Πώς τα music NFTs μπορούν να επανασχεδιάσουν τη μουσική βιομηχανία.

A music NFT is a distinct digital asset that is issued on a blockchain and is linked to an individual song, EP, album, or video clip. NFTs have been making waves in the art world, with generative art collections becoming increasingly popular among Web3 enthusiasts and in the traditional art world. However, NFTs as immutable records of ownership for digital items have many more use cases.

While the music industry’s global revenue is expected to surpass $65B in 2023, these earnings predominantly flow into a few large platforms and major record labels. As a result, many artists have started exploring the use of NFTs as a new way of distributing and monetizing music. 

Music NFTs have the potential to revolutionize the way artists create, distribute, and earn income from their music. In contrast to the current model, where artists have to rely on record contracts, brand deals, and extensive touring to advance their careers, music NFTs present artists with the opportunity to generate income solely based on their primary focus—creating music.

In this post, we’ll look at what music NFTs are and how they work and examine how this technology can transform the music industry through improved economics and more immediate fan-artist relationships.

First, a quick primer on NFTs. An NFT is a token on a blockchain that is unique. Each NFT has a unique token ID and contract address that sets it apart from other NFTs. While an NFT can be linked to any media, what’s typically associated as the “content” of an NFT is stored in its metadata, which can point to images, videos, music, or other forms of media.

In a nutshell, a music NFT is a distinct digital asset that is issued on a blockchain and is linked to an individual song, EP, album, or video clip. Artists can create unique digital assets as NFTs that represent their music, concert tickets, exclusive merchandise, or virtual experiences, which people can then own, use, or trade. Purchasing a music NFT can be seen as a way of supporting an artist—akin to buying their music directly—while still allowing others to enjoy their work.

Music NFTs enable artists to forge a more direct relationship with their collector community. By helping to circumvent larger platforms, music NFTs give artists the chance to build a more direct connection with their fan base, who can also benefit from new ways of interaction and ownership.

Some music NFTs are generated entirely by an on-chain algorithm with no external dependencies. Generative music posted on-chain empowers artists to create a permanent imprint on an immutable ledger and preserve their creation for future generations exactly as originally intended.

In essence, music NFTs help shift the ownership of music from companies to individuals. While record labels continue to play an important role in the music industry and can serve several business functions for artists, music NFTs allow artists the option to maintain full ownership of their creations.

Some music NFTs include revenue and royalty-sharing features that can provide a source of income for artists without them having to rely solely on earnings from streaming services, building a large following, or engaging in excessive marketing. Instead, they can rely on a smaller group of highly dedicated fans.

As such, music NFTs can help emerging artists who may not have access to traditional funding or distribution channels. With the rise of Web3 platforms and marketplaces, musicians can independently create and sell their NFTs, giving them greater control over their careers and revenue streams.

Another important benefit is the ability to create token-gated communities that enable fans to participate in exclusive events and promotions, opening up secondary markets for fandom that alter the dynamics of being a fan and enable more integrated fan communities.

$0,004 Per Stream Vs. $40 Per Mint

 Since the onset of streaming, opportunities for musicians to earn an income have significantly decreased. NFTs turn pieces of music into a commodity, like a piece of art that can be bought and sold, similar to the earlier days of the music industry with vinyl records, cassette tapes, CDs, and MP3s.

Currently, many artists find it difficult to see significant returns on streaming platforms. According to some estimates, one stream on Spotify amounts to about $0,004 paid to the artist, meaning that one million streams net roughly $4.000. Getting that many streams isn’t realistic for most independent artists. It’s important to note that the issue here isn’t necessarily with individual companies but more with the underlying economic model. Offering the ability to stream a large portion of the music library of human history for the equivalent of ~$10 a month creates thin margins both for the platforms and the creators and is likely leading to a race to the bottom.

Let’s say an artist whose music had been streamed one million times decided to release a music NFT collection with a mint price of $40. If one hundred people bought one NFT each, the artist’s earnings would be the same as in the streaming example above ($4.000). This illustrates the new economic paradigm that music NFTs enable—on one side, one million people interact passively with the music through streaming, while on the other side, one hundred people interact actively with the music through NFTs, and the result is the same.

Artists have historically relied on record labels (ultimately a for-profit business) for investment. However, record deals can lock artists into a set path early on in their career that may not align with their later goals.

Before music NFTs, crowdfunding was one of the ways that independent artists could raise money, but it isn’t necessarily sustainable, and the fans’ incentive to participate usually stems from a passion for the artist. Music NFTs, on the other hand, offer a new way for fans to support artists with the potential of a financial return, changing the nature of the relationship between artist and fan.

Music NFTs allow fans to become early investors in an up-and-coming artist and help steward their success. Finding an artist early who may be underappreciated can lead to success both for the artist and their fans. Fans can take early exposure to the artist and form a more intimate relationship with them, similar to buying a stake in an early-stage startup. Fans (early investors) have a vested interest in the artist (founder) succeeding, while artists are more open to interacting and sourcing opinions and ideas from their community.

Music NFTs enable fans to express themselves through their on-chain activity and digital identities, providing a unique way for them to connect with the music and artists they love. These NFTs can be seen as a wrapper for cultural signaling and identity games, enabling holders to map their digital identities to the memes they care about.

By opening up secondary markets for fandom and creating token-gated communities, fans can have a more integrated relationship with artists. This decentralized approach allows fans to organize and create more opportunities for success and exposure for the artists they support, similar to the function of a record label but via a more bottom-up approach. As a result, music NFTs can transform the way artists and fans interact and collaborate, leading to more meaningful and sustainable relationships underpinned by the fundamental benefits of Web3.

It’s important to recognize that music NFTs are not competing with existing platforms but rather opening up new markets, revenue streams, and business models for musicians. Although music NFTs offer many advantages over current economic models, the two systems can complement each other effectively. 

Web2 platforms are likely to integrate the ability for artists to create NFTs on their platform to stay competitive in the ever-evolving landscape of musical formats and consumer habits. Meanwhile, fans can still enjoy the convenience of streaming vast music libraries for a small subscription fee.

NFTs can also have a significant impact on the $70B+ ticketing industry by providing a superior ticketing experience for events and secondary markets, as well as a more transparent marketplace experience that can help mitigate scalping.

Music NFTs have emerged as a new tool for musicians to monetize their work and engage with fans in new ways. With music NFTs, artists can sell exclusive content, such as never-before-heard tracks, live performances, and digital artwork, while fans can own a piece of their favorite artist’s work and participate in a community of like-minded individuals.

Music NFTs have the potential to reshape how music is discovered, distributed, and monetized. As music NFTs continue to gain traction, it’s important for the music industry to embrace this new technology and explore its potential for the benefit of artists and fans alike.

The famous music band Kings Of Leon have generated over $2 million from NFT sales of their latest album “When You See Yourself”. The band’s new album, which was released in March 2021, was one of the first major records to also be released as a collection of digital NFTs, with each unique token containing exclusive album artwork and limited edition “Golden Eye” vinyl. The band donated over $500.000 to Live Nation’s Crew Nation fund to support live music crews during the coronavirus pandemic.

The band dropped 3 types of tokens as part of a series called “NFT Yourself”. One type was a special album package, while a second type offered live show perks like front-row seats for life and a third type is just for exclusive audiovisual art. All 3 types of tokens offer art designed by the band’s longtime creative partner Night After Night; the smart contracts and intelligence within the tokens were developed by YellowHeart, a company that wants to use blockchain technology to bring value back to music and better direct-to-fan relationships.

International DJ and producer Parov Stelar in partnership with Flowtys launched the first auto-generated music and video NFT collection. The 10K collectibles are a combination between blockchain tech, old-school cartoonish visuals and unique music. The “Moonlight Love Affair” NFT collection include 10.000 algorithmically generated songs. From drums to keyboards, bass and vocals, each sound was carefully crafted by Parov Stelar himself. Once you mint your NFT, a unique algorithm will generate a song based on the musicians’ sounds. Surprisingly, the NFT songs will also feature several glimpses of Parov Stelar’s new album, titled “Moonlight Love Affair.”

Meanwhile, Flowtys’ iconic cartoon-style visuals will accompany the songs. Each character includes hand-illustrated traits and unique effects.

These elements only increase the rarity of each digital asset as follows:

• Super Rare NFTs (less than 1%) including a double invitation to Parov Stelar’s show.

• 13 Legendary NFTs bringing a double invitation to Parov Stelar’s show, and a VIP meet & greet with the artist.

Notably, both of the invitations accompanying each NFT will reset every 12 months. Therefore, a single digital asset can grant yearly access to the DJ’s live performances!

What’s more, the rarest NFT collectibles will feature Parov Stelar’s own voice and other special sounds. Finally, you can use the NFT’s audio files to create your own video content, remixes, or for other kinds of personal use.

Conclusion

In summary, music NFTs are poised to revolutionize the music industry by offering artists unprecedented control over their work and enabling direct, sustainable connections with their fan base. These digital assets provide an alternative income source to the current streaming model. Music NFTs also redefine the fan-artist relationship, allowing fans to become early investors in an artist's career and fostering more integrated fan communities. While music NFTs will coexist with existing platforms, they have the potential to create new revenue streams and business models, making it crucial for the music industry to embrace this technology and explore its transformative possibilities for both artists and fans.