Will NFTs Allow Musicians to Finally Make the Money They Deserve?
Artists, for years, have been under the impression that the internet would save the music industry. It would directly connect musicians with their fans, allow them to reach new audiences, and give them the opportunity to finally take control of their art and make a living without the complexities of legal representation.
Despite the promise of the internet, major corporations within the industry — first Napster, then iTunes, and now Spotify — found ways to harness new technologies to continue reaping profits from artists who are simply trying to share their music with their fans.
Today, for instance, artists receive only 12 percent of all profits from their music’s sales or streams on average, with the remainder going to middlemen corporations, such as streamers and labels. Given the amount of support and visibility these players provide, this isn’t necessarily a bad thing, but the current streaming model pays musicians a fraction of a penny per stream, which was initially implemented as a compromise to lower the price of music and disincentivize privacy.
Although this model works for musicians whose songs generate a massive number of streams, it doesn’t work for those who are trying to break into the industry or who make music designed for a more intimate audience. There must be a better solution for these issues… right?
Enter NFTs.
What exactly are NFTs and how are they reshaping the music industry?
An NFT, short for a non-fungible token, is a cryptocurrency that functions as a certificate of authenticity. Think about it as a limited-edition asset that can be attached to just about anything, like an image, a tweet, digital artwork, or other exclusives for a musician’s fanbase.
Touted as the future of digital commerce, the hype around NFTs has exploded in recent weeks as buyers have flooded the unregulated NFT market with billions of dollars, hoping to strike it rich. In turn, musicians, big and small, have begun to release work on NFTs as a new way of making money, especially at time when the most lucrative aspect of the music business, touring, evaporated during the pandemic.
Here are some recent examples of how musicians are using NFTs:
· Kings of Leon released their new album, titled When You See Yourself, in the form of an NFT, becoming the first band to ever do so. The band’s tokens, sold for $2 million, unlock special perks for audiences like limited-edition vinyl and front row seats to future concerts.
· 3Lau, DJ and electronic music producer, sold 33 NFTs, marking the three-year anniversary of his Ultraviolet album. The auction commanded $11.7 million with the most expensive package containing a custom song, access to never-before-heard music, custom art based on his music, and new versions of Ultraviolet’s 11 original songs.
· Grimes sold WarNymph, a series of 10 digital pieces — some one of a kind, others with thousands of copies — on Nifty Gateway for $6 million. She chose to donate a percentage of the proceeds to Carbon 180, a non-profit that strives to create a world that removes more carbon than it emits.
· Steve Aoki, DJ and electronic music producer, in partnership with 3D illustrator Antoni Tudisco, auctioned off a collection of 11 pieces called Dreamcatcher. One of the works, called ‘Hairy,’ made the record-breaking sale of $888 thousand, becoming Nifty Gateway’s most expensive and record auction sale for an NFT to date.
· Post Malone’s concert streaming service, AUX Live, will begin minting Fyooz-based NFTs that blue the line between art and experience. Perks include going “backstage” or “flying” with the artist to the venue, or even playing virtual beer pong with him.
It sounds like musicians are making a considerable amount of money from NFTs…so what’s the problem?
One of the biggest challenges with NFTs is that people are buying unique digital collectables, but they typically aren’t buying the underlying copyrights. Considering most digital art can be easily replicated with the tap of a button, questions are emerging over the uniqueness of the assets that NFTs are securing. As Pitchfork described it earlier this month: “Born out of the visual art world, NFTs create a sense of scarcity that’s inherently artificial — the token is rare, not the artwork itself.”
Additionally, some of the value of today’s NFT figures are likely inflated. Investors who made a killing on Bitcoin are rushing to be the first in the emerging music market, which is, more likely than not, overvaluing NFTs. The truth is that the technology is too new to know which direction it’ll take, which aspects of it will stick, and what the true value of these digital works and experiences will have in the months and years to come.
So, are NFTs shaping the future of the music industry?
To bring it full circle, musicians have always heard that the internet was going to change the industry by empowering artists and allowing them to reach their fans in news ways…which might be finally happening. Even though NFTs aren’t the only solution, they may finally offer a way forward for artists by letting them take control over their own careers and rid themselves of legacy business models that aren’t truly lucrative. As musicians experiment with new ways to make money and relate to their audiences, perhaps the role NFTs will play in the world will become clear. Who knows, the music industry of the past may not have been built for artists, but the platforms of the future could be.
