Blockchain in Entertainment: Tokenizing the African Artistby February 22, 2021
Blockchain in Entertainment: Tokenizing the African Artist
The blockchain revolution and the rise of cryptocurrencies have really taken the media by storm in recent years with Nigerians as one of the highest adopters in the world. Blockchain technology has been proven to disrupt all industries bringing decentralization to finance, health, supply chain and logistics and even entertainment. In this article, we focus on how African music artists can leverage blockchain technology to build fan loyalty and raise funds for projects and tours through the creation of tokens in a process called tokenization.
Tokenization is an aspect of blockchain whereby assets can be broken into pieces or shares in that asset. A token or cryptocurrency is a mechanism whereby an asset is created on the Blockchain. In terms of music, the asset can be in the form of digital music or other forms of creative output. Tokenisation creates the opportunity for a more direct artist-to-fan relationship to flourish and generate an emotional attachment between the two parties. This opens up the opportunity for fans of a band of musicians to hold an asset in that entity and share in the revenue flows of that artist. Artist creates their tokens bearing their name and likeness similar to a virtual baseball card.
The concept is simple: create a store of value, the valuation of which correlates with the artist popularity through demand, supply and music data analysis driven by data science across music streaming and social media platforms. When an artist creates a token, they’re turning their IP into a financial asset, so an artist’s token reflects the value of their output. If fans buy into an artist’s token, they are owning a share of the artist’s creations and its revenue flows. The more people who consume the artist’s creation, the higher the value of the token.
Artists can raise money through a token launch. These tokens can be designed to dispense royalty flows. If someone pays for an artist’s content, then all of that artist’s token-holders will receive a pro-rata share of that payment.
By issuing tokens, artist, and other entities in the creative industries can generate new forms of experiences around creative content like special access at a concert or early access to new releases.
”Let’s use a major artist in Nigeria to better explain this concept. Imagine Grammy Award-winning artist Wizkid decides to tokenize himself, creates tokens and called them Wizkid Fan Tokens or Wizkid Fc Tokens or Star Boy Tokens. He can then do a token launch and all his fans can purchase these tokens and receive a share of the revenue of the projects created from the fundraising. Alternatively or In addition, he can decide to tokenize his individual projects. For example, the ‘Made In Lagos’ album could have been tokenized before its release and every fan or music investor who purchased Made In Lagos Tokens would share in the revenue generated from the project. A concept like this will break the internet.”
Tokenization of artist has already begun in the blockchain space. An example of artists who have already tokenized themselves is RAC, a grammy-winning producer who partnered with collective creation internet-scale Zora to launch a community token called $RAC and Gramatik, a Slovenian electronic music producer and DJ with a worldwide fan base who became the first music artist to tokenize himself using the Ethereum Blockchain application Tokit. When his token (GRMK) was launched in November 2017 it raised $2.25m worth of Ether digital currency in just 24 hours. Currently, in the blockchain space, there are quite a number of projects that can help artists deploy the concept of tokenization
At Hot New Afro, We are currently collaborating with afro artists to create tokens also knows as NFTs (Non Fungible Tokens) and also working on a digital marketplace platform where fans and entertainment investors can purchase and invest in music and share in the revenue.