Jay-Z's Battle With NFTs
Major Label Approval Ratings Suck, Yet UMG is Still Worth $40B+
Last week, Roc-A-Fella Records co-founder Dame Dash got slapped with a restraining order by his partner Jay-Z for what appeared to be his attempt to sell the rapper’s seminal debut album, Reasonable Doubt, as an NFT, including “the copyright and rights to all future revenue generated by the album,” according to the complaint.
This, of course, did not fly with Jay-Z who asserted that the copyright to Reasonable Doubt is held by RAF, Inc., which includes “all rights, title, and interests to and in Reasonable Doubt, including, without limitation, right to sell, record, reproduce, broadcast, transmit, exhibit, distribute, advertise, and exploit the album.”
Dash responded that he was not selling the album itself as an NFT (already an abstract concept people are just getting their heads around), but rather his third of RAF, Inc. Which raises the question of what exactly an NFT has to do with all of this?
Since they hit the public consciousness five months ago, NFTs have struggled to define their actual value beyond speculative investment similar to other sorts of crypto. At this point, it is basically understood that NFTs represent “ownership” of a piece of digital media, but without any of the rights to exploit the IP that makes up the asset itself. Sorta like owning a limited edition record, or maybe a baseball card. It makes sense if people value that piece of code as much they might some ink on a paper.
Where things get complicated is when NFT sellers start implying rights to real-world assets—whether physical, intellectual or, in this case, shares of a business itself. Sure, Dash can sell his percentage of the Roc to whomever he wants. And that buyer will therefore own a third of the revenue from Reasonable Doubt (along with all other assets and liabilities connected to RAF, Inc.) But it’s not as if that person will be able to just take his share of the album’s revenue and use it to buy jewelry and art or pay child support.
And an NFT becomes what at this point? A digital plaque commemorating the sale?
There is no doubt that blockchain technology, and smart contracts in particular, offer the potential to greatly increase the efficiency of bureaucracies in virtually every industry—maybe music most of all. But minting an NFT and calling it a record company is just chasing hype.
TAKEAWAYS
The most salient statements from this week’s news.
1. Robot Rock: Can Big Tech Pick Pop’s Next Megastar?
Insert joke about A&R already being human AI here.
Takeaway: Some believe a greater reliance on hard numbers might lead to less nepotism within the music business and fewer opportunities to gerrymander signings and charts. But not everyone in the industry welcomes this focus on data; a few wonder how a new artist might fare in this system, plucked fresh from the internet and dropped under the spotlight.
2. 86% of U.S. Consumers Believe Creators Should Own and Control Their Works
In other words, major labels have roughly the same favorability rating as Congress.
Takeaway: Seven in 10 respondents believe music companies should be responsible for ensuring that the artists they represent are treated and compensated fairly. However, only 29% of those surveyed feel music companies actually do this.
3. Ackman Sees Path To Possible U.S. Listing For Universal, Working On Next Deal
Billionaire financier Bill Ackerman is beyond bullish about the future of the music business.
Takeaway: As he walked investors in his SPAC called Pershing Square Tontine Holdings (PSTH) through how the deal with UMG will work, he said he is confident investors will stick with Tontine even if its shares fall below the IPO price.
