While non-fungible tokens (NFTs) are beginning to revolutionize the market, they have made their way into the music scene.
Since NFTs have gained interest with the rise of modern technology and the hype around cryptocurrency, many top artists are starting to see a benefit to switching their albums and music to making use of them.
Musicians and bands such as Steve Aoki, Kings of Leon, and 3LAU have earned millions of dollars lately through selling NTFs online in the form of crypto-currency, the BBC revealed last week.
So, why are they becoming more popular? And what's made them infiltrate the music scene? First, it's important to understand how musicians make use of NTFs.
How Music Artists are Using NFTs
The fans purchase NFTs through online crypto markets that includes the music record and the owner, which is shared to a blockchain. This allows the artists to name their terms under what's called a "smart contract" and receive part of the revenue that's obtained through selling their music.
The difference between an NFT album or record to a traditionally sold one is that NFT music can be shared and re-sold again later for an entirely different revenue cost. This is dependent upon the current crypto market and is achieved through the records selling by way of NFT.
When the seller's music is in low supply while becoming more popular, the value reaches its highs. The original copy will especially sell for a top cost, making it a lucrative and prized possession amongst the buyers.
Here are some examples of the success the three musicians named above have had through NFTs:
- Steve Aoki made $4.25 million for selling one collection
- Kings of Leon returned $2 million for a single batch sold
- 3LAU, one of the first users of NFTs in music, earned a whopping $11.6 million
As you can, selling music through NFT can be a very lucrative market within the music industry.
Why Music Artists are Making the Switch to Using NFTs
CD and digital records are on the downflow, and with the rise of online music taking place. The online market has given artists the ability to see profits rolling in that trump that which could be achieved with traditional selling methods.
Last month saw over 150 artists making a statement to the British Prime Minister, Boris Johnson, that their music had no longer been protected in the current market. Only 50% of income through radio costs was seen as profit, while just netting 15% from online streaming.
Surely, this wasn't good enough for the artists?
Even investigations into profits being earned from the big-name platforms such as Apple Music, Spotify, and Amazon Music Limited had started to take place.
Even after being named one of BBC 6Music's Albums of the Year with "Kitchen Sink," Nadine Shah had to go back to living with her parents to save costs since her online income streams weren't sufficient to pay the bills.
Live music had taken the back seat during the COVID-19 pandemic, and it still remains unclear as to what the future holds for this side of the music scene. Before then, music artists required touring profits at times even just to break even.
It's no surprise then, with the current situation, the money side of music had to take a shift. And so, NFT record selling is starting to see its rise in popularity.
It makes logical sense that something else had to take the place of a model starting to show signs of failing.
With NFT music selling, musicians don't have to think about record labels, distribution costs, or publisher's terms. Instead. they can focus more on making music - and money too!
Direct sales can be made to fans while bypassing the hurdles that were once a natural part of the process of selling albums and records.
Mike Shinonda, the co-founder of Linkin Park, highlighted that it was a no-brainer to sell start selling records while using NFTs. After making more than $10,000 from just one of his NFT sales, he sent a tweet to say that he would never have been able to scratch these levels through the normal labeling and distribution process.
What's the Future of NFTs in Music?
Music artists and media are both predicting that NFTs will take center stage for selling within the music industry in years to come.
The benefits extend beyond making money for the artists to building better relationships with their fans. It bridges the gap between artists and fans and makes buying their music from them easier.
For the artists also, they get to cut out of the middle man and move straight to selling. This makes NFTs a much more convenient and viable option for sharing their music with the world.
By incorporating subscriptions, some artists are able to receive direct support from fans under a model that allows them to gain a better experience, both as a fan and customers.
However, there are still some concerns over the use of NFTs for selling music.
Are NFTs only a viable option for the wealthy? After an uproar from fans against the use of NFTs, UK-based band Glass Animals denounced their use of NFTs and began using baseball card collectibles instead.
Not all fans are going to want to pay through digital currency, and many are still going to want to use physical money instead, Parmenter pointed out. Therefore, while many will benefit, others might not, and it's unlikely going to be widely accepted by fans across the board.
Another option could be to allow fans to pay through NFTs but receive the physical record in return. This is an approach that was used by Kings of Leon, who we've already mentioned have made great success by using NFTs.
Perhaps, others may wish to lead by their example?
We might have to wait and see.
Until then, there does seem to be some benefits and future prospects of NFTs within the music industry for both the musicians and the fans. But as technology changes and adapts as it continues to, NFTs may have to change and adapt alongside it.
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