When musicians such as the American DJs 3LAU, Steve Aoki, and the rock band Kings of Leon made millions of dollars selling their content as non-fungible tokens (NFTs), the music industry was seized by an NFT craze.
Many began to wonder what an NFT is, why it is worth a lot of money and how could they sell their own music as NFT.
In this article, we are going to take a closer look at NFT technology and discuss its advantages, disadvantages, as well as its impact on the music industry.
What is NFT?
NFTs (non-fungible tokens) are units of data (tokens) that can be associated with digital collectibles which are created and sold on a blockchain. A blockchain is a publicly accessible ledger that tracks and records transactions. NFTs can be used to represent all kinds of collectibles such as photos, videos, audio, and other types of digital files.
Artworks and music are popular forms of those collectibles. And although it is possible to duplicate digital assets, NFTs are unique, their value is not equal to that of a copy and they are not mutually interchangeable (hence they are called “non-fungible”). To get the idea, think of NFTs as an autographed art print. It is possible to print countless copies of the original, but the one print with the most significant value is the real autographed copy. The same applies to NFTs.
Accordingly, owning an NFT involves a verification process using blockchain technology. This means that a network of computer systems records all sales of NFT and issues proof of ownership and authenticity to the buyers.
The Difference Between NFT and Cryptocurrency?
NFTs are usually bought with cryptocurrency, but they are different types of assets.
If you have a one-dollar note you can easily exchange it with any other one-dollar note since they always have the same value. Similarly, two Bitcoins will always have the same value across the board at all times.
But this is not the case with NFT. Each NFT is a unique asset and can appreciate or depreciate in value independently. They are non-fungible, i.e not interchangeable with similar assets
The Promise of NFT
Musicians hope that NFTs will enable them to reach consumers directly. By avoiding middlemen in distribution, artists can retain a significant amount of profit that otherwise would go to the distributors.
Additionally, as live music continues to face an uncertain future, NFTs could provide supplemental income streams to the artists who suffered a loss of income due to COVID-19.
Moreover, NFTs could create a new form of engagement between artists and their fans.
Examples of Music NFT
If you are a musician who is interested in creating NFTs, you might be wondering about what kind of unique assets you can offer to your fans.
Looking at what has been sold already, music NFTs are mostly short music videos, digital versions of a record, and fan experiences such as backstage footage. You can, however, always use your creativity and come up with new NFT ideas.
What Does Buying An NFT Mean?
In its essence, NFT is nothing more than a computer code in the blockchain. In many NFT cases, what you are buying is a code that verifies your ownership of whatever the code represents. It also gives you the potential to sell that ownership at a later stage.
Other NFTs, however, come with bonuses such as vinyl albums, front-row concert seats, and exclusive MP3s. For example, Kings of Leon first NFT album “When You See Yourself” comes with a limited-edition physical vinyl record in addition to the digital collectibles.
Moreover, some NFTs hold a contract for partial rights to a song. Owning such NFT entitles you for streaming royalties for as long as you own it. Royalty Exchange, an online marketplace for buying and selling royalties, was the first company to sell the publishing rights to a song.
In this article as well as this one, you can learn more about many of the existing music NFT projects.
CONS of NFT
Despite its hype, there are some concerns surrounding NFT. Following are the major concerns that you should be aware of before getting involved with this new technology:
It is a complicated process.
In order to buy an NFT, buyers will have to exchange money for a cryptocurrency such as Bitcoin or Ethereum and store it in an online wallet. They also need those online wallets to store their NFTs. While digital wallets and crypto exchanges are now easily accessible, some fans might find the process of buying an NFT overwhelming.
Additionally, the buyer might incur some unexpected fees through the process of buying a cryptocurrency and exchanging it with an NFT.
It might be expensive for the average fan.
So far, the financial cost of an NFT is often more than what most people can afford for a digital piece of art. It is reported that 90% of NFT owners are very wealthy crypto holders.
It is still speculative.
Since the concept is fairly new, no one can certainly tell if it’s here to stay. It is important to understand that when someone buys an NFT, they’re not buying the actual digital artwork; what they are buying is a link to it which likely resides on the website of a new start-up that may or may not be there in a few years’ time.
Many worry that NFT is not an environmentally friendly technology. Each transaction requires tremendous computing power to complete and the more computing power NFT transactions require, the more resources it consumes.
How To Sell Music As NFT?
There are several marketplaces where musicians can create and sell music NFT. Opulous, Mintbase.io, and Rarible.com are examples of such marketplaces.
To use these platforms, you also need a digital wallet such as Metamask to hold the cryptocurrency you are going to receive or use to cover the cost of creating the NFTs.
This article explains how to mint and sell your NFT on both Mintbase.io, and Rarible.com.
While some artists already made millions of dollars selling music NFT, such success is not guaranteed for each and every artist. NFT, however, is a new technology that independent musicians could creatively use to connect more directly with fans and drive their careers forward.
Like any other technology, NFT has its pros and cons. But if used properly to benefit both artists and fans, it could transition the music industry to a new era, just like how MP3s and streaming technologies did in the past.
At Mello Studio we utilize the newest technologies in the music industry to bring our partners closer to their goals. If you are an independent artist, we would love to chat with you on how to use the internet to push your music career forward. Contact us today!