How NFTs can help ensure a bright future for the creator economy

Intellectual Property (IP), is a set of rights created by law to protect creative works. They can protect creative rights in many forms such as books, music, art and inventions.

These laws ensure that artists and creators are paid fairly for their work. But does that really happen?

Different types of intellectual property rights

Depending upon the type of creation/invention there are three main types of intellectual property that can be used: copyright and trademarks. We are most interested in copyright, trademarks and patents for this article.

Copyright gives artists the right to use and protect their creative works. Copyright protects creative works such as literature, music and recorded sound.

Under Nigerian law artists are, for instance, protected from third-party infringement. Nigeria is also a party to treaties like The Universal Copyright Convention 52 and the Berne Conventions regarding the protection of literary, musical, or artistic rights.

This means that you, as a creative person in Africa or around the globe, are empowered to enforce copyright laws immediately upon their creation.

  • Songwriters and composers are often able to create music on their own, or in collaboration with artists/performers.
  • Performers on records create copyrights. Reproducing songs or compositions also earns them royalties.
  • Record labels invest money in artists and producers, manage their rights and market their music. Record labels make money by retaining the rights to recorded music for a specified period.

Music industry trademark

Creatives in the music industry use trademarks to protect their image rights, personal brand and identity from imitation and impersonation. They must be registered, unlike copyright. A logo, word or slogan, an audio recording, images, or shapes closely associated with your brand, as an artist, are all common trademark types.

It is recommended to register your trademark if you have a logo, a name, or any other closely related music brand.

Artists and labels can register trademarks to protect their business and from copycats. You can also license or sell your trademarks to other parties by registering trademarks.

Now that we’ve gone over the basics of intellectual property in the music business, let us talk about Non-Fungible Tokens (NFTs).

What are NFTs? Do they grant IP rights to their owners?

An NFT represents a cryptographic representation for a unique digital asset. It can be used to represent assets such as a copy of a song or a version thereof that can be stored on a Blockchain or “off-chain” like on a website.

Each NFT is powered using a smart agreement (contract on the Blockchain) that gives it a unique identity. The blockchain also keeps an unchanging record of ownership.

NFTs offer a new way to view intellectual property. Tokenization allows music to become a digital asset, and can be sold or licensed on a market.

First, it should be noted that the acquisition of ownership of an NFT doesn’t automatically grant the new owner IP rights to the asset. The terms of a contract recording the transfer by the creator of the music work determine which rights the NFT owner will have.

Artists who wish to protect their IP rights on their music can do it in accordance with their contract. Artists can also grant IP rights through contracts. For example, Nas’ recent single “Ultra Black” also granted owners a share of royalties.

How IP rights and NFTs could ensure creators a more equitable income

Changes in distribution and streaming have changed the music industry’s business model. Yet, streaming does little to help artists get fair compensation— only the top 0.8% of artists on Spotify earn $800,000 and above. Many artists have difficulty monetizing their work and keeping control of it.

Music NFTs are a rare digital collectible for loyal fans. This is the long-term vision of Music NFTs, but it requires more legal engineering to overcome legacy music industry barriers.

The artist gets to decide what song, or songs, they want to offer their fans as NFTs and what kind of “utility” the NFT will receive. This could include commercial licenses for musical works. It could also include music videos, merchandise and tickets.

NFTs permit music works to become digital collectibles, which allows early fans to show support for the artist and help finance the album/song production costs.
Artists can create a loyal following on streaming sites (and new NFT dedicated websites) by sharing their work.

The majority of the proceeds are sent directly to artists and not to middlemen or large industry players, which ensures fair and equitable revenue distribution.

There are no entry barriers for new artists to the music NFT scene. You can customize your content to suit specific audiences and upload/market to your fans directly, without any intermediaries.

Music NFTs allow artists to hold on to ownership of their work, even if they market them as NFTs due to the record of ownership built into the NFT’s metadata.

Who is creating IP-powered NFT marketplaces to artists and creators

It is still early days and there are many things to do. As we mentioned, Music NFTs has a long-term vision to allow musicians to create audiences and sell all music directly to them.

This will require more legal engineering and the removal of legacy music industry barriers. The old guard will not be leaving anytime soon.

Euterpe is the clear leader in this area. Other platforms include sound.xyz and Royal.io focus mainly on music collection and music streaming, and revenue splitting.

Euterpe, a platform that allows creators to build IP-powered tools, is a great place to start. It is the inventor of “IP-powered NFT as a Service with SocialFi” aiming to build a healthy ecosystem for creativity to thrive, for creators to be duly and equitably compensated and for fans to be an integral part of their favorite artist’s success.

The team aims to develop blockchain technology for intellectual property rights and to give NFT collectors financial benefits from investing in, discovering, and promoting original works by artists. The stellar team is composed of mainly Stanford alumni, with senior ex-Google, Meta’s Diem, ByteDance, TME, Sony Music, CAA and Uber credentials on the team.

Euterpe’s emphasis on two key components of creative distribution in the Blockchain is what is most appealing about it: an IP-powered NFT market and SocialFi. The core product is built on key value propositions

Content creators have access to innovative NFT fundraising process, effective SocialFi promotion engines, and copyright smart contracts that increase revenues dramatically; Fans become investors who share in the commercial success by acquiring a portion of copyright ownership in creative work and therefore receiving a percentage of revenue flows; Fans turn into active community participants, rewarded financially for their contributions in promoting new artists and new works through Euterpe’s native token.

In terms of funding, Euterpe has investment backing from Fenbushi Capital,  the first and most active blockchain-focused venture capital firm in Asia, and Huobi Ventures, the VC arm of the global crypto giant Huobi The startup says that the new funding will be used to develop a game-changing NFT marketplace featuring high-quality, scam-free content for users, alongside robust IP protection for creators.

Euterpe has signed over 30 record labels in IP. Around 30 songs by more than 20 artists will be released as the first batch of NFTs for Euterpe’s beta launch.

In terms of traction, Euterpe has passed Fairyproof’s smart contract audit. The audit comprehensively evaluated the platform’s code function, data security, permissions, financial safety, contract migration and upgrades, giving it excellent passes on all counts.

Notable is also the improvement of the background interfaces to music classification and playlists, as well as the implementation of API calls of the marketplace and auction functions and the secondary market subpage function.

The project promises that the refactored marketplace listing API will reduce latency. Furthermore, the upgrade of these functions is expected to greatly improve the user’s experience.

Both IP and NFTs will only work together if there is SocialFi – incentivizing both collectors and fans with continued interaction, and followership – which in turn brings rewards for both creators AND fans. Both sides can benefit from the commercial aspect of IP, even if creators do not explicitly pass it on to their fans. Artists can also get financial rewards based on the intellectual property they create, while investors (fans), are able to share in the commercial success of artists by receiving a percentage revenue flow.

You can read Euterpe’s whitepaper here.  This is the first published blockchain whitepaper in a SSCI law journal.

The following are some key points about IP and NFTs

IP owners have new options to monetize their portfolios with non-fungible tokens. It is still early days and there are many things to do. Music NFTs can bring some disruption and real value to an industry that has been historically repressive and underserved.

Africa’s entertainment scene has blossomed these past few years, propelled by global acceptance of our music and artistic works, hinged on the rise of legacy streaming platforms. Music revenues are estimated to be in excess of 10 million Africans. projected to reach $297million in 2022.

Problem is that legacy streaming platforms are notorious for paying unfair compensation to creators. There is also a clear algorithmic bias favoring established artists over promoting newer ones. Additionally, the environment is siloed making it difficult for newer artists to enter the market without solid backing.

Platforms like Euterpe and other IP-powered marketplaces will be the future of copyright. All that is certain is that this will empower a specific section of creators and creatives, who will have full ownership rights over their intellectual property.

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