This NFT sector is the most undervalued

Spotify, Universal, Meta, Coinbase, Twitter, Ebay, GameStop, etc.: The list of world-renowned companies working with NFT business models is huge. New marketplaces, some with a particular industry or subject focus, such as GameStop, ensure an important infrastructure expansion. On the other hand, JPEG images without context, history or strong branding hardly stand a chance in 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 the marketplaces have no relevant use case. The biggest social media platforms, Meta and Twitter, come into play at this very moment or at the other end. Assuming there’s enough supply, there’s nothing standing in the way of a big NFT wave, right?

NFT images are not enough

The most important question is: Is there a sufficiently large demand for the created offer. After all, this has collapsed sharply in recent weeks – trading volume on the largest NFT marketplace OpenSea has fallen by 76 percent since the beginning of the year. Profile pictures alone should not be enough to justify the high investments and sometimes high ratings on individual platforms such as OpenSea.

The hope of the NFT sector is therefore primarily in the differentiation of individual NFT sectors that offer more than just hip little pictures. So success depends on communities like 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 create new demand through new innovations in the coming months, sustainable value creation can work. If not, there is a risk of NFT platforms with low trading where the companies and investors behind them quickly lose interest.

Music: The most underrated NFT sector

In order for the sector-specific NFT establishment to function, an ecosystem with the most relevant players in the respective industry is needed. Above all, however, use cases must be easy to implement and quickly scale across the board. These relationships are more likely to be found 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, are both investing significant time and money into 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 any industry with a greater reach on social media. After all, the biggest Instagram accounts include musicians like Beyoncé, Ariana Grande and Taylor Swift, who all have between 200 and 300 million followers on the platform. Their NFT promotion could very quickly create a high level of demand that would be unimaginable for example for Metaverse NFTs.

Finally, the music industry offers easy ways to generate NFT use cases. In addition to the collecting aspect, specific services such as access to exclusive (online) concerts, exclusive chat groups or the development of entire communities can also lead to enormous added value. There are no major obstacles for the music sector, neither technological nor regulatory. Except the prospect of also regulating music licensing revenue via NFTs, which for some artists should be even more exciting than the mentioned fan monetization.

The aspects that speak for the rapid establishment of NFT in the music industry also speak against NFTs in the Metaverse. While almost everyone consumes music, hardly anyone spends time in the Metaverse. The sandbox only has 30,000 active users per month. Metaverse blockchain is the industry leader with a market capitalization of around 3.5 billion US dollars.

This has nothing to do with widespread use. Rather, with an elitist image and marketing platform, on which companies build useless landmarks in order to then issue a press release that they are also now in the Metaverse.

In the long term, the potential of Metaverse may undoubtedly be gigantic, but in the short to medium term, it is overrated. One still asks oneself why one wants to spend longer in the current metaverses? Except for testing rounds and NFT speculation.

It lacks basic ecosystem aspects and ease of use. So if you rely on real and sustainable use cases, you are better off with the relatively simple music and lifestyle industry. The announcement that the developers behind Bored Ape Yacht Club also want to build a Metaverse doesn’t make those prospects any better.

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