Non-Fungible Tokens (NFTs) are becoming more and more common in the music industry. They can be used as a form of payment for an artist or as a way to interact with their song, album, merchandise, or any other content they produce. But how does that work?
Non-Fungible Tokens are digital collectibles that have one-of-a-kind, virtual properties and cannot be duplicated or broken down into smaller fractions, nor can they be destroyed. NFTs can be used in the music industry to connect an artist with their work and possibly even their album cover art.
It’s important to understand what Non-Fungible Tokens are before considering the use of them. Also, it stands to reason that artists can learn from those who have already used NFTs – for better or for worse – before joining this trend. So let’s hop into it.
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Non-Fungible Tokens (NFTs)
Like I said before, NFTs are digital collectibles that have unique, virtual properties. They can’t be duplicated or broken down. They can never be destroyed. One token is worth the same as another even if their value to an individual may differ. I love how The Verge puts it in a recent article that I found.
“Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.”
Other people can download the file, copy it, save it, use it – but they can never actually claim to own it. In the art world, the downloads and copies are comparable to prints. NFTs are the next step down from the original work of art – and only one person can own it. What bothers me is, if I paid millions of dollars for an original work of art – I literally have a physical work of art worth millions of dollars.
Practically speaking, with NFTs made from digital art – a copy is just as good as the original. You don’t have copyright ownership and it’s not the actual master that the musician or the label holds. So, in my opinion, it’s just bragging rights.
The only things that can distinguish an NFT from a copy are the portions of the piece that aren’t necessarily seen: Name, Symbol, and Decimal Places.
- The name offers something unique about each NFT, which means it will always stay true to its own identity and not become mixed with any other tokens on the blockchain.
- The symbol identifies what type of resource this particular Non-Fungible Token represents.
- Decimal places show how much decimal precision there is in relation to real-world values.
These things set it apart as an “original” versus any number of “numbered copies” that can be run across. It turns out that as of early 2021, NFTs are supported by the Ethereum blockchain, though other cryptocurrencies are jumping on this lucrative trend. You can purchase NFTs from marketplaces such as Nifty Gateway, YellowHeart, or Zora. But there are many more.
How do Non-Fungible Tokens (NFTs) affect the music industry?
NFTs allow for a more personal connection when it comes to creating and consuming art – specifically music. Those unique characteristics I covered before on each NFT shows where it came from and who has used it. Therefore, the new owner of the NFT would feel a more personal connection between themselves (the fan) and the musician (the artist selling NFTs) – because the characteristics show it. This is something many artists are looking for when they release new music.
Examples of NFTs in the music industry:
Mike Shinoda, co-founder of Linkin Park, for example, raised $30,000 auctioning a 37-second teaser of an unreleased song paired with an animation. If you want to see the actual NFT and learn what Mike had to say about it, INPUT published a great article about it – “WTF is an NFT? – Allow Linkin Park’s Mike Shinoda to explain”.
Kings of Leon, a rock band, released their 2021 album When You See Yourself in early March. This was the very first full album to be sold by a musician as an NFT. Along with the music in this was digital artwork and six “golden tickets,” all as NFTs. Those who got the golden tickets would be able to redeem four front-row seats at any live show for them once per tour. This was all handled through the YellowHeart ticketing platform.
Grimes sold a digital art series that included digital images set to her music and copies of them as NFTs earlier in 2021 and made nearly $6 million off of the auction. You can see a sample of it here “Death of the Old” on the Nifty Gateway marketplace which sold it.
One of the first marketplaces focused on music NFTs was STURDY. Exchange, launched by Andrew Gertler, manager of Shawn Mendes, and the agency STURDY (best known for work with Drake and Travis Scott).
Creative ways artists can use NFTs
Creating more content that can pull fans closer and also set your art aside as something beyond unique is very doable with the use of NFTs. One example shown to be a success by Kings of Leon would be to reward loyal fans with tokens that give them access to exclusive content or discounts at their shows. Tokens might be something that is purchased during a show – maybe during that long build-up to the show when people are suffering from boredom and possibly getting drunk – rather than just the physical merchandise.
Artists could use NFTs for crowdfunding rewards. They could be a gift for Most successful of all right now has been the sale, distribution, or auction of limited edition NFTs associated with an album release. To go one step further, the purchasers of the NFTs might then have access to a special online or in-person release party with the musician. The sky’s the limit!
Pros of NFTs on the music industry
- NFTs can provide an additional revenue stream for musicians and they never have to give up the rights to the songs used in them.
- When an album is released as an NFT, it’s theoretically impossible for someone else to illegally download or distribute it. Therefore it protects the artist from piracy better than other digital formats.
- For musicians who want to branch out (I guess this may also fall into adding additional revenue streams), releasing an NFT with accompanying digital content or perks is a way to reach new audiences.
- The more people who hold your token, the higher its market value and legitimacy will be when it is re-sold or traded at a later date. This gives it and the artist a certain credibility and status.
Cons of NFTs on the music industry
- With the sale of NFTs being driven by the popularity and hype of the artist, the barrier to entry for new or emerging artists is much higher.
- The industry may be faced with a manufactured scarcity where NFTs are concerned, which can limit or diminish an audience that otherwise would be substantial.
- If everyone starts buying up all available tokens on exchanges because there are simply not enough in circulation, this could cause inflation without any new music being released (that would have been previously traded as an NFT). And what if the hype driving the market dies down? Will people who have purchased NFTs lose their investments over time? It’s possible.
- There’s also a digital rights issue – whoever owns an NFT can resell it to someone else and gain some profit. Not just the music industry. Of course, that’s the same as any other piece of music, especially vinyl or CD. I suppose you should just be careful about how few or how many NFTs are made of a specific thing. For instance, in the case of limited-edition items available through your project or tour – make sure limits on them are clearly set before sending out copies. You want the demand to remain high along with the prices while also giving buyers who missed their chance at the original sale to have another opportunity with the release of a limited-edition NFT.
NFTs can be a great way for artists to distribute limited edition items and tickets in an interactive manner. They also have the potential to make musical projects more sustainable by reducing reliance on traditional sales methods. The question then becomes, will this limit who has access to the music and art to only those who can afford the NFTs? Exclusivity can sometimes become exceptionalism and alienate fans. It’s a fine line, but some people think it’s worth the trouble.