NFTs and the future of music
Interest and excitement in non-fungible tokens (NFTs) has exploded in 2021 and the first few months of 2022. items, from digital art to event tickets to luxury goods around the world real. The numbers are spinning: NFT’s sales volume totaled $25 billion in 2021, up from just $95 million in 2020. Already in 2022, daily sales on Opensea, the popular peer-to-peer marketplace for NFT, have reached historic highs.
NFTs have the potential to disrupt a wide range of industries. Many experts expect NFTs to prove particularly transformative in shaping the future of music. Songs, albums, music, lyrics, and sound clips can all be NFTs. Last year, Kings of Leon became the first band to release an album as NFT. Music can even be combined with digital art in jpeg or gif formats to create unique works of art with embedded music. For example, Lostboy NFT is a popular music collective that combines music and art, while emphasizing mental health. Thanks to smart NFTs that can support multiple formats, music-related NFTs can be displayed differently depending on how they are viewed. For example, an audio NFT might include a PDF resource containing a song’s lyrics or a message from a musician, which would be displayed when opened in text format.
When you dive deep into what NFTs enable, NFTs seem uniquely poised to define the future of music.
Allow fair compensation.
For decades, musicians have not been fairly compensated for their music. This has been particularly evident in the music industry. As reported by Fortune, the typical split of total revenue is 50/50, with only 50% of revenue going to the artist and the rest split between agents, attorneys and distributors. The reality is even grimmer when it comes to musicians distributing their content via streaming services. Most of Spotify’s top 0.8% artists earn less than $50,000 in streaming revenue.
NFTs have the potential to ensure that musicians are compensated more fairly for their work. Take a personal anecdote from Linkin Parkfrom Mike Shinoda, who raised around $11,000 for his first NFT. In a Tweet, Shinoda Explain, “With NFTs, we can let the first few numbers speak for themselves. Even if I download the full version of the song contained on DSPs around the world (which I can always do), I’ll never get close to $10,000, after DSP, label, marketing, etc. fees.
One of the biggest opportunities for musicians in terms of fair compensation for their content is in the secondary, tertiary, and higher-order markets for NFTs. Currently, creators often relinquish ownership rights to platforms upon initial contract and struggle to know where their content is then distributed. As reported by The edge, after signing with a major independent label, a musician owed up to $40,000 in royalties on songs he never expected to collect.
Yet with NFTs, musicians and other creators don’t need to cede ownership of their content to the platforms upfront. While they can choose to relinquish the rights to a song or album when they hit an NFT, they can also retain that ownership by making it NFT-ready. So when musicians sell content, they can be compensated directly and more fairly. If an NFT owner then decides to resell the NFT, the original creator may automatically receive royalties, and this process may continue each time the NFT is sold. This is all because there is an ownership record embedded in the metadata of the NFT.
Enable greater potential for collaborations and remixes.
Over the past decade, collaborations have become increasingly common in the music and entertainment industries. Today, artist collaborations are a defining feature of modern pop culture. There is an undeniable appeal in seeing two or more artists come together in new and creative ways.
We’ve already seen NFTs support exciting new collaborations. Grammy-nominated DJ Steve Aoki recently teamed up with digital artist Maciej Kuciara to release an NFT collection. As Kuciara reflected, “NFTs represent a new canvas for digital artists, allowing a whole new generation of artists to collaborate with talent from different industries and leave a lasting emotional impact on the viewer.” With NFTs, collaborations can become more lucrative as musicians can choose to build a royalty collection mechanism into the NFT.
Remixes are closely linked to collaborations. NFTs are also able to capitalize on the increasingly popular “remix” culture, which encourages the combining or editing of content to produce new creative and derivative content. A popular example of remixes are “fan edits”, such as versions of music, movies, or artwork that are edited by fans so that content is added, removed, or augmented to create something again.
Musicians and other creators can encourage remixes in a way that benefits them by taking advantage of “scalable NFTs”. As digital agency Blue Manakin explained, “scalable NFTs open up the possibility of more efficient distribution of music that doesn’t have to go through middlemen and makes it easier to create exclusive material, collaborations and remixes, without the legal implications that often arise.”
Evolving NFTs are NFTs that can evolve and mutate over time. For example, a musician can release a soundtrack, chorus, or bridge that fans and collaborators can legally build on, while bypassing the costly legal procedures often involved in legally creating remixes. With scalable NFTs, the original creator can retain control of the derivative creation and even benefit from it.
Capitalize on calls for scarcity.
Esteemed psychologist Robert Cialdini is one of the leading researchers of influence tactics. Cialdini is famous for his “six principles of influence”, one of which is scarcity. Cialdini research demonstrates that products are considered more attractive when their availability is limited. Rarity has a long history of generating lucrative profits in the music industry. The music industry thrives on unique and rare fan experiences, backstage passes, fan clubs, collectibles and other rare assets.
NFTs allow musicians to leverage scarcity appeals in new ways and, on the other hand, allow fans to capitalize on new opportunities to develop deeper connections with their favorite musicians. Consider the following question posed in a recent poll by media company Variety: “It’s 2022. An NFT is released by a studio for a clip of a movie you like. There are 1,000 copies of this NFT for sale. What price range do you expect? »
20% of respondents thought the price range would exceed $1,000. There’s a certain sense of thrill and allure in having access to exclusive and rare content.
With NFTs, the possibilities of appealing to scarcity are limitless. Take for example the world’s largest music event organizer, Live Nation, which recently announced the launch of Live Stubs, NFTs that fans will receive for free when they purchase a concert ticket. As Michael Rapino, President and CEO of Live Nation Entertainment, explained, “Our Live Stubs product brings back the nostalgia of collecting ticket stubs while giving artists a new tool to deepen that relationship with their fans. and we can’t wait to see what the creativity of this community invents as it grows. Over time, Live Stubs and similar NFTs become rare collectibles that can increase in value over time and be resold legally.
Other calls for scarcity within the music industry have also been made possible by NFTs. Canadian singer Shawn Mendes has collaborated with avatar tech company, Genies, to launch his own NFT. Launched on OpenSea, the NFT included rare digital versions of his iconic accessories such as his Fender guitar and gold ring.
Powering the future of music with NFTs.
NFTs aren’t just another buzzy acronym. When you take a close look at the value propositions of NFTs – the potential for fairer compensation, more collaborations and remixes, and proven appeals to scarcity – NFTs seem poised to transform the music industry. . The key will be for NFTs to continually reinvent themselves and creatively evolve, as much as the musicians they support.