NFTs (or Non-Fungible Tokens) are ushering in the next era of internet creative commerce and they offer the potential to shift the current trajectory of today’s music industry. But for so many artists, it’s just another complicated digital space to worry about, of which there are many already. Additionally, we artists need to take into consideration the current environmental impact of blockchain technology in deciding whether or not this is a worthwhile option to pursue.
So we wanted to clear things up for you about what NFTs are and how they can be valuable to your music career.
This article will showcase the ability of NFTs to become an integral part of the music release process, the personal branding options for artists, and the ways that NFTs can create deeper artist-to-fan connections. And we’ll also go over their potential pitfalls.
What Are NFTs?
NFTs are digital assets that have objective ownership through blockchain technology. They can come in the form of digital art, videos, sports cards, collectibles, and yes, music, that are exclusive to the owners and unable to be deleted or duplicated (this is what non-fungible means).
NFTs were originally only able to be purchased or traded with Ethereum (a cryptocurrency which can very generally be related to Bitcoin), but now are expanding into different currencies. NFT creators can release projects that hold any specific amount of “tokens” for people to buy into their project.
Although NFTs look like they are only digital art files on the surface (some projects could actually just be that), they’re also often paired with a smart contract that can provide specifics into any additional perks or terms attached with the purchase of the NFT. These could be customized contracts that are able to be adjusted for the lifetime of the NFT by the IP owner.
For example, a restaurant could provide an NFT token to its customers for discounts or special access. A digital artist could provide part-ownership of the IP to the owner of an NFT token so that owners (not just the artist) could earn royalties from any future sales.
Let’s dive into how musicians might be able to benefit from this newly available revenue stream.
1. More Access for Musicians to Sell Their Music
The internet provided musicians that weren’t signed with top labels, the ability to produce and release their music on their own terms. NFTs will open up the doors even wider to unsigned artists that want to release their music and create a deep connection with their fanbase.
2. The Days of the Middleman Are Dwindling
When we think of the music industry, we usually imagine artists that have been hand-crafted behind a record label exec for the sole purpose of image and sound that leads to a profitability. The rise of self-released artists has led to more artists maintaining creative freedom and originality; NFTs now provide artists with more commercial freedom and originality, and to be able to enter a global market with more selling power.
For that reason, music publishers and record labels will hold significantly less weight in the music release process. In turn, the artist gains more control in the process than ever before.
3. New Streaming Platforms Will Arise
Decentralized crypto-based streaming platforms, such as Audius (who recently partnered with TikTok allowing song transfers to their platform), are now being created due to the boom of NFTs. Electronic music producers like Deadmau5, Weezer, Mike Shinoda from Linkin Park, 3LAU, and many others are contributors to the new platform. This is just the beginning of how NFTs are going to expand the current music industry and how many artists are embracing the new technological landscape.
NFT Utilities Can Change Traditional Music Release Strategies Forever
As mentioned above, NFTs can have a smart contract attached to them to provide the owner of the token added utilities that come along with ownership. Here are some examples.
1. Concert Tickets, Merch, and Collectibles
Most people have seen a loyal fan to an artist holding all of their concert tickets as collectibles to remember a specific show that they attended. Now, you can create digital versions of these items and mementos as NFTs that people can hold onto as digital collectibles or assets. This unlocks the potential for artists to connect fans that have gone to specific shows together and create communities around the token holders.
2. Ownership of Music
Inside of a smart contract, you can include a clause that every time your specific NFT is sold, the owner may earn a designated percentage of royalties. This is the first time ever that fans are able to support the artist while unlocking the potential for themselves to profit too!
These assets can crescendo in value over time and can be held onto, traded, or sold for profit. It’s basically akin to owning a verified digital version of a Beatles’ White Album first pressing.
This is also important for a second reason, which is that due to the rise of streaming and digital downloads over the last 20 years, the value of music and the perception of owning musical releases has significantly dropped. With NFTs, there’s a renewed value inherent to owning copies (digital in this case) of an artist’s output.
3. Fan-to-Artist Access
NFTs can also include an “access pass” that provides things like behind the scenes videos of the artist writing and recording specific songs, or a deeper glimpse into the personal life of the artist. You can set up a contract to offer tiered fan systems like discounts, backstage access to shows in their cities, a one-to-one video call with the artist, etc. The opportunities are endless!
How NFTs Have Already Come Into Action
Electronic music producer 3LAU released the world’s first tokenized album, raking in over $3.6 million, which was a collection of NFTs representing his best-selling album with only 33 being made. Shakira also recently teamed up with BossLogic to release her own NFT.
There are plenty of other examples where music artists are proudly representing their NFTs on their social media — for example, Jay-Z representing the famous “Cryptopunk” project in his Twitter profile picture. Electronic music producers Marshmello, Steve Aoki, and reggae artist Collie Buddz are recent investors of Gary Vaynerchuk’s “Veefriends” NFT project.
This shows that not only will NFTs be used as a music release strategy, but will also signify a bit about the personal brand of the artist depending on which project they represent and invest into.
The Current Negative Environmental Impact of NFTs
The current standard currency for NFTs, Ethereum, uses about as much energy as the entire country of Libya to mine! This abundance of energy translates into carbon emissions and is detrimental to the environment, and contributes to human-influenced climate change.
Ethereum 2.0 is supposed to fix this issue, but it is unclear whether or not this will ultimately end the environmental hazards associated with energy-intensive “proof of work” blockchain processing, and when/how it will even be released (supposedly Q1 of 2022).
NFTs are still in the infancy stage and a search for an environment-friendly solution to the way that they are transacted will become an inevitable part of the process. There certainly are directions that the exchange of NFTs can take which might decouple the marketplace from carbon emissions beyond that of normal e-commerce; such as leaving behind its reliance on cryptocurrencies (sacrificing security and reintegrating with global banking institutions) or if more cryptocurrency mining machines begin running on renewable, clean energy (but this could take years).
Before investing into NFTs, seriously consider the environmental and social impacts that they may have.
Overall, it only makes sense that NFTs will indefinitely change the trajectory of the music industry with the extra personalization and add-ons that can be paired with them. While all of the above are applicable examples of how NFTs can affect the music industry, it’s important to note that not all NFT projects will be successful and for consumers to avoid going into a “gold rush” mindset as NFTs fully enter the music industry.
In reality, this is a brand new technology that will take time to really catch on. Not enough people are comfortable with blockchain technology or understand its benefits yet. It’s an exciting time to see which parts of the music industry will be forever changed by NFTs and which will hold the traditional roots of how the industry has always been run.
Whichever way the industry is affected, it’s always good to be ahead of the game and have an adaptable strategy with your music.
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