Music NFTs: 3 Reasons Why They Will Change the Music Industry
NFTs are not just digital images of apes. Songs, albums, lyrics can all be NFTs. Different than buying a song from iTunes, this way you can own a piece of your favorite artist’s music. Imagine gifting a piece of Dua Lipa’s Levitating to your best friend. Besides this ‘fun’ aspect of it, Music NFTs will define the future of the industry. Here is why:
1. Better compensation for artists
It has been a topic of discussion for many years that artists are not fairly compensated for distributing their content via streaming services. According to Forbes, most of Spotify’s top 0.8% of artists earn less than $50,000 in streaming revenue.
Last year (March 2021), Kings of Leon became the first band to release an album as an NFT. There were three types of tokens for the album When You See Yourself. One type of token included alternate moving album cover, digital download of music and limited-edition vinyl. Another type guaranteed the owner four front-row seats to one show of every Kings Of Leon headline tour for life. Kings of Leon generated $2 million from this NFT sales of their album.
Diplo partnered with Royal, blockchain-based music company, to release the single Don’t Forget My Love on their platform as an NFT. There are three tiers of tokens — gold, platinum and diamond. Each tier gives you partial ownership to the song’s streaming royalty right. Ownership percentage ranges from 0.004% to 0.7% across the three tiers. Moreover, the most expensive tier priced at $9,999 with 10 tokens, also gives access to additional benefits like guest list pass for a Diplo show.
Kings of Leon’s NFTs do not grant fans ownership of the album. Diplo’s NFTs grants fans ownership through streaming royalty rights. So there are many different use-cases on how to integrate NFTs to the music industry. No matter the use-case, one common benefit is clear — better compensation.
Through NFT sales, artist bypass streaming and other distribution channels where they share their revenues with other parties. Instead the artists collect the money directly from their fans. This became particularly attractive during the Covid-19 lockdowns across the world, when artist could not generate revenue through their more lucrative revenue stream — live events.
2. Increased fan engagement
Through the examples of Diplo and Kings of Leon, it is clear that Music NFTs bring fans access to more content, merchandise and perks. Yet, most importantly music NFTs allow fans to engage with the artists more directly.
For example, Portugal. The Man, Grammy Award winning rock band, partnered with Rally to launch their own cryptocurrency — PTM Coin. According to band’s article on Rolling Stone, fans who have at least 10 PTM coin gain access to an updated list of benefits that includes text and video chats and co-viewing experiences with the band. Moreover, holders of $PTM are able to access exclusive channels in the band’s Discord server. This shows that by purchasing social tokens like $PTM, fans can have a direct connection with the artists they like.
3. Easier access to opportunities for up-and-coming artists
If you are an up-and-coming artists with a super fan base that are willing to invest in your music, you no longer need to wait to raise money for recording your new album. Fans can now invest in up-and-coming artists prior to album release through purchasing their NFTs.
CEO of Monstercat, an independent electronic music record label, Mike Darlington confirms this by saying:
‘There’s no longer a need to reach hundreds of thousands of fans to achieve career sustainability — with just a small group of passionate collectors, artists of all sizes can make a fair living from their work.’
For example, MusicFund is a Web3 music community that finds, funds and supports up-and-coming artists. It is an invite-only community where by owning an NFT you become a member and get to decide who the community fund supports. Every month members vote to donate ETH to three rising musicians.
NFTs and cryptocurrency are more than buzzwords for the music industry. By enabling better compensation for artist, increased fan-artist connection and easier access to opportunities for up-and-coming artists — NFTs will change the music industry.
CBS Digital Literacy
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