NFTs, or non-fungible tokens, have marked the rise of ‘crypto art’ and revolutionised the arts industry in a short span of time. As their influence continues to expand, what do NFTs mean for the future of the music industry, and how can artists use them to their advantage?
What are NFTS?
NFTs grant the buyer unique ownership of a piece of digital art or whatever else is put up for sale, and said buyer pays through cryptocurrency, which is stored on blockchain. Some notable examples include Jack Dorsey’s very first tweet, which sold for over $2.9 million. The iconic 2010s era ‘Nyan Cat’ also sold for 300 ETH ($590k or £433) on the meme’s 10th anniversary, marking the beginning of ‘crypto art’.
Compared to traditional currency, NFTs and blockchain make the assets of copyright and ownership easily transferable.
The rise of NFTs in the music industry comes at an opportune time. Earlier this year, high profile artists such as Paul McCartney and Kate Bush signed an open letter to Boris Johnson calling for an audit of the streaming economy.
Alarming statistics from The Trichordist have revealed that on Spotify, the average payout per stream is £0.0028, and artists need approximately 3114 streams to earn one hour’s worth of UK minimum wage.
In the aftermath of the pandemic, many musicians are returning to live gigs, which has previously provided a steady stream of income. However, in the meantime, NFTs offer a promising stream of revenue.
How can artists gain from NFTs and what exactly can they sell?
Artists have gained revenue through selling NFTs that come in various different forms, from selling limited-edition virtual experiences to offering up their music rights and royalty streams.
Opulous is a new platform set to launch music copyright NFTs. Users can buy tokens which give them a share in the music copyright. Founder Lee Parsons says that this is a valuable opportunity for artists with a following of over a million, whose fanbase will want to promote their music to others. In turn, these fans will receive a stake in the music and will make a profit from its success.
What are the pros and cons?
As explored previously, an artist’s success in selling NFTs depends largely on their popularity and the loyalty of their fanbase. Smaller artists are less likely to make a profit off of them, due to having a smaller fanbase and less of a platform. Matt Dryhurst, lecturer at New York University, says that it is not only about the number of fans an artist has, but where those fans sit on the socioeconomic spectrum, and if they are willing to spend thousands on a musician’s NFTs.
However, independent artists can still sell NFTs which represent their songs online, without renouncing their ownership, and still retain the right to share the songs online however they like.
As explored by Splice, the widespread use of NFTs in the music industry could also mark the beginning of a cultural shift in how artistic expression is monetised. In the future, artists may potentially approach creating from a financial perspective, always determining the market value of their art, rather than the intellectual and creative value.
What does this mean for the future of record labels?
Taylor Bennett, artist and manager, says that NFTs mark the end of traditional record labels and publishing rights organisations. They remove the need for a ‘middle man’, providing another platform to bridge the distance between fans and their favourite artists. Fans can invest in them to help them create new music, therefore allowing them a stake in the process.
The proliferation of NFTs in the music industry emphasises the significant impact Blockchain will have on our future, and specifically the quick and efficient transferral of data.
Although NFTs have proved to be promising for established artists, as we have explored, they have less to offer for newer or smaller artists who are unlikely to have built a loyal fanbase yet. However, the more music lovers continue to invest in cryptocurrency, the more independent artists will be able to benefit.