Music is enjoyed by virtually every single person on a daily basis. Starting with the 1950s, pop stars have represented some of the greatest global celebrities. Yet, for the past decades, the music industry has been in a state of flux.
Physical record sales have dwindled. Online streams pay very little ever for those with millions of fans. Many famous musicians complain about not being paid what they are due. Most musicians say that they have no possibility of making a living out of music as things stand. Can this be fixed?
Music NFTs promise to be a novel way of looking at the music industry and at the way that artists are rewarded for their work. While blockchain-based systems of any kind are relatively new, they offer a lot of promise. Music NFTs could change the fortune of artists, could create greater fan involvement, and, ultimately, may change the industry for the better. Let’s take an in-depth look at how you can use them as an artist and fan.
In this guide:
What are music NFTs?
NFT, as you may already be aware, is an acronym for “non-fungible token,” a type of digital certificate that’s embedded into a blockchain network. Most typically, that blockchain would be Ethereum. The NFT certifies ownership of a unique asset. This economic concept of fungibility has significance. We need to remember the concept of uniqueness when evaluating NFTs.
A music NFT is a certificate that identifies the owner of a musical work. It can be sold to anyone. The composition’s use is at the sole discretion of the owner.
NFT is a term that refers to all kinds of fungible tokens, which means multiple copies exist and are owned or controlled by different parties. These tokens, secured on a blockchain, grant owners the right to music, album artwork, videos, or any other exclusive access to content. In other words, the music, as well as the ownership provided by the NFT, are important.
Music NFTs can help musicians, bands, and composers to connect with their listeners in new and innovative ways.
How do music NFTs work?
The principle behind music NFTs is the same when it comes to sales or production. The musician or band decides what content they want to offer their fans. This could be merchandise, concert tickets, audio files, etc. Then, they will choose the blockchain on which to mint their NFT. They will choose which NFT platform to use.
Once they have identified their preferred platform, they will notify their fans about their NFT drops and then put them up for auction at whichever price they choose.
Music NFTs and all other NFTs cannot be duplicated. A music producer may decide to have a one-off audio file sale. Here, the highest bidder is the owner of the audio file but not of the copyright. They might also decide to make a small number of NFTs from the same audio file and then sell them on a music marketplace. Essentially, this is a new form of music distribution where the record label middlemen are eliminated.
Each fan who purchases the music NFT becomes an owner of their favorite musician’s work. The NFTs can be stored in crypto wallets and sold to higher bidders if desired. The musician who created the NFT may not be able to further sell it but can still make a profit from resales of the NFTs. This is one of many ways in which music NFTs can empower musicians.
How music NFTs help musicians
The ways in which musicians can earn money have changed. This is due to changes in distribution and technology. However, musicians have always had a hard time retaining control over their work and monetizing it.
It was a common practice during the 1950s for various businessmen to exchange services for writing credits on songs. While record sales increased starting with the 1960s, few artists owned their recordings. Music labels and publishers often handled these things.
Since 1990, physical sales of music have declined. Streaming services took over, but numerous artists complained about the small financial rewards. Some musicians have even quit streaming platforms over fair compensation or misinformation concerns. NFTs can help them retain creative and financial control.
Practically, there are several benefits. First, there’s royalties. Musicians who create NFTs to sell them can make a profit.
Music NFTs also allow musicians to make money by selling their merchandise and music directly. This eliminates the need for intermediaries such as record labels, publicists, managers, etc. They can grow their fan base as well. NFT airdrops, for example, allow musicians to reach new audiences.
Unique fan experiences, such as the chance to meet their fans in person or virtually, are another possibility. Snoop Dogg and Post Malone have dipped their toes in these waters. Additionally, musicians can share collectible items. Aphex Twin, MF Doom, or Grimes have been involved in doing this.
Newer artists have great opportunities because there are no barriers to entry to the music NFT scene. No one expects them to release new music or fit into a particular box to get a record deal. Music NFTs allow musicians to simply upload their music to any platform that they choose and then market it to their fans.
How to invest in music NFTs
If you’re a crypto enthusiast, the question is whether to invest in music NFTs. This can be lucrative, in addition to supporting various artists. Music NFTs can revolutionize the industry, but profit is not a guarantee.
Music distributors often get 50% or more of the revenues from music distribution deals. As we mentioned earlier, artists receive little to no revenue. Music NFTs can boost revenue for artists and even allow small artists to escape label restrictions. Fighting for fairness is a worthy cause in its own right.
There are three main ways to invest in music NFTs at the moment:
- funding NFT marketplaces
- starting NFT collections
- using NFT funds
If you’re thinking of minting NFTs, you may create a closer bond with fans through blockchain technology. However, this incurs minting fees. If you decide to sell your NFT later, your resale proceeds will be reduced by Ethereum network gas fees, marketplace fees, and royalties for the original artist.
You will also need to decide on the music that will make up your collection. Remember that music and art are subjective. However, also keep in mind the rarity principle of NFTs that we previously discussed. Rare or unique physical releases of music are often very valuable.
A good deal of music NFT projects produce large numbers of digital tokens that represent ownership of digital copies of music and accompanying artwork. By that very definition, these aren’t unique or even rare items. They can be replaced by many others just like them.
The most successful NFT projects focus on the supply of these tokens and not just the demand from fans. In other words, a truly rare, NFT collectible item, leads to better prospects for crypto enthusiasts.
NFT marketplaces
Remember that regular NFT marketplaces are tremendously popular in the crypto space. Despite this, music NFTs are a relatively new concept. A few marketplaces for music NFTs do exist. They are popular. And, they are already causing waves in the music industry.
How big are NFT marketplaces?
Coinbase announced an NFT marketplace in 2021. Last year, OpenSea hit a $3 billion monthly volume. Visa has also shown an interest in NFTs. Furthermore, various other marketplaces also exist. These are rapidly gaining popularity, and the music industry is following suit.
Steve Aoki and Todd McFarlane have launched the platform OddKey. They are currently one of the most popular music NFT marketplaces. There is also Royal, which allows users to purchase shares of a song’s royalties. Opulous has positioned itself as an NFT marketplace looking to empower new musicians. NFT Tone promises a similar thing.
Meanwhile, OpenSea remains the most popular NFT marketplace, for music and all other types of NFTs. Various crypto exchange services are also likely looking into the opportunity of catering to this market.
NFT collections
An NFT collection consists of numerous unique tokens. One of the reasons why music NFTs are exciting is because they offer a novel way to consider supporting artists. Besides helping their careers, creating an NFT collection rewards you for your foresight. If a new artist is successful in the future, and you own their NFT, you will also be rewarded.
Investing in a marketplace or in a certain cryptocurrency resembles purchasing company stock. Meanwhile, buying music NFT is similar to purchasing art. It is important to weigh the pros and cons of each individual’s priorities. However, there are growing opportunities when it comes to building a collection.
Doja Cat and Snoop Dogg were some of the pop stars to release highly successful NFT projects in 2021. Many music artists collaborated with digital content creators to assemble NFT collections that were successful this year. This inspired many to learn more about the world of digital assets.
NFT funds
NFT funds involve an asset manager opting to invest directly in non-fungible tokens. For example, one famous CryptoPunks NFT owner has recently launched such a fund. This will focus on investing in NFTs on behalf of users. Various institutional investors have shown great willingness to look into these prospects.
One of the benefits of NFT funds is the lower risk involved in starting an NFT collection. These NFT funds have received a fair deal of exposure. The services allow users to use NFTs, especially from popular collections like Bored Ape Yacht Club, as collateral. The newly created Bitwise Blue–Chip NFT Index Fund will include collections such as CryptoPunks, Bored Apes, or Fidenzas.
Top 3 NFT marketplaces for music NFTs
Choosing the right NFT marketplace for your need is a complicated task. As mentioned earlier, music NFTs are relatively new. As a consequence, platforms are just opening and setting up. Still, if you’re looking to invest or sell your music right now, here are 3 NFT marketplaces worth investigating.
1. NFT TONE
NFT TONE focuses on music. It allows users to collect rare pieces of music, including first editions of recordings. Besides, the platform looks to embrace the sentimental value of owning an NFT from your favorite artist. The platform features its native token TONE. It runs on the Binance blockchain.
2. Opulous
Opulous aims to involve fans in the success of their favorite artists. The buyers will own a share of the music copyright through their tokens. These NFTs generate monthly royalty revenue. Furthermore, the NFTs can become more valuable as an artist’s career progresses.
3. Royal
Similarly, Royal promises to sell song rights in the form of music NFTs and features an original song by rapper Nas with its launch. Users are encouraged to support artists whose popularity will increase over time.
Will NFTs truly disrupt the music industry?
There has been much written about the unfair distribution of revenue in the music industry. Uniqueness is one of the most important features of non-fungible tokens. Versatility is another feature that makes these tokens attractive to modern artists. These characteristics attract both artists and fans. And the trend is showing no sign of slowing down anytime soon.
Music is an art form, and NFTs can help to reimagine cultural and artistic expression. Music NFTs are more than just a game of numbers. Understanding popular culture and where the zeitgeist will move next, is important if you are an investor.
Are music NFTs a worthwhile investment? Quite likely. You’ll need to trust your gut and analyze value. You will also need to evaluate your risk tolerance. Ultimately, you will need to trust and support a community.
NFTs can be hard to keep up with, so why not join BeInCrypto’s Discord server to ensure you’re on top of everything?
Frequently asked questions
What are music NFTs?
Non-fungible tokens (NFTs) are unique assets that can serve as proof of ownership. In the case of music, audio, or something related to a musician’s work from the NFT.
Can music be sold as NFT?
You can sell music as NFTs. It allows musicians, composers, and bands to connect with their listeners in novel ways.
How are musicians using NFTs?
An NFT is a rare collectible stored on a digital ledger in the music industry. Musicians and artists can create NFTs to sell various digital media to their followers who pay with cryptocurrencies such as bitcoin or ethereum.
What is the best NFT marketplace for music?
NFT Tone, Opulous, or Royal are among those looking to establish themselves as the go-to for music NFT marketplaces. At the moment, however, OpenSea remains the most popular marketplace of its kind.
