Spotify, Universal, Meta, Coinbase, Twitter, Ebay, GameStop etc. : The list of world famous companies working on NFT business models is huge. New marketplaces, some focused on a particular industry or topic, such as GameStop, provide significant infrastructure expansion. On the other hand, JPEG images without a strong context, story or branding don’t stand a chance on marketplaces like OpenSea.
Marketplaces as a basis
A well-developed NFT marketplace infrastructure alone is of little use if the virtual goods to be purchased on marketplaces have no relevant use cases. The biggest social media platforms, Meta and Twitter, come into play precisely at this point or at the other end. Assuming there is enough supply, nothing stands in the way of a big NFT wave, right?
NFT images are not enough
The most important question is: Is there sufficient demand for the supply created. After all, it has collapsed sharply in recent weeks – trading volume on the largest NFT marketplace OpenSea has fallen by 76% since the start of the year. Profile pictures alone shouldn’t be enough to justify the high investments and sometimes high ratings of individual platforms such as OpenSea.
The hopes of the NFT sector therefore lie mainly in differentiating individual NFT sectors that offer more than just small hipster images. Success therefore depends on communities like the Bored Ape Yacht Club (BAYC), game developers like Activision, blockchain games like Axie Infinity, metaverse projects like The Sandbox and Decentraland, or art and lifestyle platforms. like Spotify away. If they manage to generate new demand through new innovations in the coming months, then sustainable value creation could work. Otherwise, there is a risk of low transaction NFT platforms in which companies and the investors supporting them will quickly lose interest.
Music: The Most Underrated NFT Sector
For the sector-specific NFT establishment to work, an ecosystem with the most relevant players in the respective industry is required. Most importantly, use cases must be easy to implement and scale quickly at all levels. These conditions are more likely to be encountered in the music sector than in other NFT sectors. The world’s largest record label, Universal Music, and the world’s largest music streaming platform, Spotify, both invest significant time and money in NFT business models. Other music players such as Warner Music or file-sharing platform Limewire are also planning to enter the NFT sector, some with their own NFT marketplace.
At the same time, there is hardly an industry with more social media reach. After all, the biggest Instagram accounts include musicians like Beyoncé, Ariana Grande and Taylor Swift, all of whom have between 200 and 300 million followers on the platform. Their NFT promotion could create high demand very quickly, which would be unthinkable for Metaverse NFTs for example.
Finally, the music industry offers easy ways to generate NFT use cases. Besides the collector aspect, specific services such as access to exclusive (online) concerts, exclusive discussion groups or the development of entire communities can also provide enormous added value. There are no major hurdles for the music business, either technologically or regulatory. Except for the prospect of also regulating music licensing revenue via NFTs, which for some artists should be even more exciting than the fan monetization alluded to.
Aspects that speak in favor of a rapid establishment of NFTs in the music industry also speak against NFTs in the metaverse. While almost everyone consumes music, almost no one spends time in the metaverse. The Sandbox only has 30,000 monthly active users. The Metaverse blockchain is the industry leader with a market capitalization of around US$3.5 billion.
It has nothing to do with widespread use. Rather, with an elitist image and a marketing platform on which companies build pointless benchmarks so they can then issue a press release that they too are now in the Metaverse.
In the long term, the potential of Metavers is undoubtedly gigantic, but in the short and medium term it is overestimated. We still wonder why we would want to spend more time in the current metaverse? Except for test rounds and NFT speculation.
It lacks fundamental aspects of the ecosystem and usability. So if you’re counting on real, lasting use cases, you’re better off with the relatively simple music and lifestyle industry. The news that Bored Ape Yacht Club developers also want to build a Metaverse doesn’t improve those prospects.
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