the creator economy evolves, more and more artists are looking for different ways to start their own business, and it’s important to provide a myriad of financial tools for more economic opportunities. We hear more and more artists getting into the idea of ownership, and the technology behind cryptocurrency is fueling that. —Sally Shin, Chief Strategy Officer, UnitedMasters
How can Web3 help artists connect with their fans?
“A lot of Web3 applications exist around community ownership which allows the fan to own part of what they support. We have seen that when fans own part of a community or project, they become more vocal about the musician and his content.Years ago, participating in your street team would net a fan a high-five, a sticker or an MP3 from an artist…all things that don’t have much anymore of value today.These days, your street crew members can hold a token or NFT that not only gives them benefits and access to the community, but allows them to share value in the music community that you build together. In a world of content overload, this allows fans to be directly involved and build stronger relationships with artists. Web3 tools create more transparent and equitable communities in ways that allow artists to grow. lop communities without intermediaries. —Bryce Carr, Director of Creator Partnerships (Music), Rally
Why do Web3 communities love using the Discord app?
“I think the first thing to note is that Discord is completely algorithm-free, which appeals to people who may be wary of social media and big tech in general. It’s also super customizable and allows for a mix of chat text, voice and video – a range of communication modes is a huge bonus for anyone engaged in intensive community building.Finally, Discord servers are semi-closed communities, where users must be invited to join. creates a sense of safety and exclusivity within Web3 communities and largely shields them from the social media backlash they may face on more traditional platforms like Twitter.—Kat Rodgers, Community Manager, Water + Music
What are the possible applications for decentralized autonomous organizations in the music industry?
“DAOs expand what is currently possible online by providing tools to quickly and easily create trusted financial agreements between strangers around the world. I can see many labels, bands and production teams emerging from a Discord server [the app where most DAOs convene] already over here. DAOs, smart contracts, and NFTs will also be invaluable in managing intellectual property in the upcoming music industry. I specialize in [artificial intelligence] and music and created a DAO, called Holly+, to manage my digital likeness. I released an instrument where anyone can make music using my voice, and a DAO of stewards can vote on the appropriate use. If approved, a creator can sell works using my voice, with part of the profits going to the DAO treasury to create more tools and part going directly to me. I believe in a decade it will be common for people to release music in the likeness of other artists – I call this process “spawning” rather than “sampling” – and blockchain-certified identities and DAOs are very helpful in dealing with this. —Holly Herndon, artist; podcast host, Interdependence
Is crypto mining bad for the environment, and if so, are there ways to reduce its impact?
“Cryptocurrency mining – the process by which new units of digital currency are created – requires energy to verify and add new transactions to blockchains, especially with proof of work. [POW] blockchains. With POW, blockchain solvers, or miners, must solve complex mathematical puzzles and process a block over the network, which requires significant power consumption. But with proof of participation [blockchains], solvers are only required to post the cryptocurrency as collateral to have the ability to successfully approve transactions. This process is not only faster, but according to recent studies, it uses 99.99% less energy. —Adam Fell, Co-Founder/Board Member, OneOf