Non-fungible tokens (or NFTs) have exploded in popularity, with everything from digital artwork to basketball highlights being minted to the blockchain. It’s exciting and full of promise and opportunity — but unfortunately also a fast-moving vector for new forms of fraud and misuse.
An NFT is a unit of data recorded on an infinite digital ledger — a blockchain. When an NFT is minted, its ownership is recorded and can then be tracked with subsequent blockchain entries if it is transferred or sold. NFT advocates see the promise of new markets for “one of a kind” digital items and properties.
But if that is going to happen, consumers need to be protected and basic legal rules of the road — like copyright, trademark, protection of name, image and likeness, and fair competition – must be followed. First principles still apply.
Recently we’ve seen a rash of NFTs associated with popular artists or their songs being offered to the public apparently without the artist’s or copyright holder’s knowledge, involvement, or permission. These sites are charging exorbitant prices for these NFTs, promising ownership in a “unique song recording” and often featuring album art or artist photos to lure in unsuspecting fans. While the details are still being investigated, these operations appear to be wantonly violating laws related to copyright, trademark, state right of publicity and consumer protection, and more.
But in the meantime, these services have raked in profits that are going… well, we don’t really know where that money has gone, but there’s no sign it’s reaching the artists and songwriters who created the music powering these NFTs.
RIAA and its members are working hard to shut down these bad actors and protect fans. We have already sent notice to the high-profile site HitPiece and are watching closely for copycats and similar operations that could undermine the legitimate market for music NFTs that is starting to bloom.
And that market is likely to be substantial. As new technologies have developed, music has almost always been first on the scene to find new ways to license and develop it. And artists and record labels have never worked harder to meet fans where they are and find ways to enhance their digital experiences with music.
Record companies have worked tirelessly to license new apps and services like TikTok and Peloton to ensure fans’ favorite music is available everywhere they want it. From concerts in the metaverse to Fortnite “emotes” by your favorite stars, music remains central to new digital experiences, and labels and artists are seizing opportunities at the very edge of the digital frontier.
But none of this would be possible without clear and strong rules and a way to ensure artists and all creators are paid for their work.
Record companies, artists, songwriters, publishers, and digital music services have collaborated to create a robust ever-evolving streaming ecosystem where fans can access all the music they want and more from properly licensed services. The same thing is possible with NFTs. We can have a marketplace of licensed music-related NFTs that delivers a new revenue stream for creators while giving fans another way to connect with and support their favorite artists. In fact, record companies are already actively participating in new and exciting NFT projects.
As “Web3” gives us new ways to connect with each other and move physical experiences online, we have to remember that behind every piece of art is an artist. Behind every note played is a musician. And they deserve to be compensated for their work and for what that work contributes to the culture — offline and online.
Mitch Glazier is chairman and CEO of the Recording Industry Association of America (RIAA) where, over 20 years, he has played a role in the music industry’s transition to streaming and “anywhere, anytime” access to music. In his career in and out of government, Glazier has worked on every major copyright bill considered in the past three decades from the Digital Performance Right in Sound Recordings Act of 1995 to the Music Modernization Act of 2018.