From records to CDs to streaming services, music has proven itself to be an incredibly transformative medium over the years. The most recent development in the evolution of music is the creation and sale of music NFTs, which show incredible promise and potential for the future.
NFT stands for non-fungible token and is a term that refers to digital assets that are bought and sold on a blockchain. The first NFT was created in 2014, but they have experienced an incredible surge in interest and sales since 2021.
An NFT can be created to represent any real-world item, including artwork, videos, real estate, and music. Buyers who purchase NFTs receive a digital copy of the item, which is either entirely unique or one of a limited edition. In other words, NFTs capitalize on the value of scarcity. They become more intriguing to buyers because they offer a one-of-a-kind opportunity for purchase and ownership.
The term non-fungible refers to the fact that NFTs do not have value equivalency. In other words, you cannot exchange one music NFT for another because they are not equally valuable. This is similar to the idea of exchanging two physical records.
Exchanging a Beatles album for one by Garth Brooks would not be an even trade, even though they are both likely to be worth significant sums of money. Even trading two Beatles albums is unlikely to be fair, especially if one is much more rare than the other. This principle also applies to all NFTs and is why they are especially appropriate for mediums like digital art and music.
One other key facet of NFTs is the level of transparency created by the use of blockchain technology. Because all transaction records on a blockchain are permanent and cannot be changed, the sale and purchase of NFTs gives buyers the opportunity to prove ownership in a way that is not possible with many other transactions. There is no need to save receipts or documentation because the path of an NFT from one owner to the next is easy to trace and validate. This means that a buyer can rest assured that they can always demonstrate the legitimacy of their ownership.
Purpose of Music NFTs
In the music world, NFTs are a seemingly natural progression from mp3s and streaming services like Spotify. Since the advent of subscription streaming services in the early 2000s, the framework of how musicians earn money has shifted dramatically. Now, NFTs are introducing another remarkable change.
Artists have taken advantage of many new opportunities for using NFTs in selling and promoting their music. These include selling NFT versions of:
- Individual songs
- Live concert or event tickets
- Exclusive content
- Special privileges at live shows
This is not to say that all musicians have embraced NFTs overnight. Instead, artists have been experimenting with the ways in which this new technology can allow them to create new experiences for fans.
One of the most notable examples of a successful music NFT sale is actually one of the first. In 2021, Kings of Leon became the first band to release a new album as an NFT, and their experience was a clear demonstration of the incredible success that can be achieved with the proper marketing and planning. The band's album When You See Yourself generated $2 million in NFT sales, $200,000 of which the band donated to the Crew Nation Fund.
Kings of Leon made such impressive sales largely because they understood that exclusivity is the central selling point of an NFT. In addition to receiving access to the songs, the band's NFT also included special artwork. More importantly, they held six special auctions that gave buyers lifetime rights to four front-row seats to one show during every Kings of Leon tour. The value of these experiences is that they are unique and available to only a few people.
The Benefits of Music NFTs
While the use of NFTs in the music industry is still largely new and, thus, uncharted territory, it already has several proven benefits. More importantly, these advantages are universal, as artists and listeners alike have something to gain from NFTs.
Building Artist-Audience Relationships
Music is an intensely personal experience for both those who perform it and those who listen to it. NFTs make it possible for both independent artists and those signed to major labels to create a new kind of relationship with fans.
The use of NFTs makes it possible for musicians to sell their music directly to buyers if they wish to do so. When an artist records songs in a studio or, as in the case of Violetta Zironi, even in a living room, they can convert them to NFTs, promote them on social media, and sell them to supporters without having to involve any outside parties.
Likewise, record companies have recognized the potential of NFTs to engage audiences in a revolutionary way. In 2021, Warner Music Group formed a partnership with the avatar development experts at Genies. Through this collaboration, Genies develops avatars and wearable NFTs for Warner’s artists, who will be able to use them across social media and the metaverse to interact and build relationships with fans.
Whether an artist or a record company makes the move toward NFTs, the result is a far more personal connection between musicians and their audiences, and it allows fans to give direct support to the artists that they believe in and admire. Most importantly, it accomplishes all of this without limiting a performer's potential audience.
Achieving Financial Success
Unfortunately, the music industry has been rife with exploitative relationships between musicians and streaming providers. Music streaming services often pay artists mere pennies per stream. This may be a feasible way of making money for those with large fanbases, but for lesser-known artists, streaming simply isn't profitable enough.
However, because performers have the ability to sell NFTs directly, they are able to maximize their profits and circumvent exploitation. The NFT community is active and eager for new material in the space, which makes it possible for musicians to regularly expand their potential pool of buyers without making a significant financial investment.
Record labels have also been presented with an opportunity to develop forward-thinking strategies with a long-lasting financial payoff. In addition to Warner Music Group, other record company leaders, like Snoop Dogg of Death Row Records, have indicated that they are dedicated to creating a profitable artistic space for the music industry within the metaverse.
Creating a Path for Upcoming Artists
The powerful aspect of NFTs is that they encourage flexibility, imagination, and creativity on the part of artists. Musicians who have smaller niche audiences or who are more experimental are perfect for NFT sales. Creating something truly special is, in many cases, the key to creating a music NFT that is desirable and will make an impact on buyers.
Consider the example of Justin Blake, a musician and producer who goes by 3LAU. In February of 2021, Blake auctioned an NFT collection for an astounding total sum of $11.6 million. While he is an artist with an established fanbase, Blake's level of success is nevertheless impressive, particularly in comparison to other, more famous artists like Snoop Dogg. Among the items he auctioned was a chance for the buyer to record a song with him. This particular item sold for $3.6 million.
Exploring Music NFTs
While music NFTs have gained steam over the past few years, there is every reason to believe that this is just the beginning of almost unlimited opportunities. Over time, the availability and popularity of these digital assets will climb, so much so that experts project that the music NFT market will reach a value of over $42 billion by 2032.
This is an excellent time to capitalize on the possibilities of music NFTs. To learn more about expanding your reach with a white-label NFT marketplace, contact the NFT experts at Anterdit.