Tag: ansaintalogiikka
Your fans are the new patrons. Here’s how Web3 makes it possible.
Web3 technology is fundamentally changing how creatives can monetize, connect with fans, and manage their content. Decentralized platforms, tokens, and smart contracts offer new ways to monetize, but they also challenge traditional intermediaries and business models. In this blog, I’ll explore how creatives can leverage the opportunities Web3 offers and new ways fans can participate in supporting and monetizing content. Tokens: new concert tickets and fan clubs From a revenue perspective, the core of an artist's relationship with a fan is a token, which is a digital token. A token could be compared to a Linnanmäki amusement park ticket: you can't get to the rides at an amusement park directly with euros, but by buying a ticket, you can get to the ride of your choice. In simple terms, a token is the digital equivalent of a single ticket, but in web3, the uses of a token are often more diverse, and their value can increase over time. No middlemen: direct connection to fans Traditionally, musicians have been dependent on major record labels and streaming services for the distribution of their music. This has often resulted in a significant portion of revenue going to middlemen: publishers, labels, agents, and other professionals who act as intermediaries between the artist and the audience. With the new internet, decentralized platforms enable direct communication with fans without intermediaries. For example, platforms based on blockchain technology allow artists to publish their music directly to the public, while retaining full ownership of their works. They can use smart contracts to determine how the use of the work is regulated and how, for example, the revenue from sales is allocated to the music creators. Traditionally, the connection with fans has been used as the basis for marketing: various mailing lists have been the basis for marketing, through which those who like the content created by the artist have been informed about new releases, for example. In the Web3 era, the role of the fan has been thought of differently: the fan is more of a partner than an object. "Engage-to-earn" at the heart of the new fan culture The engage-to-earn model is a new approach where both artists and fans benefit from active participation and interaction. In this model, artists can create digital tokens or NFTs (non-fungible tokens) that represent, for example, access to exclusive content, events, or other benefits. Fans can earn these tokens by engaging in various activities, such as sharing the artist’s content, participating in discussions, or completing certain tasks. This creates a two-way relationship where fans receive rewards for their activity, and artists benefit from increased visibility and an engaged audience. For example, in the music industry, Audius.co is a decentralized music streaming platform that aims to provide a fairer model for artists and fans compared to platforms like Spotify. The platform allows artists to release their new music directly to their fans without intermediaries and charges an introductory fee that gives the fan perpetual listening rights to the content. The content comes with access to a fan club that offers direct interaction between artists and fans. For example, electronic music composer and producer Dave Tipper has released his music on the platform and offered fans $AUDIO tokens, which give access to, among other things, fan-only events and through them become part of the subculture created by fans. Mirror.xyz, a platform for writers, allows content creators to publish their works. One of the platform’s successful experimenters was young author John Palmer, who wanted to publish an essay on his Mirror website. He sold tokens called $ESSAY, the proceeds of which were used to finance the writing of the essay. The agreement was that once the funding goal was reached, the essay would be published, and token holders would receive a share of something that could grow in value over time. The crowdfunded finished essay was sold on the online auction platform Zora. The proceeds were funneled back into the $ESSAY contract, increasing the value of each investor’s $ESSAY holding relative to the total value of the contract. Decentralized financial services enable fans to participate as investors in artists’ projects. For example, fans can invest their funds in an artist’s new album or film project and receive a share of future revenues in return. This model utilizes smart contracts that ensure automatic and transparent profit distribution to both the artist and fans and other parties specified in the smart contract. From fan to participant In the Web3 world, fan participation doesn’t necessarily stop at the role of an investor. They can also participate in decisions related to the development of artists’ careers and financial success by joining decentralized autonomous organizations (DAOs). In these communities, fans acquire tokens that give them voting rights and the ability to influence the artist’s activities. The Audius.co platform I mentioned earlier is governed by Audius token holders. These include both artists and fans. Token holders can vote on decisions related to the development of the platform, such as new features or terms of use. This model gives fans the opportunity to directly influence the operation of the platform and the visibility of artists, which can improve the financial opportunities of both fans and artists. One of the DAOs for artists, creative professionals, and fans is the Friends with Benefits (FWB) community. Membership in the community is achieved by acquiring a certain number of FWB tokens, which grant both entry and voting rights in community decision-making. FWB functions as both a social club and a funding crypto community. FWB organizes various events and festivals for its members, combining music, art, and cryptocurrency-related discussions. For example, the festival held in the summer of 2023 was open to members as well as a group of ticket holders (the ticket price was $399). The festival program included a diverse selection of speakers from technology to art. The event included a cinema, free generative art workshops organized by the NFT platform Highlight.xyz, yoga classes, DJ gigs, and a tennis tournament, where many participants dressed in all-white tennis attire. The educational speeches focused mainly on internet culture and in particular on the use of artificial intelligence in creative projects. In addition to the festival itself, the key benefit was a network of people interested in similar things, living as virtual and, at times, physical communities. Through DAOs, fan participation can lead to deeper engagement and financial benefits for both fans and artists. Fans are given the opportunity to influence the direction of artists' careers and financial success, and also to build activities that, in addition to inspiring content, promote networking and support the development of the creative industry. Only need 1,000 fans? In 2008, Wired magazine editor-in-chief Kevin Kelly introduced the idea of "1,000 True Fans," which states that an artist only needs 1,000 dedicated fans to succeed. Since then, Kelly's essay has been extensively updated and translated into many languages. The starting point of the idea is that if fans spend $100 per year on the products of the artist they admire, the artist would achieve an annual income of $100,000. This amount was therefore thought to be transferred more or less directly from fan to artist. However, in reality, complex production chains and professionals from different fields challenge the 1,000 fan theory. More and more artists can share their creations with the world at the touch of a button, enabling them to reach an ever-wider audience. They are drawn to the content, but also to the opportunity to interact with the creators of the creative content on a whole new level. But could the theory be reversed in the era of limitless digital communication, fueled by Web3? Could the reduction of intermediaries generate greater income for artists, or will the intermediaries simply change their roles while still receiving compensation for their professional contribution? Web3 may bring the 1,000 real fans theory closer to reality. Cutting out middlemen and engaging fans can increase an artist’s earnings, but they don’t eliminate the need for brand building, community management, and marketing. While blockchain and tokens bring new opportunities, they don’t automatically make an artist successful – it still requires audience engagement and ongoing interaction. The future will show how well Web3 delivers on its promise for the creative industries: is it a revolution or just another development in the digital economy? SOURCES Borg, J. (2024). Superfans: Why They’re Vital for Artists in the Algorithm Era. Amplify World Resources 18.1.2024. https://amplifyyou.amplify.link/2024/01/music-superfans/ Fenton, W. (2023). What is Web3 for music & how is it changing the industry? Midder. The Future of Music News 24.11.2023. https://middermusic.com/web3-for-music/?utm_source=chatgpt.com Fernandes, M.P. (2023). Crypto Clubs Throwing Summer Parties: Inside The Friends With Benefits DAO Festival. Forbes 10.8.2023. https://www.forbes.com/sites/digital-assets/2023/08/10/crypto-clubs-throwing-summer-parties-inside-the-friends-with-benefits-dao-festival/ fi.music396.com. Fanien sitoutumisstrategioiden mukauttaminen digitaalisiin alustoihin ja kulutustrendien muuttaminen (n.d.).https://fi.music396.com/topic/adapting-fan-engagement-strategies-to-digital-platforms-and-changing-consumption-trends/167277 Gottsegen, W. (2021). How Emily Segal Crowdfunded Her New Novel with Crypto. Deepdive Crypto profiles 24.2.2021. https://decrypt.co/68981/emily-segal-novel-crowdfund Marco J.D. (2022). The Musician's Guide to Web3. Mega Labs Article 6.7.2022. https://www.thelab.report/the-musicians-guide-to-web3/?utm_source=chatgpt.com Nittolo, T. (2024). A Peek Into The Tipper Community. Audius blogit 21.11.2024. https://blog.audius.co/article/a-peek-into-the-tipper-community Palmer, J. (2021). Using an Ethereum NFT to Crowdfund my Writing. Mirror.xyz 26.1.2021. https://j.mirror.xyz/OgVaYso25gEqxn7N4RyPnPbMO9pbNQJZQKEUvV9pxv8 Umana, D. (2024). Jack Harlow, Palaye Royale, and other music artists are using blockchain to connect with fans — and build profitable online communities. Business Insider TECH 16.2.2024. https://www.businessinsider.com/music-platforms-blockchain-artist-create-fan-clubs-communities Katri Halonen (Metropolia University of Applied Sciences) works as a project manager in the LUME – Creatives in the web3 era project, co-funded by the European Union, which focuses on new revenue models in the creative industry.
A new era of fan service
I was a Dingo fan when I was young. I first saw them on stage at my hometown vocational school and joined the fan club. My friend and I would share photos of our idols. Today, with social media, fan engagement has transformed into following, liking, and purchasing products. What if fans could be more involved – not just as distant admirers, but as part of a community where they could have a more personal experience and be recognized for their participation? The new internet (Web3) is opening doors to fan services, where tokens enable fans to experience unique experiences, exclusive content, and completely new types of fan services. In this blog, I dive deeper into how Web3 can change the way fans and artists meet. Tokens as a bridge between artist and fan A key challenge in fan relationships is communication. The new internet offers one solution to this challenge in the form of blockchain. The information stored in the blockchain is public, which allows artists to establish a direct connection with their fans by utilizing the fan's unique crypto wallet address. Knowing this address, artists can send their fans digital gifts in the form of tokens. However, it is important to note that the crypto wallet address alone does not contain personal information about the fan, which guarantees the privacy of users. A token is a digital unit that represents value or rights on a blockchain. It can act as a means of payment, a right to use a service, or an ownership interest in an asset, such as special content or services provided by a creator. Tokens act as a bridge in both directions. For example, American rap artist Snoop Dogg has moved his Death Row catalog to a platform called Tune.FM, thereby declaring that the era of Spotify is over. Tune.FM is a decentralized music streaming platform that utilizes blockchain technology and tokens called JAM. When a fan listens to Snoop Dogg's music on Tune.FM, he pays for his listening with tokens. These payments are transferred directly to Snoop Dogg without intermediaries. (Syväluomi 2025.) The payment is very small in nature, the price of one JAM token is approximately 0.0001753 (USD) at the time of writing. Compared to a traditional streaming service, this provides a fairer compensation for the artist by bypassing many intermediaries. Snoop Dogg also gets a direct connection to reward his fans, for example with a token that entitles them to purchase one concert ticket 2 hours before the actual sale starts. Stardust over content creators Traditionally, fan culture has been built around well-known creators and performers. Musicians, actors, and other major stars in entertainment have benefited from fan communities that are willing to purchase fan merchandise directed at them. That connection is nurtured and strengthened through performing. At the same time, many other creative content creators, such as visual artists, writers and designers, have been overshadowed as builders of fan services. Their work has not been based on direct, systematically maintained audience contact in the same way. However, fan services of the new internet can change this situation: they offer new ways to support and fan the creative professionals who traditionally work in the background. Any creative can build their own fan communities, where passionate supporters can participate, influence, and be recognized for their support. Specialized and even unique content can find their own fan base thanks to the global internet. Exclusive tickets – more than just an event ticket Traditionally, an exclusive ticket has meant a front-row seat to a concert, a premiere, or VIP access to a festival. In the new internet world, such tickets can be transformed into digital tokens owned by fans that offer additional benefits. Music and film fans can purchase special tickets that entitle them to, for example, an artist’s soundcheck or a film premiere discussion with the director. For example, Kentucky rapper Jack Harlow has sold VIP tickets to his concerts in the form of NFTs. Compared to regular tickets, the holders of these tickets had, among other things, faster entry and early entry to the concert venue to grab the best seats (see Kubinek 2023; Bincnce 2023; Halonen 2023). Entrepreneur Gary Vaynerchuk has launched the VeeFriends NFT collection. Each NFT grants entry to VeeCon (see VeeCon 2024). The event will run over several days, and the NFTs will serve as both collectibles and access to events hosted by the artist and other community members. For example, Elton John’s Rocket Club NFT membership gives access to the artist’s special photo collections (Sweetio.com), and Snoop Dogg’s The Passport Series NFT gives its owner the opportunity to accompany Snoop Dogg in the backrooms of concert venues and events on his tours (Langston, 2023). Martha Stewart and Quentin Tarantino also have their own NFT communities (Langston, 2021). The content of different VIP events is very diverse. Film fans can participate in NFT-based viewing experiences, where the film's director or lead actors discuss the film with fans. In the theater industry, closed readings can be organized, where fans can follow how a new play is being developed. In literature, VIP events can mean, for example, exclusive literary circles, where an author discusses his works with fans, and designers can invite their fans to design launches, where new collections are presented before official sales. A peek behind the scenes of creative work as a service for fans Especially during the corona years, a digital leap was taken towards remote participation. Zoom, Teams and Google Meet became familiar to many. These also led to the spread of digital artist meetings aimed at fans. There is no need to travel to the meeting, and everyone (including the artist) is physically safe behind their own screen. For example, director Kevin Smith (n.d.) released her film "KillRoy Was Here" in NFT form, giving NFT buyers not only the film but also the opportunity to participate in virtual meet & greets with Smith and access to behind-the-scenes footage. In addition to stars, people also want to meet creative professionals who stay behind the scenes. For example, the meeting site Charitybuzz.com has sold an hour-long Zoom remote meeting with, among others, The Walking Dead director Rosemary Rodriguez (Charitybuzz, 2025). Authors can sell special edition NFT books that entitle them to a private Q&A session, for example regarding alternative story endings. On the non-fiction side, Amanda Cassatt's (2023) Web3 Marketing book came with a limited-time purchase of the book, along with the right to join her private Discord group, where you can meet Amanda and other Web3 marketing developers. Visual artists can offer access to closed art tours that explore the creation stories of their works, while designers can sell limited tickets to prototype exhibitions where fans can provide feedback before the wider launch of products. A new era of fan culture In the Web1 era, mailing lists were collected from fans, in the Web2 era, various social media data and information provided by cookies in website tracking became the source of fan information. In the era of the new internet (web3), blockchain plays a key role in reaching fans. The tokenized services offered by the new internet not only deepen the relationship between artists and audiences, but also expand the concept of who can be fanned and how. Fanning is no longer just a domain dominated by the performing arts – writers, artists and designers can also build their own communities where fans can participate and influence more than before. So perhaps the title of my blog should have been a new era of fan culture instead of a new era of fan services. When I was young, joining the Dingo fan club and sharing photos with a friend, I felt a connection of sorts – even if it was a one-sided fandom. The new internet allows today’s fans to have a deeper and more personal connection with their favorite artists. With the help of blockchain, fans can own digital collectibles, participate directly in events organized by artists, and receive recognition for their activism. This development is transforming fandom from one-way admiration to an interactive community where fans are active participants and influencers. Sources Binance News (2023). Jack Harlow's Concert-Goers Experience Blockchain-Based VIP Tickets. Binance News 5.12.2023. https://www.binance.com/en/square/post/2023-12-05-jack-harlow-s-concert-goers-experience-blockchain-based-vip-tickets-983371762130 Cassatt, A. (2023). Amanda Cassatt on Web3 Marketing and the early days of Ethereum. Decrypt @DecryptMedia 25.10.2023 https://www.youtube.com/watch?v=p-LhIrf7Jco kohdassa 36 min). Charitybuzz (2025). https://www.charitybuzz.com/catalog_items/auction-1-hour-power-meeting-with-walking-dead-director-3129433 Halonen, K. (2023). NFT haastaa konserttien lippubisneksen. Metropolia AMK, LUME blogit 30.8.2023. https://blogit.metropolia.fi/lume/2023/08/30/nft-haastaa-lippubisneksen/ Kubinec, J. (2023). How MITH brought Jack Harlow fans to the blockchain. Blockworks newsletter 2.12.2023. https://blockworks.co/news/jack-harlow-mith-fan-engagement Langston, T. (2021). 15 Celebrities Who Are an Active Part of the NFT Community. NFT Now 10.11.2021. https://nftnow.com/culture/stars-active-in-nft-community/ Langstion T. (2023). Snoop Dogg Takes Fans on ad Digital Journey With New NFT Passport Series. NFT Now 14.6.2023. https://nftnow.com/news/snoop-dogg-takes-fans-on-a-digital-journey-with-new-nft-passport-series/ Smith, K. (n.d.). Kilroy was Here. Katsottu 13.3.2025. https://killroywashere.io/ Sweetio.com (n.d.). Elton John Rocket NFT Club Pass No. 1466. https://sweet.io/listings/pgWR0ajK Syväluomi, V. (2025). Snoop Dogg vie Death Row -kataloginsa Tune.FM:ään -- Soprityn aika on ohi. Klangi 28.2.2025. https://www.klangi.fi/uutiset/snoop-dogg-musiikki-tune-fm-web3-suoratoisto/ VeeCon event (2024). Lippukauppa. https://veecon.co/tickets Katri Halonen (Metropolia AMK) toimii projektipäällikkönä Euroopan unionin osarahoittamassa LUME – Luovat web3-ajassa hankkeessa, jossa keskitytään luovan alan uusiin ansaintamalleihin.
Forget the band shirt – new products for digital fandom
Traditional fan merchandise, such as shirts, posters and vinyl records, have been an important source of income for artists for decades. My teenage years were marked by experiences at gigs where I walked out as the proud new owner of a genuine band shirt, which my parents thought was a bit overpriced. Wearing it, I declared my fandom and that I was “there” at an important concert. When we jump to 2025, I may no longer have shirts in my closet. However, I want to support the band. Perhaps more and more people will buy fan merchandise as NFTs instead of shirts. In this blog, I will consider what NFT-based fan merchandise is like. What are NFT fan merchandise? NFT (Non-Fungible Token) is a unique digital product whose data is stored on a blockchain that serves as proof of ownership of the product. For example, a typical fan product, a poster, can be illustrated as follows: A poster is an image printed on paper. An NFT is like a digital original of that poster, but its authenticity and ownership are recorded on the blockchain. The blockchain is an open, decentralized ledger maintained by networks. The information stored on the blockchain tells you that the digital poster in question is an official edition from the collection of the band I admire and that my payment is going to the right party. NFTs can be digital art, music, or video footage, and can be bought, sold, and traded like physical collectibles. Sales often occur directly from artist to fan, without long chains of intermediaries. For example, American rap musician Snoop Dogg has made extensive use of NFT technology as part of his fan merchandise. He has released exclusive songs, digital artwork, and fan-owned products such as virtual merchandise in NFT format. He has also designed over 10,000 digital characters that make up The Doggies avatar collection (CNBCTV18, 2023). This creates a new, decentralized revenue stream for the artist without traditional intermediaries. When digital art meets ownership NFT technology has also transformed the digital art scene. For example, Australian 3D artist Andrew Price, founder of the popular YouTube channel Blender Guru, has used NFTs to sell his digital works directly to his fans. He became particularly famous for his NFT mosaic of 3D-modeled doughnuts (Lampel, 2024). The doughnuts were sold at auction without traditional intermediaries, and the sale brought the artist $18,000. Price’s case demonstrates how NFTs can serve as a means for artists to monetize their digital work and offer fans the opportunity to support their favorite artist by owning a unique digital piece. Compared to traditional commerce, the chain between artist and fan is typically much shorter – sometimes without intermediaries at all. Digital art is easily copied and shared, which has made its commercialization challenging. Crypto art utilizes NFT technology, which allows the origin and ownership of works to be verified. However, there are challenges in this field as well. For example, a person may sell an NFT to which they do not have the rights, or it may be a fake. Furthermore, ownership of an NFT is often only a link to the actual work, making ownership of the product dependent on the maintenance of the blockchain and the external storage service containing the work. (Rivero Moreno, 2024) Exclusivity and limited editions of NFT products NFT technology enables limited editions, which increases the value of products. For example, the number of NFT products aimed at fans has been limited to 500 pieces, allowing fans to compete to obtain them. This limited availability model has traditionally been used in vinyl releases and special editions, for example, but in the NFT world it is possible without physical production. Finnish fashion and virtual fashion designer Wilma Kurumaa, aka Kalista, is an interesting example of NFT fan products. Kalista has created NFT-based clothing. Fans can wear these clothes, for example, in the metaverse with their own avatars (Hero, 2025). This shows how NFT products can expand from mere images and audio recordings to interactive and usable digital products. Many NFT products contain both a physical and a digital component, i.e. are phygital. In this case, the NFT proves authenticity, ownership and ownership history - all of which are available for anyone to view on an open blockchain. The new market for phygital fan products T-shirts, pins and posters have been replaced by digital fan products with content that differs from what is customary. Artists can create fan products that are interactive and immersive experiences. NFT fan products can offer fans, for example, a personal digital artwork that includes the artist's signature, a unique animation or handwritten lyrics to a song. This adds value and uniqueness to NFT fan products, making them desirable collectibles. The content of phygital fan products has diversified with the development of digital technology. For example, Julien’s Auctions has sold phygital NFT products (i.e., NFTs that include a physical object and an NFT that proves ownership and origin) including Victoria Beckham’s evening gowns, Barack Obama’s golf shoes, and Leonard Cohen’s old front door key to his home on the Greek island of Hydra (Julien’s Auctions, 2025). Band shirts have moved on to a diverse, often unique world of fan products, where the NFT acts as a proof of authenticity and is a key part of the value of the fan product. Screenshots of the phygital products being sold at Julien's Auction NFT auction Fan shirt: a piece of the past or a future of fandom? NFT technology is still evolving, and there are many opportunities and risks surrounding it. Scams, challenges in understanding the technology, and market volatility can make it difficult for artists to transition to NFT fan products. However, when implemented well, NFTs can provide a more sustainable and fairer revenue model for artists who want to take advantage of the new opportunities offered by the technology (see Wolff, 2025). I'm still proud of my old band shirts. The stains on the prints are especially important. At the same time, the NFT world offers something I couldn't imagine before. It could mean access behind the scenes, exclusive experiences, or digital memories that can't be copied. Fandom isn't going away - it's just changing with the digital age. Or maybe my shirts are finding a new market where I could sell my old worn t-shirt as a phygital product to the highest bidder? SOURCES CNBCTV18.com (2023). 5 crypto and NFT projects that Snoop Dogg has been involved with. CNBTTV18 uutiset, 2.3.2023. https://www.cnbctv18.com/cryptocurrency/5-crypto-and-nft-projects-that-snoop-dogg-has-been-involved-with-16079141.htm Chalmers, D., Fisch, C. & Matthews, R. , Quinn, William & Recker, J. (2022). "Beyond the bubble: Will NFTs and digital proof of ownership empower creative industry entrepreneurs?," Journal of Business Venturing Insights, Elsevier, vol. 17(C). Hero, Laura-Maija (2025). Kalista ja muotiliiketoiminta web3 ajassa. Metropolia ammattikorkeakoulu, LUME-hankkeen blogi 15.1.2025. https://blogit.metropolia.fi/lume/2025/01/15/kalista-ja-muotiliiketoiminta-web3-ajassa/ Julien’s Auctions (2025). Lampel, J. (2024). What's New with Blender Guru ft. Andrew Price. CGcookie.com podcast 31.10.2024. Rivero Moreno, L. (2024). Art on the chain? On the possibilities of new media art preservation on the Web3. Digital Creativity, 35(3), 221-233. Wolff, M (2024). Web3: Huoli digitalisoitumisesta on ymmärrettävää. Metropolia ammattikorkeakoulu, LUME-hankkeen blogi 17.12.2024. https://blogit.metropolia.fi/lume/2024/12/17/web3-huoli-digitalisoitumisesta-on-ymmarrettavaa/ Katri Halonen (Metropolia AMK) toimii projektipäällikkönä Euroopan unionin osarahoittamassa LUME – Luovat web3-ajassa hankkeessa, jossa keskitytään luovan alan uusiin ansaintamalleihin.
Smart contracts for artists: An easy way to earn or a carefully considered risk?
Artist Emmi sat in a café, scrolling through her phone thoughtfully. She had been selling her art for years through traditional means – through galleries and commissioned works. She found herself thinking about the same problem more and more often: how could she make a more sustainable living from art? Then Emmi came across smart contracts. They allowed her to attach a piece of art to a digital contract that would ensure she would automatically receive a share of every resale of the piece. No negotiations, no sending invoices – just a clear, programmed model that took care of her rights. Emmi decided to try it out. She created her first digital series of works and attached a smart contract to it, which guaranteed her a 10% royalty on every resale. Sales were slow at first, but soon one of her works changed hands – and an automatic payment was made to her account without her having to do anything. This encouraged her to go even further in her experiments. However, the more Emmi learned about the subject, the more she realized that smart contracts are not risk-free. Implementing them requires consideration, understanding and preparation for potential pitfalls. Smart contracts open up a new way of earning Smart contracts are programmed agreements that automatically execute agreed-upon terms on the blockchain (Soon, 2024). This means that the artist does not have to negotiate separately how to receive payments or worry about how their works move through the market. The technology does it for them. One of the most significant advantages is the possibility of earning from the increase in the value of the work also in the so-called secondary market. Traditionally in the field of fine arts, when a work of art is sold, its ownership is transferred to the new buyer, and the artist no longer benefits from possible future resales. With the help of smart contracts, the artist can set an automatic royalty in the terms of the contract, which is paid to him for each new sale. In this way, he receives a share of the increase in the value of his work in the long term. (Murat et al. 2024, EU Blockchain Observatory and Forum 2023, EU Blockchain Ecosystem Developments 3, 2024.) A new kind of protection Payment security is also something that Emmi, like many other creative professionals, is used to stressing about. Invoices get stuck, payments get delayed, and you have to ask for them repeatedly. Smart contracts eliminate this worry: when pre-agreed conditions are met, payment occurs automatically without intermediaries or separate approval. Additionally, smart contracts offer a completely new level of protection for digital works. Blockchain technology allows a work of art to be registered in a way that its origin can always be verified. This reduces piracy and makes counterfeiting virtually impossible, as every transaction is permanently recorded and publicly visible. This is especially important for artists who sell digital works and want to ensure that the authenticity and ownership of their work can be easily verified. Overall, smart contracts can offer creatives like Emmi a new way to manage their rights and revenues without being tied to traditional and often rigid contractual models. The possibilities are attractive, but as with any new technology, there are also challenges and risks that need to be understood before full-scale adoption. (Murat et al. 2024, EU Blockchain Observatory and Forum 2023, EU Blockchain Ecosystem Developments 3, 2024) …and a new kind of vulnerability One of the first things Emmi learned was that once a smart contract is stored on the blockchain, it cannot be changed as easily as a traditional contract. Once a contract is made, it is really made. If you wanted to change the terms, for example by increasing the royalty, you would probably need a completely new contract (EU Blockchain Ecosystem Developments 3, 2024). This meant that even a small error in the contract code could be costly. In the traditional world, contracts can be renegotiated, but in a smart contract, the code is the law – and it is implemented exactly as it is written. The error can also be in the code. For example, in 2016, an attacker exploited a vulnerability in the code of the DAO organization’s smart contract to transfer about 3.6 million ether (ETH), which at the time was worth about 50 million US dollars (The DAO, 2024). The role of smart contracts in terms of traditional legal frameworks is uncertain. Smart contracts do not always fit into traditional legal frameworks, and in many countries it is not yet clear how disputes are resolved. This made their use riskier, as the security of the traditional legal system is not always available and it is not even necessarily known which country's legal protection would be used. In blockchains, there are also no guarantees that everyone will act fairly. The changing roles of cultural producers Smart contracts are associated with the idea of reducing the role of intermediaries. Traditionally, art sales have involved multiple actors – galleries, agents and other intermediaries – who take a share of the proceeds. When a smart contract manages payment transactions directly between buyer and seller, the artist can receive a larger share of the sales proceeds without having to negotiate commissions or fees. However, it is unlikely that the intermediary layer will disappear completely. Technological change will bring new job roles – also for cultural producers. They can develop new services that support the interaction between artists and audiences. Artists like Emmi need help in implementing these tools, and cultural producers can be key actors in helping them build sustainable and innovative revenue models. Choosing a blockchain platform and minimizing the risks of smart contracts may become new tasks (see Soon 2024). Traditionally, creatives have outsourced technical and commercial processes to intermediaries in order to focus on their creative work. While Emmi may find it challenging to find a physical gallery for her works, finding digital marketplaces may be easier. However, just as in the physical world, reaching the right audience in the digital environment is a key challenge. Perhaps the smart contract managers of the future will know marketplaces so well that they can help creative content creators find the right environment for their work. They can also draft smart contracts in such a way that their terms optimize the artist’s earning potential. Is it worth trying? Smart contracts offer many benefits to creatives, especially in terms of automated payments and resale revenue. However, their use still comes with many challenges, especially legal ambiguities and security risks. Therefore, before moving to smart contracts, it is important to ensure that the content of the contracts is properly programmed and that users understand the potential limitations of the technology. Smart contracts are not a solution to all problems, but they can offer creatives new and interesting revenue models, especially in the digital environment. They are best suited to situations where revenue is based on secondary markets, automatic payments or the management of digital works. Technology can be a powerful tool, but only when used consciously. For creatives, smart contracts can offer new revenue opportunities – but using them requires understanding, care and a bit of healthy skepticism. Perhaps the advice for Emmi and others like her could be: be cautious. It would be best to use only verified and proven contract templates and start small. Feel free to test low-risk use cases on reliable platforms and ensure the quality of the contract. Technology doesn't have to be scary – when understood and used correctly, it can be a powerful tool for building the future of art and creative work. SOURCES EU Blockchain Ecosystem Developments 3 (2024). EU Blockchain Observatory and Forum raportti.https://blockchain-observatory.ec.europa.eu/publications/eu-blockchain-ecosystem-developments-3_en Smart Contracts Report (2023). EU Blockchain Observatory and Forum. European Comission. https://blockchain-observatory.ec.europa.eu/news/smart-contracts-report-2023-03-13_en Soon, M. (2024). Älysopimusalustat ja niiden eroavaisuudet. Norhcrypto blogi 10.7.2024. https://www.northcrypto.com/learn/blog/alysopimusalustat-ja-niiden-eroavaisuudet The DAO (2024). Wikipedia. https://en.wikipedia.org/wiki/The_DAO?utm_source=chatgpt.com Tunc, M., Cavusoglu, H. & Zheng, Z. (2024) Resale Royalty in Non-Fungible Token Marketplaces: Blessing or Burden for Creators and Platforms?. Information Systems Research. https://doi.org/10.1287/isre.2023.0035 Blogin on kirjoittanut Euroopan unionin osarahoittaman LUME - Luovat web3-ajassa -hankkeen projektipäällikkö Katri Halonen Metropolia Ammattikorkeakoulusta.
Combine24: experiencing and making art
Traditionally, art has been based on physical materials and the skill with which they are handled. The role of the artist has been to create, illustrate and tell stories using paint, clay, stone or other concrete media. With digitalization, the form of art making has expanded, and the inclusion of artificial intelligence in the creative process raises the question (Salonen 2023): is a human an artistic actor, even though artificial intelligence is part of creative work? Art can even be produced by algorithms and technology, changing not only the way art is created but also the way it is experienced. The Combine24 competition organized by the National Gallery embodies this shift, where traditional and digital art meet in a new kind of creative process, an interaction between man and machine. The process of generative art English art critic and teacher Harold Osborne (1988) defines generative art as geometric abstraction in which a basic element, such as an artificial intelligence-based algorithm, creates new variations by changing the original initial parameter based on set rules. Unlike traditional art, where the work is static, generative art is constantly changing and real-time. Theorist Matt Pearson (2011) describes generative art as a process that combines logical and cold programming with creative, emotional expression. In this form of art, collaboration between humans and machines, or co-creation (Lundman, Nordström, 2023), opens up new possibilities for creation. At the heart of co-creation is the idea that creativity is not exclusively human-centered, but that machines can be part of the creative process, and this collaboration can expand the boundaries of human imagination. The National Gallery of Finland’s Combine24 competition exploits this concept of co-creation, where algorithms created by artists and artists together create new works, offering viewers the opportunity to participate in the creation, modification and ownership of the work. The competition focuses on generative art, which is more than a single work. The competition instructed artists to use the National Gallery’s historical art collections as raw material and create new art from them based on an algorithm, whereby the final result is generated randomly within the framework of programmed rules. Each result is a unique variant – just like each viewer experience. You may touch! One of the most interesting features of the Combine24 competition is the active role of the viewer. This involvement transforms the traditional passive art experience into an interactive and creative process in which the viewer is a participant. THL also sees the idea of participation expanding from mere presence, participation, to a way of active influence, participation, where people influence and are involved in decision-making (2024). This participatory model represents a broader trend in the cultural sector, where the audience is encouraged to be active actors, whereby creativity is no longer limited to art actors and professionals (Halonen, 2019). The Remix the Archive exhibition, which features the works of Combine24 finalists, is a physical space in Helsinki where visitors can modify the works displayed on screens with their own touch by pressing the Remix button. Viewers are no longer just passive observers, but co-creators of the work. This interactivity makes experiencing art a personal and participatory process, where the viewer can feel part of the creative process. The public also has the opportunity to influence and vote for one of the three winners, which adds more meaning and personality to the participation. Dialogue between art and technology Combine24 combines the National Gallery's historical collections with modern technology in a way that raises questions about authorship. The works are not simply based on the creations of past masters, but generative artworks create a whole new reality, where historical elements serve as the basis for modern algorithms. Here, traditional craftsmanship and technological innovation meet. The use of technology also changes the authorship of a work of art. Previously, the artist was solely responsible for the final work, but now the creative process is shared and interactive. The question that arises is: who is the true creator of the work? The programmer of the algorithm, the creator of the original work of art, or the viewer, who actively influences the final result, and without whom a certain variation would not even exist? By combining elements of past art and modern technology, Combine24 provokes reflection on how art is interpreted and who is responsible for the final result. NFTs and new revenue models for art The encounter between art and technology continues even after the art is created. The Combine24 works were built and published on the Highlight.xyz platform, which serves as the technological backbone of the competition in the creation, presentation and commercialization of art. With the platform's tools, artists can combine different data feeds, materials and libraries, such as the National Gallery's CC0-licensed collection data, and create unique works from them. Art lovers can create variations of works in real time and also purchase them as NFTs (Non-Fungible Tokens), offering a new way to own and monetize digital artworks. Traditionally, owning a work of art is associated with a physical object, but NFTs enable ownership of digital works using blockchain technology. The artist can decide their own revenue logic, for example by pricing each work separately, publishing a limited edition of works, or giving the works away for free to collect, in which case the artist can take advantage of Highlight’s protocol fees. NFT technology also enables artists to earn royalties from subsequent resales. This gives artists a continuous connection to their works and their commercial value, even after the work has already been sold. As part of the future of art Combine24 is a great way to start a conversation about how art from the past and technology from today can meet, create something new, and challenge old ways of thinking about human-machine collaboration. Algorithmic art and NFT technology open up new possibilities for both the creation and ownership of art, while giving the viewer an active role in the life cycle of an artwork. The entries in the competition demonstrate that art is not a passive experience, but an interactive and constantly changing process in which the viewer, artist and technology work together. Combine24 is a window into the art of the future – a world where algorithms and archives of the past merge to create a new kind of interactive, participatory art. More info on COMBINE24 https://combine24.alusta.art Combine24-kilpailun työt Highlight-alustalla Remix the Archive -näyttely The Remix the Archive exhibition will be held in Helsinki from 20 September to 26 October 2024 at Teollisuuskatu 9D in Vallila, opening hours Tuesday-Saturday 12-18. This exhibition offers the opportunity to experience and edit the works from the Combine24 competition and see how the past and the future can meet through art. https://www.hs.fi/menokone/events/140218 Sources Halonen, K. (2019). Nuorten osallistaminen on tunnetta ja toimintaa. Osuma-hanke blogi 9.1.2019. Metropolia Ammattikorkeakoulu. Lundman, R. & Nordström, P. (2023). Creative geographies in the age of AI. Transactions of the Institute of British Geographers: Volume 48, Issue 3. Osborne, H. (1988). The Oxford Companion to Twentieth-Century Art. Oxford University Press. Pearson, M. (2011). Generative Art: A Practical Guide Using Processing. Manning Publications Co. Salonen, P. (2023). Tekoäly rynnii taiteeseen. Taidelehti 3/23 THL. (2023). Osallisuus yhteisöissä ja vaikuttamisen prosesseissa. Terveyden ja hyvinvoinnin laitos. Marja Konttinen works as an expert in the LUME project, co-funded by the European Union, which focuses on the latest earning models in the creative industry.
Lohkoketjut avaavat uusia mahdollisuuksia musiikkialan sijoitustoimintaan
Musiikin kuluttajana voit tukea muusikoita esimerkiksi käymällä keikoilla tai ostamalla levyjä. Musiikkialalle sijoittaminen sen sijaan on ollut tähän asti melko hankalaa, sillä musiikin kuluttajille ei ole ollut sijoitusmekanismeja käytössä. Teknologian kehitys ja digitaalinen maailma voi kuitenkin tuoda tähän muutoksen. Tekijänoikeudet osana musiikkialan sijoitusmarkkinoita on mielenkiintoinen ajatus ja jo kokeiluihinkin johtanut ilmiö. Digitaalinen maailma luo meille uusia sijoituskohteita aineettomien hyödykkeiden ja niiden lohkoketjupohjaisen hallinnoinnin kautta. Tämä blogikirjoitus keskittyy pohtimaan, miten musiikkialalle voisi sijoittaa lohkoketjuympäristössä. Millaisia uusia sijoituskohteita tai sijoittajia lohkoketjut avaavat musiikkialle? Tekijöiden kustannusoikeudet nousevana sijoituskohteena Musiikkiteollisuuden asiakkaalle näkyvimpiä osia ovat usein esitys- ja levytystoiminta. Näiden takana on tekijän keskeisin pääoma: tekijänoikeuteen pohjautuva kustannussopimus. Sopimuksen puitteissa musiikin tekijät siirtävät oikeuksien hallintaa kustantajalle, joka saa osan tekijänoikeustuloista. Kustantajan tehtävänä on levittää, markkinoida ja hallinnoida biisejä. Kustannustoiminnassa pyörivät isot pääomat ja niistä käydään aktiivista kauppaa. Viime aikoina niistä on keskusteltu myös mahdollisina sijoituskohteina. Yksi musiikin sijoittamistoiminnan edelläkävijä on brittiläinen pörssiyhtiö Hipgnosis Songs Fund, joka on koonnut musiikkikappaleiden tekijänoikeuskatalogin ostamalla kymmenien tuhansien laulujen kustannusoikeudet. Katalogiartisteina on mukana huomattava määrä kansainvälisesti erittäin menestyneitä muusikoita. (Ylä-Anttila 2022; Sirén, 2021; Hipgnosis, 2022.) Joukosta löytyy esimerkiksi suuri osa pitkän linjan popyhtye Fleetwood Macin hittikappaleista ja yli puolet Neil Youngin kappaleista (Ylä-Anttila 2022; Määttänen 2021). Hittikappaleet saattavat säilyttää arvonsa hyvinkin pitkään, ja niitä on mahdollista jaella digitaalisena useita eri kanavia pitkin. Tämä nostaa niiden kiinnostavuutta sijoituksena. Rahoitusmarkkinoiden heilahtelut eivät juurikaan vaikuta musiikin kuunteluun, ja yksittäinen hittikappale voi pyöriä kymmeniä vuosia elokuvissa ja mainoksissa tuottaen sijoittajalle rojaltimaksuja (Hermansson, 2022), joiden kertyminen jatkuu vielä 70 vuotta musiikin tekijöiden kuoleman jälkeen. Tuloa kertyy miljoonista yksittäisistä mikrotapahtumista kuten suoratoiston kuuntelusta, albumin ostosta tai latauksesta, esitystoiminnasta, lisensoinnista ja synkronisoinnista esimerkiksi AV-tuotteiden osaksi. Artistin näkökulmasta Hipgnosisin kaltainen toimija voi olla kiinnostava kumppani, koska se on valmis maksamaan kappaleen tekijänoikeuksista tietyn könttäsumman kerralla. Perinteiset tekijänoikeusmaksut ilahduttavat varmasti artistin perikuntaa tämän kuoltua, mutta moni artisti arvostanee rahallista korvausta työstään jo ollessaan vielä itse elossa. Tokenien avulla sijoitustoimintaa ja investointeja piensijoittajien tarpeisiin Musiikkialan keskeisiä sijoittajia ovat olleet perinteisesti mm. levy-yhtiöt. Kiinnittäessään uuden musiikin tekijän tai esittäjän rosteriinsa yhtiö sitoutuu ja investoi heidän uransa edistämiseen. Monikansallisten levy-yhtiöiden rooli on kasvanut tässä keskeiseksi ja osin vaikeuttanut ulkopuolisten itsenäisten toimijoiden pääsyä markkinoille. Uusien tuotantojen tueksi on avattu joukkorahoitukseen keskittyviä palveluita, kuten esimerkiksi Intiassa lanseerattu musiikkialalle suunnattu FanTiger -palvelu. Se antaa riippumattomille artisteille reitin avata tulevia projektejaan faneilleen joukkorahoituksen saamiseksi. Fanit voivat tukea uuden musiikin lanseerausta ostamalla ennakkoon NFT-albumin – tosin palvelun valikoimissa on ainakin vielä lähinnä intialaisia musiikkigenrejä. (Halonen ja Tervonen, 2023). Sijoitusmahdollisuuksia voi kehittää eteenpäin tästä tokenisoinnin avulla. Termille ”token” ja siitä johdetulle ”tokenisoinnille” ei ole olemassa vakiintunutta suomenkielistä ilmaisua. Sitran tulevaisuussanastossa tokenin suomennokseksi esitetään digitaalista rahaketta, mutta se ei taivu sujuvasti verbiksi. Siksi tässä blogikirjoituksessa puhutaan tokeneista ja tokenisoinnista. Tokenisointi tarkoittaa omaisuuden, kuten musiikkisisällön, muuntamista digitaaliseksi lohkoketjuun tallennettavaksi tokeniksi. Tämä mahdollistaa digitaalisten varojen omistamisen, siirtämisen ja vaihtamisen ilman perinteisiä välikäsiä, kuten esimerkiksi pankkeja tai pörssivälittäjiä (Marinov, 2023; coinmotion, 2023). Tokenisointi on jonkin varallisuuserän tai vaikkapa jonkin oikeuden (kuten tekijänoikeus) muuttamista digitaaliseksi yksiköksi, jolla voidaan käydä kauppaa. Tokenisoinnin ytimessä on omaisuuden jakaminen pieniin kaupankäynnin osiin, tokeneihin. Kunkin tokenin hinta määräytyy omaisuuden kokonaisarvon ja siihen suhteutettuna tokenien määrän mukaan. Esimerkiksi uusi albumi voidaan tokenisoinnin avulla jakaa moniin pieniin kappaleisiin/osiin, joita voidaan myydä yksittäin digitaalisilla markkinoilla. Tällainen toiminta olisi uutta musiikkialalla, ja se mahdollistaisi uuden sijoituskohteen heille, jotka haluaisivat tarkastella alaa sijoitusnäkökulmasta. Musiikin tekijänoikeuksien kautta voitaisiin myydä osa rojaltituloista faneille tai muille sijoittajille. (Utopia Genesis Foundation 2021.) Token toimii omistusoikeuden todisteena, ja tätä tokenia voidaan lohkoketjun avulla kaupata tai siirtää tehokkaammin kuin tuntemiamme perinteisiä varoja (Coinmotion, 2023). Tokenisointi voi avata musiikkifaneille uuden ja mielenkiintoisen sijoitusalan. Esimerkiksi muusikko voi tokenisoida tuoreen albuminsa, jolloin se on kohtuuhintaan usean piensijoittajan saatavilla. Sijoittajat puolestaan voisivat helposti sijoittaa uusiin artisteihin, ja mahdollisesti saada myös sijoituksilleen tuottoa. Sweet Dreams (Are Made of This) Hipgnosis songs (2021) julkaisee sivustollaan tapauskertomuksia menestyksekkäistä sijoituksista. Esimerkiksi David A. Stewartin ja Annie Lennoxin muodostaman Eurythmics-duon yksi tunnetuimmista kappaleista on Sweet Dreams (Are Made of This). Se on ollut kaupallinen menetys sekä Euroopassa että Yhdysvalloissa niin suoratoistopalveluissa kuin radioissakin, minkä vuoksi siitä tulee jatkuvia tekijänoikeustuloja. Kappaleen käytöstä on tehty myös sopimuksia muun muassa Samsungin, Realtor.com ja yhdysvaltalaisen kiinteistönsivuston mainoksissa. Se löytyy myös Sonyn PlayStationin The King -pelin taustalta, ja suunnitteilla on yhteistyö Sony Picturesin Cinderella remake -version kanssa. (Hipgnosis songs, 2021.) Tämä kaikki tuo toteutuessaan sijoittajille osuuden tekijänoikeustuloista kappaleesta, joka on julkaistu jo 40 vuotta sitten. Tokenipohjaista piensijoittamista tehdään muun muassa Royal-alustalla. Tyypilliset albumiin tehtävät investoinnit vaihtelevat 50 ja 200 dollarin välillä, sijoittajia on noin 100–200 ja rojalti yhtä tokenia kohden on 0,05 ja 0,30 % välillä (Royal, 10.3.2023). Tokenit tarjoavat fanille uudenlaisen mahdollisuuden tukea artisteja: samalla kun tukee haluamaansa taiteilijaa, saa myös rojaltipohjaisen omistussuhteen joukkorahoitteiseen sisältöön. Tokenisointi ja tekijänoikeuksien myyminen voi olla tulevaisuuden musiikkialan kehitysaskeleita. Aiheeseen liittyy kuitenkin paljon vielä kysymyksiä, joihin eri alojen tulisi löytää vastaukset. Kuka olisi esimerkiksi se taho, joka toimisi tokenien liikkeeseenlaskijana? Jos se ei ole säännelty rahoituslaitos, miten varmistetaan, että ostettava token edustaa todellista omaisuutta? Oman riskinsä luo myös se, että suuri osa alustoista toimii kryptovaluutoilla, joita on olemassa jo yli 22 000 kappaletta ja uusia syntyy koko ajan (Osakesijoittaja, 2023). Sijoittajan riskien näkökulmasta aiheeseen liittyy osittain samoja ongelmia ja kysymyksiä kuin virtuaalivaluuttoihin muutoinkin. Osa virtuaalivaluutoista kulkee kuitenkin kohti rahan arvon sitomista viralliseen valuuttaan, kuten Yhdysvaltain dollariin tai euroon. Lohkoketju tuo tullessaan niin musiikin ystävälle kuin puhtaasti sijoitustoiminnastakin kiinnostuneelle mielenkiintoisen alueen. Mukana on paljon kauniita unelmia ja idealismiakin, mutta myös paljon mahdollisuuksia – jos niihin vain uskalletaan tarttua! Lähteet Coinmotion (2023).Suomalainen stablecoin – Membrane Finance julkaisi EUROe-stablecoinin. Haastattelussa Juha Viitala. Coinmotion 9.2.2023. Halonen, K. ja Tervonen, A. (2023). NFT musiikin tekijöiden tulovirtojen lisääjänä - Luovat metaversumissa Metropolia Ammattikorkeakoulu Luovat Metaverumissa blogi 1.3.2023. Hermansson, M. (2022). Musiikkikatalogit – taiteilijan elämäntyö ja sijoittajan unelma. Thomann blogit 23.1.2022. Hipgnosis Songs (2022). Interim report for the period ended 20 September 2022. Hipgnosis songs fund. Hipgnosis Songs (2021) The Anatomy of a Song. David A. Stewart’s Sweet Dreams (Are Made of This) (2021). Annual Report 2021. Hipgnosis Songs Fund Limited, p 18. Leppänen, M. (2018). Lohkoketjun "kolmas vallankumous" on käsillä – mullistavatko digitaaliset arvopaperit sijoittamisen, vai tuleeko niistä vain kryptohypen seuraava aalto? Yle 10.11.2018. Marinov, E. (2023). Varojen ja niiden käytön tokenisointi. Escrypto artikkeli (5). 5.2.2023 Määttänen, J. (2021). Neil Young myi puolet kaikkien kappaleidensa oikeuksista yli 120 miljoonalla eurolla sijoitusyhtiölle: “Tämä muuttaa yrityksemme ikiajoiksi”. Helsingin sanomat 6.1.2021. Osakesijoittaja (2023). Kryptovaluutta 2023. Osakesijoittaja.fi -sivusto 10.3.2023. Sirén, V. (2021). Mies, joka ostaa musiikin. Helsingin sanomat 19.3.2021. Royal (2022). Kotisivulla oleva artistien myyntiosasto. Royal Invest in Music 10.3.2023. Utopia Genesis Foundation (2021). Music tokenization - how it will change the music industry and why you should care? Utopia Genesis Foundation blogs. Medium 14.7.2021. Ylä-Anttila, A. (2022). Musiikkiin sijoittaminen on nouseva ilmiö, arvioi alan brittikonkari – ”Rahaa liikkuu paljon, vaikka siitä ei hirveästi puhuta”. Kauppalehti 7.2.2022. Kirjoittajasta Musiikkipedagogi YAMK -tutkinnosta valmistunut Aili Tervonen on toiminut musiikkialalla aiemmin freelancer-pianistina ja opettajana, mutta päätynyt sittemmin työskentelemään opetus- ja kulttuuriministeriöön. Valtiolla työskentely on saanut Tervosen pohtimaan musiikkialan asemaa yhteiskunnassamme. Musiikkialan tulisi pystyä parantamaan muusikoiden työmarkkina-asemaa, kehittämään alaa eteenpäin sekä moninaistaa alan ansaintalogiikoita. Tämän vuoksi Tervonen päätyi tutkimaan YAMK-tutkinnossaan NFT-teoksia ja virtuaalivaluuttoja. Lue lisää: https://www.theseus.fi/bitstream/handle/10024/751689/tervonen_aili.pdf?sequence=2
NFT as an additional source of income for music creators
The music industry is talking about blockchain technology as one of the growth directions in the industry. Could it also offer opportunities for music creators to earn additional income? This blog will consider what the process of entering the NFT market is like from the perspective of a musician building their career. The background is a practical experiment reported in Aili Tervonen's (2022) thesis. Blockchain technology is seen as a solution to the mechanisms that have long plagued the music industry, where currently only about 12% of the industry's turnover is generated for music creators (Bazinet et al., 2018). The remaining part is processed by the so-called intermediary layer, which makes the content available to fans. The value chain includes, for example, those who provide publishing, recording, agency and management services. Some industry players see blockchain as a way to take control of creative work back to its creator. There has been talk, among other things, of “IP rights decentralization” (Jalonen, 2022), which refers to the decentralization of the management of intellectual property rights. Decentralized rights management could resolve the perceived imbalance between wide distribution and fair compensation. For others, blockchain appears as a challenger that forces a reassessment of the already established business models of the music industry, in which the management and exploitation of copyright have been key. Recently, there has been an active discussion about blockchain-based non-fungible tokens (NFTs), which are at the heart of new content ownership. NFTs have also been considered as a source of income generation for young musicians operating outside of multinational corporations (Langston, 2022). From recording sales to increasingly diverse content A music NFT is typically a song, album, lyrics, or music video stored on the blockchain. It can also be, for example, a composition created by a generative computer program that algorithmically visualizes the work using random patterns, colors, sounds, and/or shapes (Langston, 2022). A music NFT can also be a concert ticket or an album cover. NFTs also help to build a new kind of culture in the music industry. NFTs can be, for example, collector's cards aimed at fans, pictures of the artist, versions of different stages of the creation of a song, or almost anything related to the artist that has value to fans. According to Sitra's definition, an NFT is a digital file management certificate. The transfer history of the digital file management is recorded using blockchain technology. Some of these digital management certificates (NFTs) sold on NFT marketplaces do not contain any rights recognized in legislation. According to Sitra, this is because the legal status of NFTs is still unclear. (Sitra 2023.) A young music creator quickly encounters a number of seemingly challenging choices that have a strong to binding impact on the future and profitability of the product or service in question. A key choice is the type of content exported as an NFT: A 1/1 NFT is a single, unique product. It is completely exclusive. The analogy is often used with paintings in our physical environment, of which there is only one original. With an open edition, an NFT can be made in unlimited quantities, for example to commemorate participation in an event organized in the metaverse. However, that edition is usually only made for a certain period of time, after which it is no longer available. With a limited edition, a certain number of individual NFTs are made. Many collections consist of editions of 10,000 pieces, for example. There are advantages and disadvantages to different release models. A single 1/1 NFT is a unique collector's item. The Mona Lisa is often used as an example: there is only one genuine copy, which has a high price. Open editions can be used to celebrate a specific moment, for example, and are collector's items available only to participants. A limited edition serves, for example, as a pre-sale of tickets. Blockchain brings added value to music NFT trading In the music industry, the added value of blockchain lies in its various means of exchange and the uniqueness of the NFT token. Only one person can own a single NFT, and all purchase and sale transactions related to that token are recorded in a “ledger” maintained by the blockchain. For example, the path of each NFT is openly visible to everyone, and the NFT acts as a proof of authenticity. For example, a fan buying an NFT concert ticket can check the authenticity of the NFT on the blockchain before making a purchase decision. If they sell the ticket on, the new buyer can also see the chain of ticket owners and can check the authenticity against the ticket history recorded on the blockchain. The restrictions and rights related to the use of NFTs are managed by smart contracts that follow the individual NFT in question with every transaction. For example, during the creation phase, it is decided what share the creators will take as royalties if the NFT is resold. This way, the original creator will receive passive income and benefit from, for example, the increase in the value of the NFT. In the music industry, the increase can be really large, because for some artists the future can bring widespread global success. For this reason, Tervonen (2022) wonders whether in the future one of the motives for a budding artist to buy NFTs could be investment instead of fandom. Creatives often find pricing difficult. One solution to this challenge on the blockchain is to use auctions. This allows NFTs, such as a VIP add-on service built around a concert, to be sold in limited editions at the best price at the time. By utilizing the pre-sale mechanism, fans can invest in an artist of their choice, for example by financing the production of an album in advance. As a reward, they can receive their own NFT for a limited edition of the new album. In India, a FanTiger service aimed at the music industry has been launched, which gives independent artists a route to open their future projects to their fans for crowdfunding. Fans can support the launch of new music by pre-purchasing an NFT album from a selection that currently includes quite a few Indian music genres. At the same time, fans can be critically important marketing messengers when taking new content to the social platforms and communities of their networks (Nahar, 2022). NFTs and cryptocurrencies are also of interest to criminals The NFT market has rapidly become a new area of activity in the music industry. Regulation is still quite incomplete, and there are many question marks surrounding NFT trading. Issues that need to be resolved include the security of smart contracts, legally valid ownership, and the regulation and taxation of virtual currencies (Lindgren et al., 2023). Blockchain technology can also be misused. Last year, the NFT marketplace Cent suspended most of its trading due to abuse. The platform sold certificates of ownership for content that was not the property of the person who uploaded the NFT to the platform. Market manipulation also occurs. For example, creators of works have bought their own works to make the demand for them appear greater than it actually is (Närhi 2022). In the NFT environment, money moves through virtual currency wallets. The buyer sees the virtual wallet address on the blockchain, but the buyer remains anonymous. This makes it difficult, for example, to detect money launderers. Before diving in, look into these things Tervonen's (2022, see also Table 1) work carefully reports the steps that a musician needs to take to adopt the NFT world. It also describes the kind of expertise that each step requires. StepRequired skillsCreate a virtual currency account and acquire currencyVirtual currency advice: how to open a wallet, how to buy virtual currencies, how to connect a wallet to an NFT marketplace, how virtual currency value is created, what virtual currency alternatives exist and what risks are associated with the currency you are considering acquiring.Creating an NFT workSupport service for brainstorming NFT works to create an idea of what could be sold. Criteria for choosing a platform for selling an NFT work, technical requirements of the platform, the most important choices made on the platform regarding NFT usage rights, and the technical process of publishing.Selling an NFT workSupport services for marketplace practices, marketing planning utilizing existing channels to direct fans to the NFT platform, also support for fans to make NFT purchases (they need to learn how to use virtual currencies and understand how NFT marketplaces work). Table 1. Based on Tervonen, 2022, p.51 From a musician's perspective, NFTs may offer interesting new ways to interact economically with fans. The transition of physical fans to a virtual environment currently requires a considerable amount of expertise from fans. They must have sufficient understanding of virtual currencies, the functioning of DAOs, NFT products, and various marketplaces offering music NFTs. It is of paramount importance to identify whether each artist's fans can be reached through this. NFTs are currently still a series of development projects and directions. However, it already seems quite clear that at least some of them have found their place alongside Web2 environments. When the news talks about NFTs and music, it usually involves big money: 3LAU made $11.7 million in a 3-day auction for their new album (Brown. 2021) and Whitney Houston’s previously unreleased demo recording made when she was 17 sold for $1 million (Legaspi, 2021). In reality, audiences of millions are limited to global stars. It is likely that it will be at least as difficult for a new music creator and performer to find an audience through music NFTs as it is in a traditional physical environment. About the writer Musiikkipedagogi YAMK -tutkinnosta valmistunut Aili Tervonen on toiminut musiikkialalla aiemmin freelancer-pianistina ja opettajana, mutta päätynyt sittemmin työskentelemään opetus- ja kulttuuriministeriöön. Valtiolla työskentely on saanut Tervosen pohtimaan musiikkialan asemaa yhteiskunnassamme. Musiikkialan tulisi pystyä parantamaan muusikoiden työmarkkina-asemaa, kehittämään alaa eteenpäin sekä moninaistaa alan ansaintalogiikoita. Tämän vuoksi Tervonen päätyi tutkimaan YAMK-tutkinnossaan NFT-teoksia ja virtuaalivaluuttoja. Lue lisää: https://www.theseus.fi/bitstream/handle/10024/751689/tervonen_aili.pdf?sequence=2 Lähteet Bazinet, J.B., Singlehurst, T.A., May, M., Suva, J., Ezawa, K., Yap, A. (2018). Putting the Band Back Together. Remastering the World of Music. Citi GPS: Global Perspectives & Solutions. Brown, A. (2021). Largest NFT Sale Ever Came From A Business School Dropout Turned Star DJ. Forbes 3.3.2021. Jalonen, J. (2022). Musiikkialan kasvustrategia. Tilannekuva-raportti, 04/2022. Music Finland Ry. Johansson, P., Eerola, M., Innanen, A. & Viitala, J. (2019). Lohkoketju: Tiekartta päättäjille. Alma Talent. Langston, T. (2022). The Music NFT Bible: A Guide to the Future of Sound. NFT now guides 22.9.2022. Legaspi, A. (2021). Whitney Houston Unreleased Demo Sells for $1 Million at NFT Auction. Full-length track was recorded when singer was 17. Rollingstone 15.12.2021. Lindgren, J., Lindholm, O., Lehtonen, K., Mustikainen, H. & Niikkonen, P. (2023). 6+1 suositusta Suomelle. Miten sääntelyllä voidaan parantaa web 3.0 -liiketoiminnan edellytyksiä? Sitran selvityksiä 229. Muikku, J. (2021). Pelastaako NFT musiikkibisneksen? Musiikkikustantajat MPA Finland blogi 18.3.2021. Nahar, P. (2022). FanTiger crosses 50k transactions, enters list of top five NFT projects globally. ETMarkets.com 28.11.2022. Tervonen, A. (2022). Muuttuva musiikkimaailma: NFT-teknologiasta uusia ansaintamalleja muusikoille? Musiikkipedagogi YAMK opinnäytetyö. 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