Music NFT: The Next Big Evolutionary Step In The Music Industry
It was only a matter of time, a short one even, for the inevitable (the music world embracing NFTs) to manifest.
2021’s late winter saw 3LAU, one of the remarkable pace-setters, net $11.7 million in a 3-day NFT album auction. Canadian multi-genre songstress, Grimes, became $5.8 million richer in 20 minutes from selling some WarNymph Collection. And like we asked for it, her billionaire partner, Elon Musk, put up his song about NFTs as music NFT for sale.
He had second thoughts, though, and decided not to sell later.
Regardless, the NFT craze has somehow found its way into the music industry, sparking daily interest from new music fanatics. Scores of artists, bands, producers, DAOs, & music platforms from renowned to up-and-coming have in various inventive ways contributed to the trend. Even the Recording Academy has exclusively partnered with OneOf to release NFTs in commemoration of the 64th, 65th and 66th Grammy Awards.
With proponents asserting NFTs possess the power to reform the entire music industry, what exactly are they?
NFTs explained
NFTs (non-fungible tokens) are digital tokens that prove the authenticity and ownership of assets. The assets can be anything digital including, music, albums, art, movies, tweets, and collectables. They can also be physical.
Predicated on the keyword, “non-fungible,” NFTs are irreplaceable. For example, a naira note is fungible. You can deposit some considerably stained, squeezed notes in the bank today and get spotless bills on withdrawal tomorrow. Similar property goes for cryptocurrencies like bitcoin — if you trade one for another, you essentially have the same amount.
A land, computer, clothes, and furniture, on the contrary, are not fungible. They each have unique properties that make them non-interchangeable. Your laptop may contain vital academic manuscripts your professor shared for an upcoming test, while another’s may be relatively empty. Both laptops are not exact replicas hence not exchangeable/fungible.
In the same way, the original recording of a piece of music is non-fungible, but copies of it are fungible.
Since NFTs are non-fungible, they can have only one official owner at a time, which is made possible & secure by a blockchain, most popularly Ethereum’s. The blockchain acts as a digital ledger and stores unalterable information about the NFT.
Owners can, however, sell NFTs on an online marketplace. Their value most times depends on how much a potential buyer wishes to pay for it.
Why are musicians considering NFTs?
Let’s time travel back to the 1950s, when music recording was still in its infancy. Artists recorded tracks & albums on vinyl and controlled their exclusive sales. Various implemented strategies ensured uniqueness and scarcity of music, which was vital, profit-wise.
From magnetic tapes to CDs, the evolution was always welcoming to artists until the onset of the internet. Thanks to Napster, the ease of compressing sound waves into bytes and sharing them online paved a new era of piracy. CD sales exponentially plummeted, and music nearly lost value as more of its lovers exploited the internet.
With the possibility of sharing music online exposed, artists resentfully had to adapt for revenue, culminating in streaming. Fast forward to today, NFTs now gift artists a chance to regain music’s scarcity, hence lost value.
When artists tokenize their music, they guarantee uniqueness, making it easier to fetch four to five-figure sums from auctions. Bidders are pleased to own an artist’s original works while rewarding the artist handsomely in return.
Promising electronic & pop star, Daniel Allan, has prominently benefitted from NFT music sales. By selling copies of his pop songs as NFTs, he has made thousands of dollars to fund his career entirely. He released his second EP, Overstimulated, in January.
Data has shown that 90% of streams go to the top 1% of artists, making it extremely difficult for others to earn substantial income today. Even artists with decent audiences and millions of streams receive only some hundred dollars as incentives.
But with NFTs, not only can musicians make huge one-time profits from successful sales or auctions but also earn predetermined percentages of royalties whenever their music NFTs are resold.
Moreover, NFT music sales create a direct bridge between musicians and fans. Despite the disheartening earnings artists endure from streaming networks, record labels & other intermediaries aren’t better at revenue splitting.
In California-born singer-songwriter Mike Shinoda’s words:
“Speaking personally, the revenue I’ve been able to generate in NFT music has already eclipsed the sales of my last physical, record label-backed EP,” Joan Westenberg, artist, angel investor, and member of MODA DAO.
After netting $1 million in 57 seconds from NFT album sales, Tory Lanez euphorically admitted, “I GUESS WHEN U CUT THE BULL*** OF THE MIDDLE MAN, U BECOME KING !!!”
Aside from the lucrative benefit of bypassing record labels for direct transactions with fans, artists can cultivate a devoted fanbase. Frequently, buying music NFTs for mega amounts proves how enthusiastic fans are towards artists’ success, and many don’t take it for granted.
Daily, Daniel Allan spends at least 6 hours on Discord interacting with fans who encourage him, offer feedback, and even share memes. He intends to dissolve the barrier between artists and fans even more by collaborating with them for an EP soon.
Why would anyone buy music NFTs?
Honestly, who wants to spend over a thousand dollars for a song worth cents on Spotify? No one, except there are ulterior motives than listening. For most investors, investments in this space are highly speculative. Since the concept behind music NFTs is relatively novel and has proven accepting to musicians, there is a surfacing prospect of substantial gains among investors who want to seize the opportunity to amass them fast.
Besides, buying music NFTs from your favourite artists gives you the chance to support them financially. Since music iteration today hardly allows appreciating artists without intermediaries collecting significant cuts, you can turn to buying their NFTs. Depending on your generosity, it can even compel artists to uncover your identity, and who knows, you can get a one-on-one interview with them as Allan does.
Democratizing the music industry is also easily actualized with NFTs. With fan-inspired equity crowdfunding, artists could strike better deals than record labels offer while the fans earn percentages of future revenues. Introspective American rapper, Ibn Inglor, raised over $92,000 from sales of shares of his upcoming album, among other opportunities as NFTs. Fans’ opinions could subsequently affect how music is created, released, and promoted.
Finally, although most artists still retain their NFT music copyright on selling them, buyers can gain their exclusive ownership. It grants music enthusiasts some online usage rights that streaming platforms can’t offer. Moreover, the oblivious could also enjoy their bragging rights of owning them. Lol. Not everyone has one.
Popular music NFTs ever sold
The concept & realization of NFTs may have existed since 2014, but it wasn’t until 2021 the paradigm-shifting system hit the music industry. Initiated artists commenced tokenizing their music digitals. Multiple audio NFT marketplaces were springing up, and pioneering ones began supporting music sales. Even Grammy-award-winning musician, RAC, launched an agency to help “musicians, brands, and visual artists break into the world of NFTs.”
Among the myriad of music NFTs sold so far, here are some of the most prominent:
1. 3LAU’s Ultraviolet Album NFT
“Trust me, I didn’t know it was going to go this high,” admitted 3LAU to Forbes after his record-breaking sale. The disc jockey’s 33 NFTs minted to commemorate the third anniversary of Ultraviolet fetched him $11.7 million through a three-day auction.
2. Kings of Leon NFT album
When you see yourself, an album by the Kings of Leon rock band became the first NFT album by a musical group. The NFTs attached with additional perks produced 820 ETH.
3. Don Diablo’s concert-film NFT
Dutch Don Diablo became the first performer to tokenize a full-concert film which a certain deckchair bought for 600ETH. In addition to the hour-long sci-fi visual, deckchair received a one-of-a-kind USB stick containing the file.
4. Betty’s Notebook NFT
A 21-minute recording, Betty’s Notebook, was auctioned off as an NFT, 56.46 ETH ($375,000) being the winning bid. Sold in early May 2020, it marked the first piece of classical music NFT.
5. BT’s 24-hour music NFT
Pranksy took to Twitter to announce his new NFT, Genesis.json, a 24-hour “art and multi-channel music.” He won BT’s auction artwork after bidding 88.88 ETH ($212,736).
6. Tory Lanez’s When It’s Dark NFT Album
In August 2020, Canadian rapper, Tory Lanez, collaborating with E-NFT, released a million NFTs linked to his album, When It’s Dark. Owing to the low price tag (one dollar) of each NFT, it took only 57 seconds for Tory to become a million wealthier.
7. Whitney Houston’s Demo Track NFT
In an Iconic Auction, OneOf released an NFT of a never-before-heard demo recording of Whitney Houston at age 17. The legendary gospel artist’s track sold for $999,000 with a video created by 17-year-old Diana Sinclair. While the public distribution of the recording of any kind is strictly forbidden, the lucky owner will have full private access.
Drawbacks to music NFTs
As seemingly flawless as NFTs application has appeared, there are still a few drawbacks in the quest of dominating the music industry. Most foreseen hurdles are still theoretical, but dysfunctional NFT platforms have emerged. After Tory Lanez sold one million copies of his NFT album on E-NFT, fans took to Twitter & Reddit, expressing their discontent with the platform.
According to the irritated fans, reselling the tokens, which most anticipated, was hindered by glitches. Many concluded that they felt duped by the rapper.
Since NFTs are tied to their accessible marketplaces, issues affecting the platform could be detrimental to the NFTs it holds. Another example was the destruction of $100,000 worth of NFTs by a bug in the OpeanSea marketplace. The first ENS name ever registered, rilxxlir.eth, was obliterated in the process.
Also, many NFT-initiated artists were already prior adopters before releasing theirs. They understood the underlying concept behind the unprecedented tokens, from their blockchain cryptography to marketing. It made it easier to join in the trend creatively with their fiercest weapon — music.
But not everyone has the technical know-how of NFTs. There are still sceptics among musicians and even fans.
It’s a good thing RAC launched the SixNFT to help the uninitiated, but it’ll definitely take some time to convince everyone.
Another restraining factor, especially for artists, is their legal obligations with record labels. Violating any contract terms by engaging in NFT sales may cause serious legal trouble.
Where can you buy music NFTs?
Music NFTs are available on marketplaces, but first, you need to own a digital wallet for storage. Coinbase, an established wallet, can store only Ethereum-based NFTs. Trust Wallet supports over 53 different blockchains but is only structured for mobile apps. And Metamask, Math wallet and Alphawallet are also recommended.
It’s best to understand each wallet’s peculiarities before choosing it. Learn their ups and downsides relative to the kind, frequency, and size of NFTs you intend to store in them.
After setting up your wallet, you can check out various NFT music platforms. Some popular ones include:
Just follow the instructions on-site to own your NFTs in no time.
Can music NFTs topple streaming giants?
Not any time soon, if ever. Spotify currently boasts over 172 million premium subscribers, and Apple Music had 72 million as of June 2020. With these numbers exponentially rising every year, it would be almost impossible to write them off completely. But never say never.
Final thoughts
NFTs have empowered artists with autonomy & digital ownership of their creativity while cultivating & sustaining an unprecedented connection with fans. Exponents of a democratized music industry can’t also demand a better system for facilitation. And music-fanatical investors might feel the luckiest of all.
Sceptics’ inadequate technical knowledge, dysfunctional NFT platforms, and artists’ legal obligations to record labels have proven flies in the ointment, but measures are on track to combat them.
Only time will tell if this thriving trend is here to stay, but the incredible imminence of mainstream adoption due to the rapid involvement from top brands & personalities is too lucid a signal to ignore.
