NFTs are changing the music industry forever: find out how.
Non-fungible tokens (NFTs) sparked a wave of interest and enthusiasm in 2021 and the first few months of 2022. NFTs—digital tokens kept on a blockchain that may document ownership of products—have now been produced for a wide range of items, including digital art, event tickets, and real-world luxury goods. The figures are startling: In 2021, NFT sales reached $25 billion, up from just $95 million in 2020. Daily sales on Opensea, the popular peer-to-peer marketplace for NFT, have already surpassed all-time highs in 2022.
NFTs have the ability to disrupt a variety of sectors. Many experts believe that NFTs will have a significant impact on the future of music. NFTs include songs, albums, music, lyrics, and soundbites. Kings of Leon were the first band to release an album as an NFT last year. Music can even be blended with digital art in jpeg or gif formats to produce one-of-a-kind works of art that include music. Lostboy NFT, for example, is a popular music collective that combines music and art with a mental health focus. Music-related NFTs can be displayed differently depending on how they are accessed, thanks to smart NFTs that can handle several formats. A PDF file containing the lyrics to a song or a message from a musician, for example, could be included in an audio NFT and displayed when it is accessed in text-based mode. When you look at what NFTs can do, they appear to be particularly well positioned to shape the future of music.
Enabling fairer compensation
Musicians have not been fairly compensated for their work for decades. This is especially noticeable in the music industry. According to Fortune, the normal total income split is 50/50, with the entertainer receiving 50% of the revenue and the remainder going to agents, lawyers, and distributors. The situation is significantly worse for musicians that use streaming services to distribute their work. The top 0.8 percent of Spotify’s musicians earn less than $50,000 in streaming earnings.
NFTs have the ability to ensure that musicians are reimbursed appropriately for their efforts. Consider Linkin Park’s Mike Shinoda, who raised approximately $11,000 for his first NFT. “With NFTs, we can let the early figures speak for themselves. Even if I upload the full version of the contained song to DSPs worldwide (which I can still do), I would never get even close to $10k, after fees by DSPs, label, marketing, etc.”
Enabling greater potential for collaboration
Collaborations have become increasingly frequent in the music and entertainment industries during the last decade. Collaborations between artists are now a staple of modern pop culture. The appeal of seeing two or more celebrities collaborate in fresh and inventive ways is apparent. NFTs have already shown their support for new and intriguing collaborations. Grammy-nominated DJ Steve Aoki just released an NFT compilation alongside digital artist Maciej Kuciara. “NFTs represent a new canvas for digital artists, that allow a whole new generation of artists to collaborate with talent from different industries, and leave a lasting emotional impact on the viewer.”
Remixes are closely related to collabs. NFTs can also benefit from the growing “remix” culture, which encourages users to combine or change existing content to create new, derivative content. “Fan edits,” which are copies of music, videos, or artwork that have had content added to, removed from, or modified to create something new, are a common example of remixes.
Using “upgradeable NFTs,” musicians and other producers can reward remixes in ways that benefit them. “Upgradable NFTs enable the prospect of more efficient music distribution that does not have to go via intermediaries and that facilitates the creation of unique material, collaborations, and remixes, without the legal problems that sometimes occur,” according to digital firm Blue Manakin.NFTs that can evolve and mutate over time are known as upgradeable NFTs. For example, a musician might share a soundtrack, a chorus, or a bridge that fans and collaborators can lawfully build upon, avoiding the time-consuming legal hurdles generally associated with remixing. The original inventor can keep control of the spin-off creation and potentially benefit from it thanks to upgradeable NFTs.
Capitalizing on appeal to scarcity
Robert Cialdini, a renowned psychologist, is one of the foremost experts on the subject of persuasion techniques. One of Cialdini’s “six principles of influence,” which includes scarcity, is well-known. According to Cialdini’s research, products are more appealing when their availability is limited. In the music industry, scarcity has a long history of creating profitable profits. Unique and uncommon fan experiences, backstage access, fan clubs, souvenirs, and other scarce goods are vital to the music industry’s success.
NFTs allow musicians to take advantage of scarcity appeals in new ways, enabling fans to take advantage of new chances to create deeper connections with their favourite musicians. Consider the following question, which was asked as part of a recent Variety poll: “The year is 2022. A studio issues an NFT for a scene from a film you enjoy. This NFT is available in 1,000 copies. “How much do you think the pricing range will be?”
A significant 20% of those polled believed the price range would exceed $1,000. Getting access to exclusive, unusual content provides a particular excitement and appeal.
The possibilities for scarcity appeals with NFTs are endless. Consider Live Nation, the world’s largest music event organiser, which just announced the launch of Live Stubs, which are non-transferable tickets that fans will receive for free when purchasing a concert ticket. “Our Live Stubs product brings back the nostalgia of collecting ticket stubs while also giving artists a new tool to deepen that relationship with their fans,” said Michael Rapino, President and CEO of Live Nation Entertainment. “We can’t wait to see what the creativity of this community dreams up as it grows.” Live Stubs and comparable NFTs become uncommon collectibles over time that can appreciate in value and be lawfully resold.
Shaping the future of music through NFTs
NFTs aren’t just another trendy acronym. When you look at the value propositions of NFTs—the potential for more equal pay, more collabs and remixes, and tried-and-true scarcity appeals—NFTs appear to be on the verge of transforming the music industry. The key will be for NFTs to keep reinventing themselves and evolving artistically, much like the musicians they sponsor.