How NFTs are revolutionizing the music industry
NFTs have come to the music industry and they’re already providing new opportunities for musicians all over the world. In this article we cover how NFTs get rid of the middlemen, provide digital scarcity and much more.
NFTs are exploding in every sector of the creative world. Creators are minting everything from digital art and video clips to sports card collectibles. As popularity spreads, the music industry is becoming a hotbed for new NFT horizons. If the trend continues, NFTs offers a new paradigm for musicians seeking to spread their music, connect with fans, and profit from their creative work. Let’s examine the ways NFTs are revolutionizing the music industry.
Say goodbye to the middlemen
Traditionally, music distribution has gone through agents, studios, record labels, record stores, and other third parties in order to reach their audience, and everyone gets a cut of the profit. This was a necessity before the internet, when musicians needed incredible amounts of resources in order to be heard. In the internet age, however, platforms like Soundcloud and Bandcamp have been moving musicians in a DIY direction for years, but NFTs present the most promising development toward supporting indie artists.
Selling your music as NFTs involves only one other entity beyond seller and buyer: the NFT marketplace you sell it on. Considering the lack of gatekeeping involved, the marketplace hardly acts as a middleman in the traditional sense. Create music any way you choose, mint it, and upload. All other barriers are removed. Musicians are able to combine their completely original artistic visions with a way to profit from them directly.
Like with other types of NFT art, crypto music can create scarcity that has not traditionally been an option for digital media. In the early days of the internet, sites like Limewire and Napster allowed users to copy media files and distribute them freely, making piracy a viable option for anyone with an internet connection. Today, streaming platforms like Spotify allow users to listen to whatever music they want without downloading anything, despite their reputation for extremely low artist pay. This creates a huge problem in the supply and demand balance.
NFTs give musicians the opportunity to create 100% original, uncopiable assets to sell. The scarcity allows the supply side of the equation to become limited while the demand side potentially continues to grow. These sales can also be combined with unique giveaways to entice purchases further. For instance, the rock band Kings of Leon released their NFT album When You See Yourself in March 2021, and anyone making the purchase was automatically registered for a contest to win VIP tickets to a concert. The possibilities are endless in the hands of the artist.
The collection of royalties doesn’t have to end with outright sales. An NFT sale does not mean the transfer of a copyright or intellectual property rights, so royalties can continue to be obtained through further sales. If you use a smart contract, you can include a clause which specifies that anytime that NFT is sold, the owner of the copyright gets a percentage of the royalties. This process can go on indefinitely, and it the musician’s popularity grows and that NFT’s value grows with it, a larger amount of royalties can be obtained later on.
Without major record labels and agents funneling money into musical business endeavors, artists may still need funding for various projects. NFTs provide a method for funding to be built from the ground up, rather than trickle down from the top. The popularity of Patreon and Kickstarter demonstrates that audiences are willing to invest in future and ongoing projects by their favorite creators.
If a band wants to record a new album, for instance, they could promote their project via their social media channels and offer unique NFTs to those willing to throw down some funds for a project that doesn’t even exist yet. Bands can offer NFTs for song demos, alternate artworks, unique merchandise, and anything else they can come up with. Fans could also be invited to invest in the financial future of an album or song in exchange for a cut of the royalties down the road.
The more musicians get in on this new method of crowdfunding, the more accepted the new paradigm will become, and the more power will shift away from existing structures and to the musicians and fans directly. With some persistence, the age of monolithic major labels could come to an end.
NFTs revolutionize more than just the distribution and sales of recorded music. NFTs represent a way for artists to expand their brand in many other ways. More than three-quarters of musical revenue comes from live events, but plenty of other entities get in on ticket sales too. From record labels to ticket scalpers, third parties don’t need to be a part of the process when NFTs are involved.
Using NFTs as tickets also ensures their validity. When purchasing an NFT ticket, a buyer’s name and information and recorded and stored on the blockchain where others can’t access it. If musicians issue tickets, either by themselves or in collaboration with a concert venue, they are able to keep full authority over the buying and reselling of tickets.
Musicians can also profit off NFTs as a new form of merchandise. Digital artworks of album covers, clips of the band in the studio, and unique messages to fans can all become assets in a musicians NFT web store.
Many people are talking about how NFTs will change the future of the music industry, but the reality is that it’s already happening. The previously mentioned Kings of Leon example is only one of many.
Mike Shinoda of the band Linkin Park found great success releasing his first NFT in early 2021, raising over $11,000 from it. He specified that he never could have found that level of financial success releasing it traditionally with everyone getting cuts.
Electronic music producer 3lau recently released a tokenized album, which made over $3.6 million through 33 sales. He’s been so successful that he’s also implemented a system where his fans can share the profits. Other big names like Jay-Z, Marshmello, Steve Aoki, and more have shown support for the movement.
Musicians like Steve Bach and Nadine Lustre are already on board enter.audio with their audio NFTs, and more artists - both established and yet to be discovered - are joining their ranks by the day.
Looking to learn more about NFTs? In this section you can learn more about how NFTs are revolutionizing the world.
PUBLISHED 22ND DECEMBER 2022
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