Gm music fans.
I firmly believe that NFTs and blockchain will be a fundamental part of the future music industry. But there’s a big, black cloud around all of it… regulation.
This might be a denser newsletter than usual but it’s an important read. The implications for music and NFTs are huge.
This week, the SEC sent a $1 million fine to an NFT project called Stoner Cats while some music NFT projects are blocking US citizens from collecting. What’s going on?
We dive deeper into it this week, alongside the usual top stories and biggest drops. Let’s go!
Ziggy Ziggy Season 3 is powered by Beatport.io.
“What if this is it? If no club in Berlin is ever going to open anymore, how are we going to preserve what we had?” Photographer and bouncer of Berlin’s legendary Berghain club Mischa Fanghaenel started the NACHTs art project during the first lockdown in 2020.
“I was asking myself, ‘How are we going to memorize this culture, if all this is gone?’ I wanted to show the variety of people that are coming together in this club.”
I’m definitely hooked on the concept behind the first audiovisual project rolling out on Beatport’s Web3 platform. It’s a pure celebration of Berlin’s underground dance culture that we nearly lost during lockdowns.
Headline Story: Are NFTs Legal?
Remember Stoner Cats? The project launched at the height of the NFT hype-bubble in 2021, featuring 10,000 cartoon cats. It raised $8 million to help fund an animated series featuring Mila Kunis and Ashton Kutcher.
Well, they just got fined $1 million by the SEC and were forced to burn all the NFTs.
According to the SEC, Stoner Cats is an “unregistered security.” They concluded that the sale of cartoon cat NFTs constitutes an “investment” because the team was actively leading buyers to believe there would be monetary gain, through their use of memes and the suggestion that a Hollywood production would add value to the holders.
BAD NEWS: If this interpretation is upheld, then a lot of NFT projects that promise utility and “value” to their holders are in trouble.
But there’s a twist…
Following the SEC decision, two of the five main SEC commissioners publicly pushed back on the decision, and came out in support of creators and artists. In their dissent letter, they said that Stoner Cats was no different to a crowdfunding project or even Star Wars collectibles.
More importantly, they demanded freedom for artists to experiment. This part was particularly refreshing to read:
“Artists of all kinds have long struggled to support themselves, and NFTs offer a potentially viable way for them to support themselves. The fact that money is involved does not make them securities … We ought to lay out some clear guidelines for artists and creators who want to experiment with NFTs.”
So, are they legal? … we don’t know!
Even the members of the SEC can’t agree whether or not NFTs are securities, so how are artists and creators supposed to go forward?
Many will just play it safe.
Last week, music NFT platform Anotherblock put a geo-block around their Justin Bieber drop to stop US citizens from collecting it, citing “regulatory uncertainty”. The lack of guidelines means some platforms may avoid the US altogether.
To be clear… the Anotherblock drop is an outlier because the NFT includes streaming royalties which is a direct promise of future income. It’s much closer to a traditional investment than a cartoon cat.
What should creators do?
This goes without saying but I am not a securities lawyer so I don’t know the answer!
Personally, however, I tend to stick to pure art and music NFTs. As soon as you start making promises, adding utility or guaranteeing value then you are entering a grey area.
We’ll keep tracking this and make sure we bring you the clearest information we can if you’re trying to build in this space.
Web3 music roundup
🤖 Deadmau5 platform teams up with Beatport - Pixelynx, the Web3 company founded by Deadmau5, has partnered with Beatport to launch an AI-powered music companion called BeatKor. (Read more).
❓Sound.xyz teases a new drop format - It aims to combine the scarcity of limited editions and reach of open editions. (Read more).
🔎 Earl Sweatshirt NFT drop transparency? - How many sales did the drop make? Community members to try to figure it out due to Gala Music’s lack of transparency. (Read more).
👨🎤 UK pop punk band Busted enters Web3 - The band sold 3 million albums during their heyday, now they’re releasing a Greatest Hits rework as an NFT via Serenade. (Read more).
🎤 KINGSHIP starts teasing music - The Bored Ape supergroup signed to Universal has started dropping instrumental stems ahead of full track releases. (Read more).
🎧 San Sound headphones - Listen-to-earn platform San Sound launched Hyper Reality Audio headphones. (Read more).
📺 Glass Protocol shuts down - Music video NFT platform winds down operations. (Read more).
Zooming out: Web3 news we’re watching
📈 FriendTech does more volume than OpenSea - Friend Tech now has $32 million value locked and generated more transaction fees than Bitcoin this week. (Read more).
☠️ Vitalik Twitter gets hacked - Be careful with linking your phone number to Twitter, folks! (Read more).
☀️ Onchain Summer success - Coinbase’s BASE hits 700k mints, 268k unique wallets. (Read more).
🔗 NFT Now launches “NowMedia” - Aims to pioneer media powered by Web3. (Read more).
🍄 Bello integrates POAPs - Our favourite NFT analytics tool now includes POAPs so you can analyze all your POAP holders. (Read more).
📉 FTX gets approval to sell $3.4b in crypto - The news triggered selloffs across the board. (Read more).
👕 Digital AI Fashion - Web3 fashion company Fabricant partners with Nvidia for AI digital fashion. (Read more).
Biggest music drops of the week
BLOODY - INSTANTE (feat. HeyBela)
We’ve been obsessed with this song since Bloody White debuted it on our live DJ session in July. INSTANTE is a dark, brooding introduction to the producer’s new project ‘BLOODY’ featuring a phenomenal vocal performance by Colombia’s HeyBela.
The song rolled out with a unique bidding format whereby collectors could submit their best price in advance of the track going live onchain. It sold out immediately.
Follow BLOODY and HeyBela on Spinamp to keep up with all their new releases.
HENO - Relief (a pixel game)
Rapper and Ziggy Ziggy favorite Heno just dropped a new Pixel Game, ahead of his new single Relief. You can mint a ticket to play the game on Zora.
Follow Heno on Spinamp to stay up to date with all his new releases.
Artist to watch: Jade
We stumbled across this hidden gem on Sound this week - a completely new artist with just one track onchain so far. It’s a dream-pop debut about one of our favorite UK cities, Brighton. Listen and collect on Spinamp.
Thanks for reading!
We believe a new generation of independent music will be born out of Web3 culture. Discover the best music here first. Follow us on Twitter where we share the best music every day.
Ziggy Ziggy Music Season 2 is supported by Beatport.io and Spinamp.
Disclaimers: We may own NFTs mentioned in this article, have previous or current contracts with companies mentioned and may earn referral income from links to music NFTs. This newsletter is purely informational and should not be considered financial advice. Nothing in this content should be considered a recommendation to buy a particular NFT, only an expression of our opinion.