The Business Case for IP Tokenization Development Services in the Music Industry

The IP Tokenization Development Services are empowering artists and musicians all over the world. Recently, Maroon 5 has tokenized the copyrights of their popular song. Music By Virtuals, in partnership with Story Protocol, has also launched a feature called ‘Bangers’ that turns viral social media moments into unique, tradable Tokenizing music IP assets. These initiatives by popular artists are giving a kickstart to musicians worldwide to explore the benefits of Music IP Tokenization and how it can benefit their fans and creators.

Why IP Tokenization for the Music Industry?

The traditional methods of managing IP assets, such as songs, recordings, royalties, and licensing deals, are outdated and slow. Involvement of numerous intermediaries not only makes the process time-consuming but also costly. With Entertainment IP Tokenization, artists can transfer ownership rights into digital tokens on a blockchain, offering a solution to these challenges.

For platform development service providers, this could be a strategic move to address longstanding issues within the industry.

move to address longstanding issues within the industry.

The Challenges Faced by Music IP Today

The current landscape of music IP management presents several obstacles:

1. Delayed and Complex Royalty Payments

Artists frequently experience delays of months or even years in receiving payments. Intermediaries such as labels, distributors, and performing rights organizations (PROs) often take cuts and cause payment delays. Additionally, errors in tracking plays can result in lost revenue.

2. Lack of Transparency in Ownership

It is quite unclear to determine who owns what percentage of a song due to messy data. This opacity leads to frequent lawsuits over unclear samples and unclaimed royalties.

3. Limited Monetization Opportunities

Traditionally, only large investors could afford to purchase music catalogs. The licensing process is manual and paperwork-heavy, limiting opportunities for smaller investors and artists.

4. Fans Have No Real Ownership

Streaming platforms pay artists minimal amounts per play. While NFTs have attempted to address this, they often lack real utility and fail to offer genuine ownership experiences for fans.

How does Tokenization Address These Issues?

Music IP tokenization transforms music rights into digital assets on a blockchain, with each token representing a piece of ownership. Here’s how it works:

1. Instant, Automated Royalties

Smart contracts enable real-time royalty distribution to all rights holders, eliminating delays and reducing errors.

2. Transparent Ownership Records

Blockchain provides a public, immutable ledger of ownership, resolving disputes over rights and ensuring clarity.

3. New Investment Avenues

Investors can purchase fractional shares of songs, democratizing access to music investments. Artists can also sell shares in future royalties to fund their projects.

4. Empowered Fans

Fans can buy tokens linked to songs they love. If the song gains popularity, the value of their tokens increases, offering a sense of real ownership and potential profit.

Essential Features for a Tokenization Platform

For developers aiming to build a successful Entertainment IP tokenization platform, certain features are crucial:

1. Secure and Scalable Blockchain

Platforms like Polygon, Solana, or custom music chains offer better scalability and lower transaction costs compared to traditional blockchains like Ethereum.

2. Legal Compliance

Tokens must adhere to securities laws, including Know Your Customer (KYC) checks, to prevent fraud and ensure legitimacy.

3. Integration with Industry Systems

The Intellectual property tokenization platform should seamlessly integrate with PROs (e.g., ASCAP, BMI), distributors, and streaming services, supporting standard music identifiers like ISRC and ISWC.

4. Marketplace for Trading

A user-friendly marketplace is essential for fans and investors to buy and sell tokens, with high-speed and low-cost transactions.

Monetization Models for Music Tokenization Platforms

Tokenization isn’t just a technological advancement; it’s a viable business model:

For the Platform:

• Transaction Fees: Earn fees from trades, similar to a stock exchange.
• Subscription Fees: Charge labels and publishers for using the platform’s tools.
• Data Services: Provide analytics on song performance and value trends.

For Artists & Labels:

• Upfront Capital: Sell shares of future royalties to fund projects.
• Reduced Administrative Costs: Automate royalty tracking and distribution.
• Enhanced Fan Engagement: Offer fans a stake in the artist’s success.

For Investors & Fans:

• Access to Music Investments: Invest in music without needing millions.
• Liquidity: Buy and sell tokens at will, unlike traditional music rights.

Real-World Implementations: IP Asset Tokenization

Several platforms are already pioneering music IP tokenization:

• Fractional Ownership of Song Royalties (Royal, Nas)

Royalty Exchange and Royal.io allow artists to tokenize song royalties, selling fractional ownership directly to fans and investors. In 2022, Grammy-winning artist Nas tokenized royalties from two of his hit songs, letting fans buy shares and earn a portion of future streaming revenue. This model bypasses traditional labels, giving artists direct access to funding and fans a stake in the music’s success.

• Automated Royalty Payments via Smart Contracts

Platforms like Royal.io and Polymesh use smart contracts to automate royalty distribution. When a tokenized song earns revenue, payments are instantly and transparently sent to all token holders based on their share. This eliminates disputes, reduces administrative overhead, and ensures artists and investors are paid promptly and fairly.

• Tokenized Physical Music Assets (Enjin, George Murphy, and the Rising Sons)

Enjin has collaborated with artists such as George Murphy and the Rising Sons to tokenize physical vinyl records as NFTs. Fans can buy these digital tokens to prove ownership of exclusive physical albums, merging collectible value with blockchain-backed authenticity and enabling direct artist-to-fan sales.

• Live Event and Hospitality Tokenization (Backstage, David Guetta & Tiësto)

Backstage brings tokenization to live entertainment by integrating ticketing, hotel bookings, and event perks into a blockchain ecosystem. Events featuring artists like David Guetta and Tiësto have used Backstage to bundle tickets and hospitality, letting artists and organizers earn from both ticket sales and associated travel/hospitality bookings, expanding revenue beyond the concert venue.

Risks & Challenges: What Developers Must Navigate?

While Music IP tokenization offers massive upside, launching a blockchain-based music platform is not without serious risks. To succeed, platform leads must take a hard look at the roadblocks ahead and be prepared with smart, forward-thinking solutions.

1. Regulatory Uncertainty

Crypto regulation is still evolving and fragmented across regions. In the U.S., the SEC may treat tokenized royalties as securities. In Europe, MiCA offers more clarity, but it’s not fully harmonized. Asia has its frameworks, and some jurisdictions outright ban crypto-based investments.

Why it matters:

Platform developers must work on compliance from day one. That means:

• Collaborating with legal counsel experienced in digital assets.
• Implementing KYC/AML processes for users.
• Ensuring tokens meet the definition of utility or disclose their investment nature.

2. Industry Pushback

Legacy music institutions—labels, PROs, and collection agencies—are unlikely to welcome disruption. These entities have built their business models around control: over data, royalties, and access.

 Developers need to:

• Show how smart contracts can automate their admin tasks, not replace them.
• Offer new revenue-sharing models that include legacy players.
• Educate partners on how they can profit more with less friction.

3. Technology Limitations

Blockchain platforms have high gas fees, slow transactions, and confusing user experiences are still barriers. Millions of royalty splits must happen in real time, affordably.

To fix these issues, developers can:

Use Layer 2 solutions (like Arbitrum or Optimism), explore chains built for media (e.g., Audius Protocol), and abstract blockchain from users entirely.

Takeaway

Music runs on intellectual property. Tokenization transforms that IP into something transparent, tradable, and alive. For platform developers, this is the future of defining a foundation.

Looking forward to building an IP Tokenization platform, partner with Antier, a leading IP Tokenization Development Company, to give artists direct access to funding and fans a stake in the music’s success.