NFTs are being used by musicians to take back control of their music and connect more directly with fans.
- NFTs are being used by musicians to take back control of their art and connect more directly with fans.
- Verified ownership is a key concept to understand with NFTs as it opens up new models for innovation in the digital world.
- Issues with NFTs in the music industry include: legal issues, difficult to use tools, and the problem with content storage.
These days, artists in the music industry receive an average of 12 percent of all profits from the sale and streaming of their music, be that on Spotify, Apple Music, or whatever.
Mikel Jollett, the lead singer of Airborne Toxic Event, wrote an opinion piece for NBC News on what NFTs could do for musical artists. He said, "every major corporation within the music industry, as well as several new ones outside of it, found a way to harness technology to continue reaping the profits that come from selling our art to our fans for themselves."
Within the music industry, 90 percent of all streaming income goes to the top 1 percent of artists – and 88 percent of those profits go to someone or some company outside of the creating artist or artists.
NFTs present a way for value to return to music and reward its creators with more than pennies on every stream as well as to allow artists to connect more deeply with their fans.
First Things First: What are Music NFTs?
Before we get into how NFTs are revolutionizing the music business let's be sure we're all on the same page with music NFTs.
Think of NFTs as digital certificates of ownership that are verified for anyone to see on a blockchain. If you own an NFT of album art, you can prove that you own it and the world can verify it.
Verified ownership is a key concept to understand with NFTs as it opens up new models for innovation in the digital world.
For a better conceptual understanding of NFTs check out this article on Why are NFTs worth so much?
So what then is a “music NFT”?
The term “music NFT” isn’t precisely defined, but we can think of music NFTs as NFTs that have associated digital music tracks and possibly closely related assets such as album art.
But that is too narrow of a definition to understand the innovation that is happening in the music industry.
So maybe the better question is: How are musicians using NFTs (not just "Music NFTs") to transform their industry?
Examples of How Musicians are Using NFTs
Below are a few interesting examples of how artists are using NFTs to disrupt the music business.
Kings of Leon
The first Kings of Leon album after a four-year hiatus, When You See Yourself, is also the first full-length LP by a musical group to be released as an NFT, which is sure to be a lofty designation in both musical and tech history.
The album was slated to be available as an NFT via blockchain company YellowHeart between March 5th and March 19th, 2021, at 8 PM.
The auction was extended an additional 24 hours and concluded on March 20th. The Kings of Leon wrote that the twenty-four-hour extension was a response "to the learning curve of first-time NFT buyers… in hopes that more time allows more fans to participate in this historic offering."
The band dropped three types of NFT tokens as part of the series they call "NFT Yourself." Rolling Stone reports that the tokens provide a range of experiences for users. "One type is a special album package, while a second type offers live show perks like front-row "Golden Ticket" seats for life, and a third type is just for exclusive audiovisual art."
- The first token, priced at $50 USD, came with a digital download of the new album and a 1:1 limited-edition "NFT Yourself" Golden Eye vinyl record and enhanced media to be delivered to the buyer within four months of token purchase.
- The second token the band refers to as a "Golden Ticket." This token unlocks four guaranteed front row seats at any and every Kings of Leon show during each tour for the holder's life, as well as VIP interaction, chauffeured transportation to and from the show, and four goody bags with one of every item at the merch booth.
- The third NFT token consists of a limited collection of six unique tokens that contain the keys to elaborate audiovisual art. Initial offering prices ranged from $95 to $2500.
After the deadline hit, all of the remaining limited-edition collectible NFT albums that had not been sold were "burned" (which basically means deleted). The enforced scarcity that results from NFTs only being available for a limited amount of time is part of the appeal to artists creating NFTs and music fans snapping them up.
The total sales of the Kings of Leon "NFT Yourself" collection amounted to 766.4 ETH , which depending on the value of Ether at any given moment, is worth somewhere between $1.32 and $2 million USD as of July 22nd, 2021.
Ethereum's all-time high was May 11th, 2021, at $4384.43 per Ether. Supposing the band held on to the Ethereum they earned via their NFTs until that point and sold when the price was highest, they would have made a little over $3.36 million USD.
Like true Kings, the band contributed over $500,000 USD to Live Nation's Crew Nation fund to support the crews that run live music venues and keep each crew member afloat during the pandemic.
One of the most incredible feats on this list is how musical artist Imogen Heap was able to sell her work using smart contracts back in 2015, before the NFT standard was even fully formed.
With her song Tiny Human, Imogen Heap made the first-ever art sale on the Ethereum blockchain. The sale was cleverly created to include the music, album artwork, and a smart contract to split payments to contributors.
Dance and DJ virtuoso Justin David Blau, better known by his stage name 3LAU, sold $11.6 million USD of NFTs in April 2021. In addition, he broke NFT crypto records with the auction of 33 NFTs created as a limited-edition celebration three-year anniversary release of his acclaimed Ultraviolet album.
An example of one of the unique NFTs sold included a custom song, access to never-before-heard music, custom art, and a limited-edition pressed vinyl copy of Ultraviolet's eleven original tracks.
As with Imogen Heap, 3LAU is looking to further explore engaging his fans by sharing royalties with them.
Grimes is a Canadian singer/songwriter and record producer. In February 2021, she sold $5.8 million USD worth of NFTs on the NFT marketplace Nifty Gateway. One of the highest selling pieces was a video clip called Death of the Old.
Steve Aoki, dance music producer, has sold $4.25 million USD worth of NFTs on Nifty Gateway since March 2021 with his Dream Catcher collection.
As reported by edm.com, Aoki explained, "NFTs are a juggernaut that cannot be stopped. It will soon be normalized and be a structural pillar in our culture. If you’re reading this now, you’re early. Time to build, innovate and disrupt the entire space."
The Future is Bright, But Not Clear
When the Internet came along, some saw it as a path for artists to connect directly with fans. This is true to a great extent, but the challenge with the Internet is that digital content - the work that artists put so much effort into - wants to be free.
Digital content is easy to share and ubiquitous. It isn’t scarce.
NFTs are the missing piece in this Internet puzzle. It offers verified ownership - a chance to have scarcity in a world of abundance.
But these are early days for NFTs and the path to this brave new digital world is not clear.
It is not entirely clear how copyrights will work with NFTs. What rights do you actually own with an NFT? How will courts view NFTs?
Artists have been all over the map with granting (or not granting) certain rights with these NFTs. They are often not clear (and sometimes not stated). In other words, there are no norms that have developed around these legal issues.
Tools are difficult to use
NFTs are a subset of the crypto world. The general public is not very familiar with crypto and how to use tools to interact with the blockchain.
Right now, Metamask, a crypto wallet, is a key tool in this space, but many people might struggle to download and fund their wallet.
Where is the actual content?
NFTs are a digital certificate of ownership, not necessarily the actual content itself. So if you own an NFT with an associated music track, the NFT is on the blockchain, but (typically) not the actual track. The NFT contract will simply “point” to the content. Meaning that it (usually) lives on some centralized server somewhere.
Why is that bad? Because you may end up with a certificate of ownership to a “404 Page not found”.
Imogen Heap (featured in the examples above) uses Arweave, a platform designed to be a permanent internet storage solution, to solve this issue. But these tools are new and most artists (and fans) haven’t taken the time to understand how best to associate content with NFTs.
NFTs hold the promise of changing the game in the music industry. As we see in our examples, artists are already innovating in ways that help bring control back to their hands; finding new ways to connect more deeply with fans; and trying new economic models that were not available under the confines of the traditional music world.
Although not all is clear on exactly how norms and tools will develop in this space, NFTs stand ready to completely disrupt the industry in favor of the artists and their fans.