In recent years, we have borne witness to the exponential growth of non-fungible tokens (NFTs), especially within the art and collectibles realm. Highly notable projects such as Blue-chip PFPs like BAYC and Azuki have gained significant traction, and more ventures are beginning to unlock the practical utilities of NFTs that can be integrated into real-world use cases. In particular, with regards to intellectual property, the advent of IP NFTs has allowed for seamless linking with music albums, merchandise, TV series, films, and more to enable the sharing of revenue streams with NFT holders.
From an analytical standpoint, the value of IP NFTs can be evaluated in a manner vastly different from that of PFP NFTs. Creators and buyers of IP NFTs can assess the economic and cultural value of the intellectual property in question, considering factors such as future royalty cash flows, the commercial value of secondary development, commercial licensing potential, and liquidity of the NFT itself.
The music industry presents an intriguing example of how IP NFTs have the potential to revolutionize traditional models. Historically, musicians have been exploited by record and audio-streaming companies such as Spotify, with little bargaining power to negotiate a fair deal. However, the emergence of NFTs can help level the playing field by facilitating direct funding of musicians through the sale of music NFTs. In this way, fans and NFT holders can become investors, thereby enabling musicians to bypass record companies and audio-streaming companies. Additionally, fans can assist with music content distribution and participate in content creation if desired.
Despite the tremendous potential of IP NFTs, their mass adoption will require bridging many links within the IP industry, integrating web2 and web3, legalizing smart contracts to be equal to legal contracts, and ensuring that NFTs represent corresponding intellectual property rights. This requires a concerted effort from NFT builders and the entire ecosystem, making IP NFT development a time-intensive process. However, the increasing recognition of the value of IP NFTs by users and more and more projects experimenting with linking NFTs with specific intellectual property suggest that mainstreaming is inevitable.
Furthermore, negotiations regarding the potential income-sharing model with musicians must also be considered, as the web3 legal framework for content creators is still in its infancy. Fortunately, a few service providers such as Euterpe are bridging the gap between web2 and web3, assisting content creators and holders in entering the web3 space, and providing ultimate copyright solutions for web3 content, including music and beyond. Euterpe also offers content creators and NFT holders solutions to deal with copyright registration, licensing, transaction, investigation, royalty collection, and dispute resolution.
In conclusion, IP NFTs are poised to revolutionize content creation across various industries, not limited to music. The tokenization of digital assets and real properties is a significant web3 trend, and IP NFTs offer an innovative economic model that can be applied to video, books, games, offline concerts, celebrity merchandise, patents, and trademarks. However, operational details such as the web3 legal framework for content creation and DAO governance for further development are still being refined.