Hollywood Meets Art: How NFTs Are Revolutionizing the Entertainment Industry
Technological innovation has always played a crucial role in developing the entertainment industry. Whether it is film and television, music or gaming sectors, the significance of technology cannot be understated. Each entertainment industry sector has always found a way to co-opt the latest technologies, whether digital cameras or the internet, to achieve better results.
The emergence of blockchain technology has provided a new opportunity for the entertainment industry to improve and redefine itself, and evidence suggests it has taken it. Although blockchain technology can help the entertainment industry in several ways, non-fungible tokens (NFTs) have, in my opinion, the best product-market fit for easy adoption at the moment. Let’s look at how the trends and future are moving toward NFTs.
The Entertainment Industry and Its Participants
NFTs are unique digital assets verifiable on the blockchain and can represent real-world or digital items. The uniqueness of NFTs makes them a strong fit for the entertainment industry, where intellectual property is the currency. Everything in the entertainment industry revolves around creation, distribution and monetization. It takes talent to create, but NFTs could help with distribution and monetization.
For the entertainment industry as a whole, NFTs could help with the protection of intellectual property rights. Whether it is film, art or music, creative works are the lifeblood of the entertainment industry, so they need to be protected.
Although intellectual property laws protect these IP rights, it is not as effective as they used to be. This is because technological advancements have moved faster than the legal framework of IP protection. The internet and digital age have made it easy to copy other people’s work without their permission and even monetize it. With generative AI now gaining momentum, this problem is going to worsen.
There are already efforts to protect these IP rights. But not even major companies with their big legal budgets have been able to completely stamp out piracy. For smaller and independent creators who are not affiliated with such corporations, protecting their work is a lot harder.
The key characteristics of NFTs — immutability, provenance and traceability — could provide a potential solution for everyone. Creators that issue NFTs create a record of origin and ownership, which cannot be altered. It is even possible to implement controls on the usage of the NFT and track ownership perpetually.
Additionally, NFTs could help creators with distribution and monetization. This is especially important for independent and lesser-known creators struggling to monetize their works using traditional distribution systems. One area where this is most evident is in the music industry. The music industry is projected to make over $65 billion in 2023. But most of this money goes to record labels and the superstars who get billions of streams.
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For independent artists, the maximum $0.005 per stream on Spotify and $0.01 on Apple Music is barely enough because they have to get millions of streams to make a significant income. Using NFTs, such artists could earn more while focusing on a smaller audience. Water & Music reported that recording artists made $83 million from primary sales of NFTs in 2021, and 70% of that revenue went to independent artists.
Other creators, such as digital artists, have also leveraged extensively on NFTs to protect their IP and monetize their works. In 2021, Beeple sold his Days of Our Life NFT for $69 million, the most expensive digital art ever. Even though not everyone has achieved this level of success, several digital artists, including in places such as Nigeria, have found NFTs the perfect tool to monetize their works.
Aside from independent creators, even successful artists and celebrities could use NFTs to make extra income. They can leverage their fame to issue NFTs based on their IP that has not been licensed. For instance, Canadian musician Grimes did this in 2021 when she issued NFTs of digital artworks and made $6 million in revenue. Popular actor William Shatner also released NFTs based on Star Trek and his personal life, which sold out within hours.
It’s noteworthy that NFTs don’t just generate one-time income for the creators, but they can also guarantee recurrent income on every sale. Most NFT smart contracts have a specific percentage as a royalty fee, and creators get this percentage on every second sale.
Meanwhile, NFTs could also be a way for creators to connect with their fans directly. The traditional distribution system depends heavily on intermediaries. There are record labels for musicians, galleries and auction houses for artists, publishing houses for authors and film studios for actors. These intermediaries play a crucial role in funding and distribution, but not everyone can or wants to be subject to their control and authority.
For the creators who choose deliberate independence or cannot secure deals with the major intermediaries, NFTs could be a way for them to get funding by marketing directly to their fans. This way, those fans can be investors in the creator’s progress with the potential to make profits if the creator becomes successful. The artists also enjoy more creative independence and control of their works.
Even established creators can still use NFTs to connect with their fans or offer extra perks as rewards for their fandom. American rock band Kings of Leon did something like this in 2021 when it issued three types of NFTs; one offered a special album package, the second was exclusive audio-visual art and the third offered perks such as lifetime front-row seats at live shows. Other musicians like 3LAU and Snoop Dogg have released NFT collections with similar perks.
The trends seem to be leaning toward NFTs, so it is not surprising that NFT marketplaces such as OpenSea, Blur, SuperRare and Nifty Gateway are becoming go-to places for digital art and entertainment. Specialized marketplaces such as Audius, Royal, Catalog, SoundXYZ and Opolous have also emerged for music NFTs. With NFTs, every participant in the industry, from the creators to the fans, stands to gain something. It might take some time, but the revolution will be tokenized.