Key Takeaways:
- Music NFTs are music tracks that artists can store on a blockchain.
- Every time a person purchases music through the NFT, they become the owner of that artist’s work.
- Artists can create a deeper connection with their fans through digital certificates and images and expand their revenue streams.
Non-fungible tokens, NFTs, have grown enough to achieve recognition from mainstream organizations and individual investors over the past year. According to Nonfungile.com, NFT sales hit $17.6 billion in 2021, a 21,000% increase from the past year.
Among the first remarkable sales in NFT history was the Christie’s auction for Beeple, a digital artist, which sold for $69 million.
These digital assets are widespread and diverse in their uses, ranging from the gaming industry to digital artwork, ticketing, music industry, and real estate.
Among other industries that the assets have tapped into is the music space, which is the main focus of this guide.
There are a lot of challenges that musicians around the world face when it comes to the production and dissemination of music.
Some of these are exploitation, lack of royalties, and copyright issues. With the emergence of non-fungible music tokens, there is potential that the music industry could benefit from the change.
Music NFTs
An NFT is a unique digital or physical asset stored on a blockchain that cannot be changed or replicated. They can be coded to enable them to make royalty payments, one particular technology that could become beneficial for musicians.
Music NFTs are music tracks that artists can store on a blockchain. They are assets that belong exclusively to their owner. Unlike music files in MP3 that you download onto your phone, users can also sell these virtual assets on the secondary market to earn royalties.
How Do Music NFTs Work?
Interested parties can find various forms of music NFTs in the music industry. Artists can represent these digital tokens by an album cover, a video, and signed merchandise.
Like other NFTs, the principle of music sales remains the same. A musician or band can decide what products they want to sell to their fans.
They will then identify which blockchain is convenient enough for them to use in minting tokens on their preferred music NFT platform.
Currently, available platforms include OpenSea, Opulous, and NFT TONE. After identifying their preferred platform, artists will then inform their fans about the release of their NFT drop and put it up for sale.
Since none of these non-fungible assets are replicable, artists might decide to sell their tokenized music on an audio file, which means the highest bid will get the original audio file. If they choose to mint a limited number of them, they will sell them on a music NFT marketplace.
Every time a person purchases music through the NFT, they become the owner of that artist’s work. They can then keep the music in their crypto wallets and sell it to a higher bidder in the future.
Despite being the owner of the virtual assets, the musician can still make money from the resale of their work. It is one of the most potent ways that the tokens can empower musicians.
Various bands and musicians have already benefited from the technology. For instance, DJ 3LAU was able to sell his record “Ultraviolet Collection” for over $11.6 million.
In early 2021, Canadian musician Grimes made over $6 million from selling her digital artworks. These pieces were part of her WarNymph project.
A Way To Cut Out Middlemen
One of the biggest challenges that musicians face is finding a way to earn money from their music without signing a contract with a record label. A substantial advantage of NFTs is that they give the artist 100% of the money that they make from their work.
Without distributing profits among various platforms, making music becomes financially rewarding. It will allow more people to become musicians and not worry about making money when all the revenue goes to their pockets.
Royalties
Unfortunately, some musicians in the industry cannot support themselves financially due to the revenue from streaming their work online. NFT royalties, on the other hand, allow artists to receive a certain percentage of the sale every time.
For example, by minting music NFTs, such artists could list their masterpieces via blockchain technology and get 10% of any sale made by subsequent buyers.
Benefits for Fans Only
Music NFTs allow musicians to build a solid and loyal following by allowing their fans to access exclusive content related to their works. For instance, holding events such as airdrops can reach new audiences.
Since the concept of these unique tokens is still in its infancy, many people are still hesitant to purchase them due to their potential risks. However, artists can still create unique and compelling NFTs for real-life use.
Aside from these, musicians can also capitalize on their fans’ unique experiences by holding events that allow them to connect with them in person or virtually.
For instance, during his SandBox hangout session, rapper Snoop Dogg invited his fans to play beer pong with him.
Fans Can Invest Directly
As an artist, it’s hard to track down the exact individuals listening to your songs. Even if you have a rough idea of who is listening, it is a mountain to climb knowing who these individuals are.
Through a music streaming site, your most loyal supporters can easily support you by making a financial contribution.
Your followers can help you develop a plan for your future success by giving you feedback about their views on your songs.
If an investor purchases a music NFT from a less popular artist, they can help raise the product’s value by promoting the artist and supporting their development. This move benefits both the artist and the buyer.
As an artist, you can also use the non-fungible Tokens to fund your next project, which could be an album release. Like a Kickstarter campaign, you can also generate money by selling non-financial rewards.
Opportunities for New Artists
The low barriers to entry in the music industry are great opportunities for new musicians. No one can hold upcoming artists back from releasing new music. With music NFTs, artists can now efficiently market their work to their fans on multiple platforms.
Currently, only a few musicians are exploring the possibility of using music NFTs. However, the increasing number of fans and knowledge about the technology will cause opportunities for artists to grow.
Music NFT Marketplaces
Groovetime NFT Marketplace
Most artists prefer to launch their music on music-specific marketplaces such as OpenSea instead of its dedicated NFT catalog.
For some artists, releasing limited editions is their preferred method of music release. For instance, they can launch ten NFTs of a single track through Sound.xyz, a daily drop. Users can then sell the unique digital tokens on secondary marketplaces like Rarible and OpenSea.
The OpenSea competitor marketplace known as Catalog is the primary place where artists can sell their single-edition NFTs. Founders built it using the Zora protocol and as of February 2021, users sold over $2 million worth of single-edition NFTs on the marketplace.
Other platforms that allow artists to mint 1/1s include FormFunction, Foundation, and Arpeggi. They also cater to different music genres. Another platform that focuses on dance music is Groovetime. It also offers generative music.
How To Invest in Music NFTs?
If you’re a musician or just an investor with musical interests, then you might be interested in music NFTs. Either way, it’s a risky proposition, and there are no guarantees that you’ll make money.
Suppose you’re thinking about minting NFTs. You’ll need to pay fees to get started. If you buy music NFT, then your resale proceeds will be reduced by the fees charged by the platform and the gas fees that the artist collects.
Before buying tokenized music, it’s essential to consider the piece’s value. Aside from its overall quality, other factors such as its creativity and provenance also determine its worth.
There’s also value in the fact that these assets are unique. For instance, a rare record might have value even though the artist made only a few copies.
Some music NFT projects offer large volumes of digital tokenized copies of music and accompanying art. Users can also exchange them for different cryptocurrencies.
To determine the actual value of music NFTs, it’s crucial to study the success of the platform’s sales. Aside from the quality of the product itself, the supply of these digital tokens directly correlates to the project’s overall success.
Is the Market Developing?
One year ago, the concept of NFTs exploded into the global art market. It’s easy to see how this will affect the music industry. The potential of the unique technology in the music industry extends beyond songs.
Many established artists have already used the various marketing and merchandising opportunities that digital collectibles can provide.
Artists can create a deeper connection with their fans through digital certificates and images and expand their revenue streams. One of the most promising features of NFT technology is preventing ticket fraud and the black-market sale of tickets.
This technology also allows artists and event organizers to set revenue shares in advance, ensuring that the money goes to the appropriate parties.
Anthony V, a Twitter user who had a chat with an unnamed researcher in the music NFT industry, shared a thread of answers he got from the analyst in a thread.
According to the answers displayed on the thread, the analyst expects the music NFT industry to experience periods of growth, slowdowns, and dependence on more significant crypto trends because it’s pretty early in its life cycle.
Small, focused teams can refine this unique sector’s underlying technology and product needs during this period.
Music and NFTs: What Lies Ahead?
Aside from purchasing physical copies of their works, music NFTs can also have other values beyond music. For instance, artists can use them for various purposes, such as hosting private parties and granting access to exclusive remixes.
Several artists are currently exploring the use of NFTs. For instance, 3lau, a creative music producer, sold 33 of his NFTs for over $11.7 million on the third anniversary of his record “Ultraviolet.” He’s already considering allowing the owners of his NFTs to collaborate with him on a song.
NFTs Are Bringing Symphony to the Blockchain Space
Due to the potential of NFTs to transform the music industry, several artists are also considering using them to monetize their paparazzi photos. These types of applications could help level the playing field for all artists.
Despite the current state of affairs in the music industry, non-fungible tokens in music streaming platforms have the potential to transform the consumption of music. In just over a decade, streaming platforms have already changed how music is bought and sold.
Only a few musicians have explored the possibility of using music NFTs. However, with the increasing number of fans and their knowledge, artists’ opportunities grow.
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