I thought I would talk about something relatively new that could affect the music industry in a major way in the very near future …..NFTs.
What are NFTs?
Non-fungible tokens (NFTs) are digital tokens stored on a blockchain that can record the ownership of a wide range of digital or physical items, from digital art to event tickets or even music. As well as a token, NFTs can be coded in a way that allows for royalty payments to the creator, which makes them a highly interesting technology for musicians. Songs, albums, music, lyrics, and soundbites can all be NFTs.
Experts say NFTs will be especially transformative in shaping the future of music. NFT sales totalled $25 billion in 2021, compared to just $95 million in 2020. Read more here about how NFTs could define the future of music.
How does it work?
NFTs are a kind of cryptocurrency, but instead of using money, they use assets like art, tickets, music or merchandise. NFTs operate on a blockchain, which is a publicly accessible and transparent network — meaning anyone can see the details of any NFT transaction. NFT could be defined as a rare collectible that is stored digitally. Artists and musicians can create NFTs themselves to auction off as various forms of digital media to their fans who pay using cryptocurrencies like Bitcoin, Ethereum and others. A musician or band will decide what they want to sell to their fans, be it an audio file, concert tickets, merchandise or something else. Then they will inform their fans of the release of their NFT drop, and put them up for sale at whatever value they would like to sell their works.
How will it help?
For years, musicians have been poorly compensated for their music. The typical revenue split of 50/50—with only 50% of revenue going to the entertainer and the rest shared among agents, lawyers, and distributors. Despite the ease with which people can now listen to music, according to a study, artists receive only 12% of the money made by the entire music industry. This is where NFTs are making all the difference. NFTs could have a huge effect on streaming platforms that simply don’t earn artists enough. We could see an era when artists are able to do business directly with retailers and sell their NFTs like they used to do with self-made CDs. Fans who buy the NFT become an owner of the musician’s work. They are then able to store the music NFTs in their crypto wallets, and if they want, may sell off the NFT to a higher bidder in the future. Despite being the owner of the NFT and being able to sell it, the musician who created the NFT can earn from the re-sales of their work as well, which is one of the most powerful ways music NFTs can empower musicians.
“NFTs will give artists another outlet to create exclusive content for fans in a more artistic fashion. In the future, we’ll see the value of songs appreciate, like Basquiat paintings.” – Dallas rapper Rakim-Al Jabbaar
Currently, there are only a small number of musicians who are exploring the uses of music NFTs such as Kings of Leon, Tory Lanez, Aphex Twin, Ozuna and Belave. . However, with increased knowledge by musicians and fans, the opportunities for artists to benefit from NFTs are growing substantially. Read more here about the Kings of Leon being the first band to release an NFT.
Water and Music wrote an article about the various strategies that music NFT platforms use to attract, onboard and retain their fans, collectors and artists in an increasingly competitive marketplace if you’re interested in learning more.
I know I’ll be keeping a close eye on how musicians are working with NFTs and how it could potentially help your profile relevance and garner new audiences!