Among the folds of the prospectus of the recent listing of Universal Music we read how for the record industry the world of NFTs (non-fungible tokens) will be an integral part of the next frontier of digital business. Already today, as Warner Music COO Steve Cooper said at a recent Goldman Sachs meeting, monetizations related to new market segments other than streaming have become an increasingly relevant part for the major. The first experiments on the NFT front have already taken place in Italy but many questions still remain. To provide an introductory framework to the various facets of this world, FIMI, the federation of the Italian music industry, brought together IT and content protection experts, lawyers and representatives of the Italian tax and tax administration moderated by Francesco Prisco del Sole24ore.
The digital structure of the musical NFT, which can be a piece fixed as a recording, a video clip, a text or an image, a live recording, or virtual merchandising (even a concert ticket) means that the tokenization of the content becomes a relevant asset in the digital market of the future, above all for its uniqueness which makes it exclusive and particularly appreciated by the world of fans and collectors.
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The aspect of exclusivity and limited availability of the good is perhaps the most intriguing issue for the music industry today. In the era of the widest mainstream diffusion by streaming platforms and the vast amount of music uploaded every day on the network (Spotify sees about 60,000 tracks a day enter the platform), the economy of scarcity that in the world of the physical product and the live concerts that had characterized the music industry are now identifying new channels, limited editions of vinyls, exclusive versions, show houses with VIP access, have grown over time involving fans in unique events. Here, therefore, is how the NFT business is strongly coming into play.
However, as has already happened with cryptocurrencies, many aspects are intertwined and must be evaluated with caution.
As Marco Signorelli of DCP Content protection highlighted, the cryptographic tokens linked to NFTs, which represent a “computer” version of a content, are linked to platforms, which must first of all guarantee great security and stability over time, both for who creates and disseminates the content, both obviously for the purchaser, who unlike an analogy work or a painting, there is only a digital representation, albeit unique, but “fragile” from the point of view of security and conservation .
The disappearance of a market place or a platform that helped generate and disseminate the content (or store it) would in fact lose the content or make it worthless because without certification.
The legal aspect, also in the light of recent jurisprudential decisions on software by the Court of Justice of the EU, and the innovations introduced by the Copyright Directive, is another very sensitive issue. As the lawyer Simona Lavagnini, expert in new technologies and intellectual property, observed, are NFTs tools to create an artificial scarcity? But what kind of scarcity? NFTs are tools that guarantee the uniqueness of a file, not the underlying work; they create a unique identity for the digital file that would otherwise be reproducible without control. But they do not guarantee the uniqueness and exclusivity of the digital work, they do not guarantee its originality, they do not in themselves confer copyright (except probably, but certainly not the right of “exposure” in a digital environment).
If the NFT is a new right, it is therefore necessary to pay attention to the acquisition phase of the rights, carrying out a pre-evaluation of the third parties involved (in the music: author – co-authors – performer – producer in the case of fixation; other works? Synchronization) and distinguish between rights property and moral rights (to always be guaranteed). Also on the legal level, still unresolved issues emerge with respect to the responsibilities of marketplaces or platforms, the contractual and guarantee clauses as well as the aspects concerning the deposit of the technology, which, as we have seen, could be compromised at the infrastructure level, leaving the owner with a fist of flies in hand.
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In the new ecosystem of NFTs, there is no shortage of fiscal and fiscal aspects that have been addressed in detail by Lieutenant Colonel Tst of the GdF, Fabio Antonacchio, author among other things of the volume Crypto art, NFT market: rules and risks.
The evolving scenario is declined starting from the absence of ad hoc regulation and the financial administration rightly questions which aspects to address, which, in a context of inapplicability of the rules on virtual currencies, focuses on the relevance for tax purposes. direct for crypto-artists and producers resident in Italy. Still on the fiscal side, the trading activities of NFT were analyzed: relevance for the purposes of direct taxation for domestic crypto-investors. The activity in entrepreneurial form detectable on the basis of substantial parameters of habituality, frequency and size of trading operations in NFT, absence of other sources of income, as well as carrying out activities to promote the works sold. Activities carried out on an occasional basis generating various incomes. Finally, fiscal monitoring in relation to NFTs held on wallets activated on foreign platforms, relevant for the purposes of the tax return.
With regard to the regulatory prospects of the Non-Fungible Token market, the proposal for a Regulation of the European Parliament and of the Council was then discussed, relating to the crypto-asset markets (Markets in Crypto-Assets MiCA) which concern common rules in the European context. .
It is clear from the context that for the music sector, always at the forefront of identifying new areas of monetization of music content, NFTs can become a prolific segment if well managed with appropriate long-term strategies and not aimed at immediate speculation with the risk of saturation of the market which could then generate a rejection by fans.
* CEO, FIMI – Federation of the Italian music industry