This NFT sector is the most underestimated

Spotify, Universal, Meta, Coinbase, Twitter, Ebay, GameStop, etc.: The list of world-famous companies operating on NFT business models is huge. New markets, some of which focus on a particular industry or topic, such as GameStop, ensure significant infrastructure expansion. On the other hand, JPEGs without strong context, story or branding hardly stand a chance in markets like OpenSea.

Markets as a basis

A well-developed NFT market infrastructure alone is of little use if the virtual goods to be purchased from the markets do not have a relevant use case. The two largest social media platforms, Meta and Twitter, play a role at exactly this point or at the other end. Assuming there’s enough supply, nothing stands in the way of a big NFT wave, right?

NFT photos are not enough

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

Thus the hopes of the NFT sector are primarily in the differentiation of individual NFT sectors that provide more than just small images. So success depends on communities like the 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 afar. If they can generate new demand through new innovations in the coming months, sustainable value creation can succeed. If not, there is a risk of low-transaction NFT platforms as the companies and investors behind them quickly lose interest.

Music: NFT’s Most Underrated Sector

For a sector-specific NFT to operate, an ecosystem of the most important players in the respective industry is needed. Above all, however, the use cases should be easy to implement and quick to expand across the board. These conditions 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 investing both time and money in NFT’s business models. Other music players such as Warner Music or file-sharing platform Limewire are also planning to enter the NFT segment, and some have their own NFT marketplace.

At the same time, there is hardly an industry with a greater reach in social media. After all, the biggest Instagram accounts include musicians like Beyoncé, Ariana Grande, and Taylor Swift, all of whom have between 200 and 300 million followers on the platform. Promoting their NFT can lead to a high level of demand very quickly, which is unimaginable for Metaverse NFTs, for example.

Finally, the music industry offers easy ways to create NFT use cases. In addition to the collector aspect, certain services such as access to exclusive (online) concerts, exclusive chat groups or the development of entire communities can lead to a huge added value. There are no major obstacles to the music sector, neither from a technological nor organizational point of view. Except for the possibility of regulating music licensing income also via NFTs, which for some artists must be more exciting than said fan monetization.

Aspects that speak in favor of the rapid establishment of NFTs in the music industry also speak against NFTs in the Metaverse. While almost everyone consumes music, hardly anyone spends their time in the Metaverse. Sandbox has only 30,000 active users per month. The Metaverse blockchain is the industry leader with a market capitalization of approximately 3.5 billion USD.

This has nothing to do with widespread use. Instead, using an elitist image and marketing platform on which companies build pointless milestones so they can then publish a press release that they are now in the Metaverse.

In the long term, the potential of the Metaverse may undoubtedly be enormous, but in the short to medium term, it is overestimated. One still asks oneself why one might want to spend more time at current metrics? Excluding test rounds and NFT speculation.

It lacks basic ecosystem aspects and usability. Therefore, if you rely on real and sustainable use cases, you are better off going with music and a relatively simple lifestyle. Announcing that the developers behind Bored Ape Yacht Club want to build the Metaverse doesn’t make those expectations any better.

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