Here's How NFTs & Crypto Can Revolutionize The Music Industry was written for Playlouder by Cristina Par. Please note that contributing opinions are that of the author. They are not always in strict alignment with my own opinions. –Joe.
The interest in NFTs has grown exponentially in recent years, with NFT sales totaling $25 billion in 2021 alone, up from $95 million the previous year.
While some financial experts are skeptical about NFTs based on their volatility, it's not easy to ignore the amount of money generated through the sale of NFTs.
Most people know NFTs in regard to collectibles and digital art images. However, NFT trends are evolving quickly to include other art forms such as video games, TV shows, and music.
This post looks into the influence of NFT and cryptocurrency in the music industry and its ability to revolutionize it.
The best place to start understanding music NFTs is to understand what an NFT is.
NFT is the acronym for Non-Fungible Token, which is a digital asset stored on a blockchain representing a digital or physical asset. Each NFT is unique and acts as proof of ownership of an asset on the blockchain.
In the music industry, artists can create NFTs of their music, which they can then list for sale through cryptocurrency.
There is no limit to the copies of a song or an album you can create. However, each of the copies will have a unique identifying token, so while they may have something in common, every person that buys a copy will have a copy whose identity is unique.
How NFTs Are Changing the Music Scene
A Better Way of Monetizing Their Work
Over the years, artists have always been under the control of recording labels, which often get the lion's share of an artist's work. Most artists like Kanye West have always spoken out about this unfair distribution of resources generated from artists' works of art.
Still, things have remained relatively the same over the years. But NFT technology is poised to bring changes that can help artists be in full control of their music.
When trading Music NFTs, artists transact directly with their fans, allowing them to keep the most significant share of their work.
Piracy is a big problem in the music industry and sees the industry lose millions of dollars annually. While there are laws to protect artists from piracy, they are ineffective in controlling the problem. But piracy could be a thing for artists who sell their music as NFT.
However, an artist can also specify how not a piece of art can be used. If you are unsure about what you can or cannot do with your NFT, you may want to talk to an IP law firm like Heer Law to help you understand your legal rights, options, and limitations.
Building a Loyal Fan Base
Artists depend on the recording label to have their music reach their fans. Besides having the record label take the lion's share of an artist's proceeds, the second downside to this approach is that there is no direct interaction between artists and their fan base.
Luckily, trading NFTs allows artists to transact directly with their fans which helps build royalty and a supportive music community.
Major Artists Already Embracing Music NFT
While NFT trading is relatively new, some artists are already cashing in on this opportunity. An example of an artist benefitting from tokenizing their music is electronic producer 3LAU, who sold an NFT collection worth $11.6 million.
Canadian musician, Grimes, made $5.8 million in 20 minutes, and Steve Aoki, a DJ, made 4.2 million in his first week of selling music NFT in 2021.
Other notable musicians embracing music NFTs include Akon, the music group Rolling Stone, and Snoop's Death Row Records.
How to Create Music NFT
The first step in creating music NFT is recording your song. You can choose to add a video to your track or create a piece of audio-only music NFT. After creating your art piece, the next step is getting an NFT wallet and combining it with token gating apps, which is a secure online environment where you store your NFTs and digital currency.
After you get a wallet, you must upload your NFT to a blockchain platform supporting NFTs. The most preferred blockchain platform for persons trading NFTs is Ethereum. But you could also explore other options, such as Polygon and Fantom.
After uploading your music, the next step will be creating a smart contract. A smart contract stipulates the price of the NFT and other terms and conditions of using the NFT.
Once the contract is ready, the next process is creating a unique token for your asset in a process referred to as minting. After minting your asset, the next step is listing it for sale on NFT marketing websites.
How to Market Your NFTs
Once your NFT is done minting and listed for sale, any interested buyer can make an offer to buy. But there are several approaches to marketing NFT that you may want to consider, which include:
When marketing his NFT music, 3LAU, one of the earliest adopters of music NFTs, offered to collaborate with the top bidder for his music NFTs in his next single. This approach is called added utility. Added utilities allow NFT to gain high market value as bidders who are most likely fans compete to get the opportunity to get that added utility which in 3LAU's case was collaboration.
You can choose to add a video to your music to make it more marketable. But you can also choose not to and instead use platforms like Triptchip to create AI visualizations for music using a tool called VOID. This tool makes it easy to create unique visuals that synchronize to the track, which an artist can sell as different versions of their music NFTs.
With the music NFT scene being relatively new, your only limitation is your creativity in selling and marketing your music NFT. Illmind, another music producer, recently created an exclusive sample pack for non-fungible tokens.
His NFT consisted of the sample loop/melody pack, meaning that the person buying this NFT acquires true digital ownership of the entire pack. That is Illmind's approach. You could choose to borrow it when marketing your music NFT or create a whole new approach and have others learn from you.
Pros and Cons of NFT Music
NFTs are a relatively new technology, and it may take some time to get a real picture of their pros and cons. Early entrants into this space can only speak of advantages, and you can join in. However, if you don't have an already established connection with crypto art collectors, getting significant revenue for your music NFT can be challenging, so patience is also vital.
One major downside of music NFTs is that creating an NFT is not free. You must pay a “gas fee” for every token you mint, and there is always the risk of your NFT being stolen and minted into a different NFT.
The future of art seems headed in the NFT direction. While there is a lot to be understood in terms of NFT music, new entrants have already reaped huge benefits. The sooner you cash in on this opportunity, the better it will be for you.