Intellectual property is your crucial output if you’re an artist. Intellectual property, referred to as IP, is any type of intangible work typically used in commerce.

If you’re a musical artist, this includes but is not limited to your songwriting, your performance of a song, your brand & more. It can also be anything from patents for a machine to a design on a t-shirt. 

IP value & ownership are increasingly complex topics due to the amount of intellectual property available on the internet. Plus, this property often gets shared online without the property owners being fairly compensated, without obtaining permission, or is just outright stolen. It’s estimated that 24% of the global bandwidth annually is consumed by pirating copyrighted material.

Simultaneously, the internet allows an unprecedented amount of fans, consumers, etc., to be exposed to artwork, videos, music & more in mere seconds.

 NFTs (non-fungible tokens) have driven discussions around the value of IP back into the forefront in recent weeks. Several weeks ago, popular digital artist Beeple sold a piece of digital artwork for $69mm, with the buyer saying they’d potentially have paid even more. I think I speak for everyone when I say that I was shocked by the dollar amount given to this artwork. Not because I don’t like the art or understand how intrinsic value can be tied to the subjective value of art, but similar to others, I didn’t understand why you would pay so much for something so easy to steal, copy, etc.

But then, I remembered back in December 2020, Bob Dylan parted with most of his songwriting ownership in a record deal with Universal Music Publishing Group for $300mm. 

Why is this situation truly all that different?

Sure, there is copyright protection for Bob Dylan’s compositions, so someone else cannot re-record the songs and release them without getting clearance from the rights owners. But technically, the same protection is in place for Beeple’s artwork.

Sure, Bob Dylan is a household name, but the sales price is almost 5x the auction price for the digital artwork, so maybe that differential is appropriate for Beeple’s niche.

Sure, maybe it’s technically easier to screenshot and share a post from Instagram than t is to pirate or cover a song, but not by a large margin. Most songs are still only a few megabytes and are very easy to share quickly - demonstrated by the influx of ‘leak’ culture on Spotify & SoundCloud in recent years. 

Ultimately, when evaluating intangible assets, like music, visual artwork, or even movies, the original piece of art’s value is entirely subjective. The reality is that artwork is likely to be copied & spread around whether you like it or not. 

We’ve entered the digital store shelf era, revolutionizing the way recorded music reaches its audience. Twenty years ago, the name of the game was in-store distribution. You had to work with a major label/distributor, go door-to-door trying to different retailers or find a direct-to-consumer model in an era when you couldn’t share music digitally. The internet was in its infancy, and the primary way to sell music was physical CDs in store. 

Physical distribution created a massive barrier to entry for your average artist, incredibly independent artists. CDs are expensive to produce, costly to ship, and there were undoubtedly plenty of labels & artists that ended up with surplus inventory after an album release. 

Only the most prolific artists see consistent CD sales in stores & on top of that - getting a placement on the shelf didn’t guarantee your position there forever. There was a very brief window to sell your product. If your CD sold too slow, or maybe something more popular needed your space, they might pull you off the shelf - and you may never return.

Nowadays, that final route to market overhead cost has been removed. After completing the recording and allocating a marketing budget, there is little-to-no incremental cost to distribute your music through popular DSPs and keep it online indefinitely. This means that future rights holders or yourself will be able to continue monetizing your music at no incremental cost beyond the purchasing price.

Not to mention, Bob Dylan’s songwriting catalog’s valuation of $300mm is slightly higher than the price Square paid to acquire Tidal several weeks ago. To put that in perspective - a single artist’s IP is worth more than a channel of distribution required to use or monetize their work.

Now think about Beeple’s situation with his artwork. The new owner does not have to fear an art robbery, nor do they have to negotiate with museums for the best location to display the art. Sure, it’s easy to steal or copy, but it’s also a priceless piece of digital art that might require the owner almost no cost to upkeep, display or advertise in the future.

So, never undervalue or underestimate the value of your work. The end goal is creating as much possible value, intrinsically & extrinsically, for your work. 

Gambling on a record deal might be an approach that works for some, but for others, it traps them in an unfortunate situation in perpetuity. Many contracts will ask for partial or full ownership over your artistic output in exchange for resources that you might need to expand your platform. Sometimes it’s worth it to take the deal, as Bob Dylan did. Grow your platform with the label’s resources & hopefully buy yourself out of the agreement or earn your ownership back down the line. Like Taylor Swift’s conflict over her Fearless masters, others demonstrate some of the dangers that go along with singing a deal.

It’s not always black or white, and I recommended prioritizing ownership when possible and, but also that $1mm advance in your pocket.