Aron Solomon is the senior digital strategist for NextLevel.com and an adjunct professor of business management at the Desautels Faculty of Management at McGill University.
Today Kings of Leon will release their new album in the form of a non-fungible token (NFT). They will become the first major musical artist to ever release an album this way.
This is a pretty big deal and here’s the very long answer as to why.
An NFT is a type of cryptocurrency, which means that it is a type of virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. But instead of holding money (which the cryptocurrency that you’ve already heard of does) NFTs hold assets such as art and music.
NFTs operate on a blockchain, which is a publicly accessible and transparent network — meaning anyone can see the details of any NFT transaction. It is impossible for an NFT transaction to be hacked because there is a massive network of computers involved. What this means in a practical sense for NFTs is that their value is very much like the value of a stock – it fluctuates and can be highly subjective and quite volatile, as we’ve seen in the news a lot so far this year.
Samir Patel is a Miami-based attorney at Holland & Knight, LLP, and is a crypto expert. He explains that “any NFT is nothing more than ownership over metadata – no other ownership rights are transferred.”
While the Kings of Leon album will of course be available on Apple, Spotify, and everywhere else we usually acquire our music, the NFT version available on YellowHeart will be the only product with special perks. The NFT YOURSELF open edition of the album will run for two weeks starting March 5 at 12:00 p.m. ET. This NFT collection includes up to 25 unique pieces starting with a $50 exclusive NFT collectible. In other words, the NFT token, priced at $50, includes enhanced media, very much like an alternate, moving album cover. After the two-week release period, no more will be made, and the NFT becomes a collectible that can be traded just like any other collective can.
While Kings of Leon are certainly trailblazers this week, eventually, like Bitcoin, NFTs will become mainstream and the appetite to own NFTs will only increase as more real-world, tangible things are represented on a blockchain as an NFT.
Patel adds, “NFTs can be the nexus between real property and its ownership on a blockchain, like a digital deed. They can serve as tickets to an event or a certificate of provenance for a diamond. These types of applications require much more trust and collaboration between blockchain developers and public/private enterprises, but art as an NFT, is low-hanging fruit for the technology.”
Of course, just as cryptocurrency did, the demand for NFTs will drive a concurrent demand for a new genre of lawyer that will specialize on digital ownership of assets on a blockchain.
As to the consumer side of the equation, Krenar Camili, a New Jersey lawyer and founder of Camili Law, feels that NFT’s are as safe as any other collectible. “There is always an element of ‘buyer beware’ with any collectible, but as long as the maximum loss is just the value of what was spent on the collectible and nothing more, then an educated consumer is hopefully making an educated gamble.”
It is worth noting that today’s NFT market is a new era and new territory for blockchain technology and we should see NFTs become more common. That doesn’t mean that prices of NFTs will continue to rise – prices of crypto assets tend to eventually normalize. However, as Patel observes, “the exuberance around NFTs identifies a thirsty market for digital art, which will absolutely include music.”
It is worth noting that lawyers such as Patel aren’t new to preaching the legal utility of NFTs – they have been doing so since their inception (as what’s known as an ERC721 token) on the Ethereum blockchain.
If you really want a much deeper dive into the subject of crypto in music, Rolling Stone has an amazing guide. This is something we will hear a lot more about in 2021, as more musical artists continue the industry’s evolution from the old victrola record player to a bright, digital future.