Why Music is Diving Headfirst into NFTs
“You’re buying a feeling.” - Ben Horowitz, Venture Capitalist
It’s been a year since COVID-19 put a halt to all live concerts and tours, shutting down the industry’s most profitable sector and artist’s main source of income. Since then, artists have had to get creative to compensate for the loss of income and connect with fans at home. Some artists took to virtual performances and documentary series, while others sold the rights to their music catalogues. But now there's a new trend that’s taking the music industry by storm and everyone wants in. Welcome to web 3.0, where music and art is available to fans in new and exclusive ways, aka NFTs or “non-fungible tokens.” To truly understand how NFTs are revolutionizing the music industry as we know it, you need to understand the basics of how they work.
“There’s something about applying markets to culture and art.” - RAC, Grammy-Winning Artist
So, let’s break it down in simple terms, an NFT is a cryptocurrency that is specifically used to hold digital assets such as art, music, tickets, cards and more. An NFT contains a certificate of authenticity and proof of ownership for that asset, which is stored in the blockchain.
NFTs operate on a blockchain, which is a ledger accessible to the public that cannot be tampered with or broken into. Whenever a transaction occurs, a new block is created and coded with a record of that transaction and all the important information involved. This block is then permanently added to the chain of blocks created from all previous transactions and this will continue over the life of the asset.
Since each NFT has its own identity and is a distinct object, it cannot be replaced by another, hence the term “non-fungible.” It is important to understand that there can be copies and replicas of the digital asset, however, this does not cause the original asset to lose value. Let’s use Vincent van Gogh’s painting Starry Night as an example; there are plenty of copies and prints of the painting but there is only one original painting that could never be replicated. The original Starry Night does not lose value because of the number of copies on the internet or prints sold. That is exactly how digital assets work as NFTs.
“This album is one of the biggest releases of my career, so I had to make the release strategy bigger than ever.” - Tory Lanez, Rapper and Singer/Songwriter
Now that you have a basic understanding of NFTs, you are probably wondering their sudden relevance in the music industry. More and more artists are finding NFTs as being a new outlet to reach their fans, specifically their super fans. Artists have been selling NFTs in many forms such as previews of unreleased music, special-edition merchandise, animated artwork, virtual and live show perks and more.
Not only are NFTs a new way for artists to connect with their fans but they also allow fans to directly invest in the artists. NFT expert and CEO of Raised in Space Enterprises (RISE), Zach Katz, explained to Rolling Stone that “because of the smart contracts and rules that can be coded into a NFT, the original creator of whatever art or asset is stored on it can get paid a piece of the value that was exchanged.” Katz continues to discuss how integrating a blockchain system could be massively beneficial to artists and ultimately would result in, “a much more expansive, more long-term career.”
The adoption of NFTs and blockchain systems would give artists full transparency of their revenue streams and would enhance accountability for receiving payments. Additionally, it would eliminate most risks of fraud or misbehavior involved in business deals and allow the creator to have more control over the business involving their art.
“This marks a major turning point in the NFT space; creators will have maximum flexibility in issuing digital assets to fans.” - 3lau, DJ and Producer
Below are four different approaches that artists have used to sell and promote their art forms as NFTs. Other artists who have sold their art via NFTs include Tory Lanez, Kings of Leon, Shawn Mendes, Linkin Park’s Mike Shinoda, Steve Aoki, Portugal the Man, Disclosure, and Deadmau5, with more big-name celebrities discussing their own launches.
3lau - Producer and popular DJ, 3lau, made history back in February by releasing the first album to be sold with NFTs. With the rerelease of his 2018 album, Ultraviolet, 3lau sold 33 NFTs which gave buyers access to special-edition vinyls, unreleased music, bonus tracks and exclusive experiences.
Grimes - Grimes, a musician and singer/songwriter, auctioned off 10 limited edition pieces of digital artwork from her debut NFT collection, “WarNymph.” One of the audiovisual pieces featured snippets of an unreleased song by Grimes, which was valued at over $100,000 within minutes of the auction opening.
Quavo, Lil Baby, 2 Chainz, Jack Harlow - Bleacher Report (B/R), a popular sports reporting site, auctioned off digital basketballs that were custom-designed by each of the hip hop artists and in conjunction with NBA All Star Weekend.
Jacque Greene - Canadian electronic music producer, Jacque Greene, sold the copyrights to an unreleased song as an NFT. The buyer of his new song, “Promise”, owns the publishing to the song once it is released.
“I’m getting to be a part of something that has a sense of scarcity around it, a sense of exclusivity.” - Zach Katz, CEO of Raised in Space Enterprises
As you can see, artists have incorporated NFTs in unique ways to promote their music and artistry as a whole, and this is just the beginning. NFTs have given artists a new platform to reach their fans and give them access to their art in ways they never have before now.
Additionally, NFTs present an exciting opportunity for faster, more fluid business but also allow fans to directly invest in the artists. The adoption of NFTs and blockchain systems for copyrights, ownership, distribution, royalties and other contracts, has the potential to completely revolutionize artist pay-out models and the future of the music business.