by Matthew V. Wilson

2021 may be remembered as the year that NFT’s (non-fungible tokens) forever changed the music industry. Not since the emergence of downloading technology in the era of Napster has the industry faced such a significant potential for sea-changing disruption.

Rooted in blockchain technology, NFTs are a form of cryptocurrency that often include scarce assets imbedded into the digital token. In practice, these digital tokens can be used to guaranty intellectual property integrity; as a medium for direct to user access, distribution and licensing; and to facilitate instantaneous royalty accounting and payments – all elements attributed to the blockchain generally.

Beyond these benefits, music rightsholders may employ NFTs for other purposes as well:

• Blockchain smart contracts offer copyright owners a continued stream of revenue beyond the one and done, “first sale” via the secondary market in perpetuity.

• Recording artists with established fan-bases may circumvent traditional label and distribution channels to connect directly with end-users via digital distribution.

• Developing artists might finance recording and promotional activities by offering fans the opportunity to purchase copyright shares.

• Producers, engineers and session musicians can easily participate in back-end revenues.

It is clear that NFTs offer many attractive options for music rightsholders and the list is certain to continue to grow.

**Matthew V. Wilson is a partner at Arnall Golden Gregory LLP and co-leader of the firm’s Entertainment and Sports team.