NFTs for the Hit of Today and Yesterday
Non-Fungible Tokens (NFTs) are hot, and may well prove lucrative for anyone with a measure of cultural notoriety. Here’s a hypothetical case study using an iconic pop hit as an example.
As of this writing, the percentage of people who’ve heard of Non-Fungible Tokens (NFTs) remains fairly small. The percentage of those who conceptually understand them is even smaller. And the percentage of those actually creating (“minting”) and selling them remains smaller still. (And let’s not even get to the coding level, as crypto-programmers represent an even rarer breed.)
But, awareness and adoption is growing rapidly on all fronts. For a general background on NFTs (and profiting from them), I recommend reading my “White Paper on Nonprofit / Public Sector Fundraising via Non-Fungible Tokens (NFTs).” That piece covers the basics — the gist of which is that an NFT is simply a digital asset.
NFTs Were Meant for Artists
Another salient point in the aforementioned piece is that NFTs began as a technological means for helping artists. It may well be that digital / visual art found the most natural fit, but there’s nothing preventing artists working in other media (musicians, writers, performing artists, etc.) from benefiting as well.
At the moment, while scores of unknown-but-hopeful up-and-comers are trying their hands at producing original NFTs and offering them for sale, the higher-dollar transactions seem to be happening for individuals of a certain renown. And it’s precisely that quality — fame — that NFTs (at the moment) seem ripe for leveraging.
So, for the purposes of this article, I’m focusing on ways that musicians — those with some renown either individually in bands that have been fortunate enough to have had one or more major hit — might cash in on the NFT crazy while the iron is still hot.
What Makes Hits Crypto-Valuable?
Hit music is particularly interesting to me because, once a song becomes a hit, artists receive all of the usual accolades, fame, and (hopefully) compensation that comes along with it. But, if the emergence of NFTs has driven home anything, it’s that something additional happens via that phenomenon — namely, the creation of a cultural asset, an ethereal thing that until now had no direct, quantifiable monetary value of its own (although it could certainly be leveraged).
Ahh, but what kind of asset is that, who owns it, and how can it be sold and profited from residually? I’ll get to that! But first…
Hot Prospects for Meaningful NFT Cash-Ins
In my mind as I’m writing this would be a band that enjoyed significant success decades ago with one or more mega hits. If I Google the name of any 70s–90s band, for example, from whom I vividly recall a massive hit, it’s quite common that these bands are still out there touring — largely (it could be argued) powered by whatever that mega hit happened to be.
I’ve gone to see quite a number of such bands over the years. For example, just prior to the pandemic, I caught a show by the Crash Test Dummies — a classic indie band from Winnipeg. Anyone around during the era of early 90s indie pop would recall their most famous song, the haunting “Mmm Mmm Mmm Mmm.”
True CTD fans would know the deeper material, of course. But, that’s a much smaller demographic than number of people who’d primarily recognize only their main hit. At the concert I attended (which took place 27 years after the tune in question’s peak on the charts, airwaves, and video channels!) they saved their big hit for the encore. In fact, just after finishing the main part of the show (pre-encore), the lead singer joked as they left the stage about their being done, thanks for coming, etc. And when they returned for the encore, he laughed and remarked, “Clearly, we weren’t done.”
They knew that tons of people, just like me, showed up specifically to hear that beloved song in particular, some three decades past its release. And they were glad to play it, likely for what must perpetually feel to them the 80-millionth time. (Despite tales I’ve heard to the contrary, I don’t suspect many bands truly tire of playing their hits. I actually know a guy who wrote an absolutely iconic 80s hit, and he’s said as much to me many times; they love performing it still.)
Converting a Musical Hit Into an NFT
But, back to the Crash Test Dummies example. Maybe they’re all multi-millionaires; I have zero idea. I hope they’re appropriately well off and do what they do purely out of love for performing and for the craft. But would a windfall of, say, a half-million dollars be unwelcome by them?
(For comparison: At half a cent per stream — which may well be more than is paid or realized by a band on, say, Spotify — it would take them 100 million streams to rake in $500k.)
So, yes, this is the big idea: converting that hit into an NFT asset and allowing someone to buy it.
A valid question. With digital / visual art, it’s a no-brainer — make a nice JPG, “mint” it, and list it for sale (albeit with the proper setups for royalties, etc.).
With a song, it’s different. It seems to me that the artists have options, some of which would include:
- The Remix Model: A few months ago, EDM artist 3LAU raked in $11 million for, essentially, some nicely packaged reissues of a previously released album. (See “3LAU Sells Record-Breaking $3.6 Million NFT in First-Ever Tokenized Album Sale.”)
- The Representative Model: I’m actually having trouble at the moment finding a solid example of this, though I’m sure it exists. We have to keep in mind that, when a person purchases an NFT of a song, they’re generally not purchasing any other rights to it — not the copyright, not any creative rights, nor any particular usage rights. They’re simply the owner of the NFT. So, for example, an artist with a hit song could do something like create special graphic (e.g., a slick animated GIF) to represent the NFT rights to their big hit. In this case, using Crash Test Dummies as an example, they could have such a graphic created, list it for sale on an NFT marketplace, and state that “this NFT, the only official one ever to be recognized by the band, represents our iconic hit, “Mmm Mmm Mmm Mmm.” (And, if you read my previous article on nonprofit fundraising via NFTs, they could do something similar to the idea therein — e.g., posting a copy of the NFT graphic or animation on their web site with information about the current owner, the price, and other details or links. The leading NFT artist, Beeple, more or less does this on his site. Here’s an example from him.)
- Listing the Tune as an Actual MP3 File and Declaring that the Definitive MP3: In this version, the band would literally upload what would be forever known as the official MP3. As for where this lives, that’s a tech detail. It could be that there’s still some sort of preview image, but the MP3 gets unlocked by the NFT owner. It’s easy to get mired in the tech questions that this sort of arrangement poses. But, stepping back from that, I’m not sure it matters here because NFT ownership appeals to buyers for two main reasons: (1) ego / bragging rights, and (2) possible future profit. My gut is that fans won’t care much about the tech aspects or any particular file.
- Perhaps Doing Something with the Music Video. Though, I’ll table this item for now, as I suspect many bands of especially the 80s-90s era might view the video as a second possible distinct NFT opportunity related to their major hit(s).
Keep in mind that we’re talking about ways to cash in on pre-existing hits. Certainly many other uses for music-related NFTs exist. The band Kings of Leon famously released an entire album this way, along with merch and other experiences. And, before NFTs were even a thing, the WuTang Clan did something more or less similar to an NFT when they released just one copy of an album so that there could only ever be one owner / listener (well, unless that owner made the music public somehow).
The key message is this: At the end of the day, the artist simply needs to create some sort of digital collectible that represents the hit. They should also, in my opinion, declare that this will be the only such NFT collectible related to that hit song ever available (unless, as mentioned, they also wanted to do something similar with, say, the music video).
Valuing Intangible Cultural Assets
And so, where did I pull this “half-million dollar” figure from? This is a fair question. All I can say is that this 2005 meme image …
… sold for roughly $500,000 as an NFT. Or, for another example, an NFT of the viral 2007 “Charlie Bit Me” video …
So, in the case of our Crash Test Dummies example, the valuation goes something like this:
- How many people recognize the above examples as a meme and a viral video? As part of pop and internet culture?
- How many people know the song “Mmm Mmm Mmm Mmm” and regard it as an iconic part of indie pop culture?
Considering the psychological factors involved in purchase-making decisions, quantifying an assertion that NFT rights to a given hit might be worth $500k is difficult at best. One can only speculate. Although, I’d note for starters that the phrase “disaster girl” (in quotes) returns 1.3 million results on Google (182 million without the quotes). And the phrase “Mmm Mmm Mmm Mmm” (in quotes) returns 1.8 million results (157 million without the quotes).
So … does that perhaps suggest some sort of roughly equivalent valuation? Are the demographics of crypto-millionaires who know and love Disaster Girl similar to the demographics of crypto-millionaires who know and love Mmm mmm mmm mmm?
I admittedly have no clue, but it’s in the vicinity of where I’d start the bidding.
So, Is an NFT “Merch”?
In “Here’s what NFTs are — and what they could do for the music industry, artists and fans,” the writer quips that “musicians are really in the ticket and T-shirt business.” Admittedly, when I first thought of NFTs, I’d had the impression that they could be classified as merch (esp. with respect to my “representative model” idea, above), and perhaps that could allow bands increased financial opportunity, and a speedier path to profiting from the sale of an NFT of a hit song (i.e., without the red tape of involving labels, etc.).
However, that’s not likely exactly the case. I reached out to Erin Jacobson (aka “The Music Industry Lawyer,” recognized multiple times in Billboard magazine’s Top Music Lawyers listing) to clarify if this might be the correct way to think about a song offered as an NFT.
While acknowledging that some bands are indeed selling literal merch NFTs (e.g., some kind of digital item paired with physical merch or experiences), she says the song itself is likely a different animal. “Although NFTs are a new technology, the permissions for the underlying rights are in line with traditional intellectual property ownership,” Jacobson notes.
“If a band wanted to sell their iconic hit as an NFT,” she explains, “they would need to work with their lawyer, music publisher (if they also wrote the composition), and record label, as it is likely the music publisher and record label own the rights to the musical composition and master recordings, respectively. If the composition was written by a writer who is not the artist, then the writer’s or writers’ publishing companies would also need to be involved.”
Legal Hoops, Yes, But Opportunities Still Abound
My takeaway from the above is that, if a band wanted to pursue an idea like the one being presented herein, it’s still something that could be done, and could be remarkably profitable. However, the band should definitely go through the proper channels at the outset to avoid any issues later. Ergo:
- Step one: Talk to your lawyer and/or label. Express interest in doing this and negotiate terms if you can. (If you need a lawyer, check out that Billboard list, or have a look at Jacobson’s site, as she’s clearly already immersed in NFT discussions.) If any musician-reader does this, I’d love to post financial details (anonymously, of course) of how the label / artist split is structured for an NFT. (Email me anytime!)
- Step two: Partner with a tech/marketing company that can navigate this strange new territory and optimize results. Have another look at the NFT white paper I’ve made available for nonprofits, as it sketches out my ideas for gamifying NFTs and their integration into an NFT creator’s existing marketing / web presence — resulting in arguably enhanced visibility and profitability. It’s highly similar to what the NFT pioneer Beeple is doing!
- Step three: Rake in some crypto-cash (Ethereum / ETH, convertible into actual USD) and bask in the publicity and notoriety of having struck while the iron’s still hot, perhaps even inspiring other similar bands to follow suit.
Regarding that last item, I want to reiterate a few important aspects:
- NFT creators — even those selling an NFT of a hit song — are not selling any other rights. The new owner owns only the bragging rights related to owning a newly created digital asset. Basically, this amounts to him or her being able to say, “Hear that song? I own the official NFT of it.” That’s it. In no other way does this change any existing royalties, rights, or anything else related to your hit.
- You can of course set any kind of minimum price. If you agree that such a thing should cost ~200 ETH (~$552k as of today), then that’s simply the price. Maybe no one would buy it; maybe they would.
- You can also, as the originator of the NFT, set up the contract to always receive royalties if the digital asset sells again later on. So, if that’s 10%, and the thing sells for $1m someday, you could receive another $100k. (Might that happen? I have no clue. But, if creating and selling official NFTs of hit music becomes popular, then it seems likely people will start collecting it.)
At the end of the day, the above it essentially a fairly complicated marketing idea. There will be a million other general questions not answered above, a million more specific to your situation, and even more when it comes to considering all of the possibilities for making the sale of your NFT into the kind of spectacle it deserves to be. If you get stuck, call me at anytime (503) 902-HTML or email at Jim [at] ArrayWebDevelopment.com and let’s explore the possibilities. Good luck!
You may also like:
Thoughts on Internet Marketing for Musicians / Bands
Many of my online friends are professional, working musicians, so I find myself reviewing their online marketing from…
✍🏻 Jim Dee runs Array Web Development in STL and PDX. He maintains three blogs and contributes numerous publications. He’s been writing about crypto occasionally over the years (e.g., suggesting that nonprofits accept crypto donations in this Jan 2018 article). In 2013, Jim offered to accept Bitcoin for web development work. At the time, a typical $5k small business site would’ve cost around 50 BTC; ~$2.7 million today. (No one ever paid that way, though.) His server admin then had 792 BTC, ~$45 million today! (But, he sold it well before it skyrocketed.) Jim’s 2019 novel CHROO (a guaranteed good read!) may well have been the first published fictional work to incorporate an actual crypto address within the text! Comment here or email anytime: Jim [at] ArrayWebDevelopment.com.
Inspired by this article? Donations welcome at: