"Music is the language of the spirit. It opens the secret of life bringing peace, abolishing strife." — Kahlil Gibran.
The rise of social media and the introduction of digital music streaming and downloading services like Apple Music, Spotify, Youtube, etc., have allowed musicians to amass large followers, fans, and listeners online in recent years.
The worldwide music industry made a total income of $21.6 billion by 2020, marking the sixth straight year of growth within the industry, with a 7.4 per cent CAGR rise from 2019. Even though the music industry has grown significantly in past years, it is no surprise that music artists are not adequately compensated for their ability and work. According to a survey, the majority of Spotify's top 0.8% of musicians earn less than $50,000 in streaming earnings.
Different sources of music revenues for artists in the US between 1973-20221. Source RIAA
Smart contracts and non-fungible tokens (NFTs), which are at the heart of the blockchain's basic technology, can be used to reorganize and decentralize the music industry to align with the interests of artists and creators, who are responsible for driving the industry's success. Blockchain has the potential to fix this problem.
We have already seen multiple cases of visual artists selling digital art through the NFT space. Music-related NFTs can provide artists with greater ownership over their work in the music industry.
What does the music world need to know about NFTs?
What is an NFT?
Non-fungible tokens (NFTs) are indestructible and one-of-a-kind digital assets that cannot be divided into fragments. NFTs can represent anything on the blockchain, including digital assets such as digital art, music, metaverse land or physical assets like artwork, merchandise, physical property, etc. NFTs are created via smart contracts and blockchain technology, so each NFT is distinct with its own code.
Music NFTs provide several benefits for the musicians and the music industry:
- Music NFTs can help eliminate unnecessary intermediaries and third parties.
- Ownership rights can be simplified using music NFTs and blockchain.
- NFTs can enable simple tracking and control of secondary market revenue streams.
- Payments are executed immediately and automatically.
- Transparency amongst all parties.
Can artists and musicians make money with music NFTs?
Short answer: Yes!
Before COVID-19, artists and performers relied significantly on live performances to compensate for the loss of income from DSPs. With live gigs being cancelled owing to the pandemic, artists lost their primary source of income. At the same time, the NFT and crypto space experienced a significant increase in awareness and utility, resulting in millions of dollars in revenue for various visual artists and illustrators.
Music NFTs can give scarcity to the music you create, allowing you to set prices for your music, choose how your music gets distributed, and receive royalties from secondary market sales. As a result, they revolutionize access to new markets for artists in the digital space.
As a result, artists such as Snoop Dogg, 3LAU, Grimes, Steve Aoki, and others began using music NFT albums and merch that allowed their fans to pay for the exclusive content while still endorsing their favourite artists.
3LAU earned over $11 million through selling music NFTs
Justin David Blau, commonly known by his onstage name 3LAU, is a DJ and EDM producer from the United States who published 33 exclusive music NFTs redeemable for his album Ultraviolet. The album Ultraviolet was first published in 2018. To commemorate the album's third anniversary, 3LAU published the NFT collection.
The top 33 bidders in the exclusive music NFT collection were divided into tiers with varying rewards, and the top bidder received an NFT exchangeable for a piece of personalized music by 3LAU, a limited edition vinyl of Ultraviolet, access to unreleased music on 3LAU's official site, and all 11 songs from the Ultraviolet album. 3LAU's music NFT debut was one of the most successful, with the artist earning more than $11.7 million.
Kings of Leon became the first band to launch their music NFT album
Kings of Leon launched an album as an NFT on March 5th, 2021, making them the first band ever to launch an NFT album. The band issued three tokens: one for a special album bundle, another for live concert advantages such as front-row tickets for life, and the third for audio-visual art only. The band earned 820 ETH, which was valued at $1.45 million at the time.
If you're a musician thinking of launching your upcoming album as music NFTs, ask yourself, "Is this something your audience would be interested in?" You may even poll them via Discord or email to help you choose. Notify them that they could be starting a financial partnership with you.
How can the music industry benefit from music NFTs?
1. Build a loyal and engaged community
Your and your team's complete focus should be community creating and engaging with your fans and listeners. A community must exist to take full use of Web 3 and the possibilities it will bring to the table.
You can use NFTs to boost community participation by organizing NFT airdrops of your upcoming music or album, hosting quizzes and competitions based on your previously released work, and collecting vital feedback directly from your fans.
More on building a community: Discord Guide: How to Build an Engaging Community for Your Blockchain and NFT Project.
2. Set up royalties on the secondary sales of your music NFTs
One of the most valuable features of music NFTs is the ability to set up royalties. Royalties allow you to build a passive income stream by receiving a share from secondary sales of your music NFTs. This means that whenever your NFT is sold, the artist will earn a part of the revenue.
How do music NFT royalties work?
When you convert a music file into an NFT through an NFT marketplace like Zora, you can create a "creator share," which is a fraction of future secondary sales of your music NFT. Assume you have a 5% creator share; if you sell the original song NFT for 1 ETH and the buyer later sells it for 10 ETH, you will receive an extra 0.5 ETH from the secondary transaction.
Furthermore, because the creator shares are automatically paid out via smart contracts, you will never have to worry about collecting them: they are paid to the original Ethereum address from where the music NFT was created. This is a powerful concept, similar to royalties in the music industry, but automatic and highly sustainable.
3. Transform your community into music NFT DAOs
A Decentralized Autonomous Organization, or DAO, is a community-led organization without any centralized authority. Aside from NFTs, a DAO allows you to provide extra value to your fans. Once you've established a fan community, you can turn it into a DAO.
Fans are the heart and soul of any artist; they are like the fuel in the engine, and their efforts and responsibilities in projects should be rewarded. DAO promotes a sense of belonging, ambassadorship, and more profound devotion on the financial side. Being a member of a DAO is not the same as owning music NFT or donating to a fundraising campaign.
Artists can incentivize their audience to endorse their work and helping to the growth of their fandom through NFT projects and Web3 technology. As the community grows, the value of artists' NFTs or social tokens may rise, balancing rewards between artists and their followers.
DAOs transform your fans into investors and shareholders. They have the opportunity to own a piece of their favourite artist's brand and Profit from it. It completely changes the narrative because your DAO members can gain money from the revenues of your song and royalties.
DAO allows you to establish a close relationship with your followers, allowing them to participate in their favourite artist's progress and find delight in being your fan.
Read more: Marketing Strategies When Launching Your DAO.
4. Link your music NFTs with exclusive merchandise
In addition to their inherent worth, music NFTs can provide extra benefits. They can be linked to physical autographed CDs, song royalties for music NFT holders, backstage passes, special remixes, and private parties. We've described only the tip of the iceberg to rewarding your fans for investing in your success using NFTs.
Several artists have already released music NFTs with exclusive goods such as signed CDs, vinyl records, rare community access, backstage passes, and exclusive footage from live shows, including Eminem, Katy Perry, and Kings of Leon.
Offering music NFTs alongside items might be a beneficial authentication layer on top of the merchandise, demonstrating its originality and distinctiveness. In future, NFTs can also be implemented into live streaming services and events platforms to expand their reach to at-home audiences and possibly offer them live dynamic experiences mediated by a fungible token.
5. Sell NFT tickets for your concerts & live shows
Music NFT's applications can also include concerts and live show tickets. Because NFTs are unique assets on the blockchain, it is nearly impossible to generate another physical or digital copy of tickets, effectively erasing the possibility of counterfeit tickets.
Furthermore, we all know how large the secondary market for concert tickets is, and with NFTs, artists and promoters can make substantial royalties on secondary market ticket sales.
You can personalize NFT tickets to offer special perks like Premium seats, festival tickets, special meet and greets, backstage passes, private dinners, etc.
Music NFTs have the potential to make the future of music more open and transparent
Music NFTs are a powerful and revolutionary tool in the hands of an artist and record labels. Music NFTs provide musicians and the entire music industry with a new platform to publish and earn from their work via blockchain and NFTs and engage in new and previously unseen ways with their fans on a more granular level.
We've already entered the unexplored territory of music NFTs. Independent artists are largely leading the effort in music NFTs, accounting for 68.4 percent of overall sales or $41.2 million of the $60.2 million in overall music NFT revenues, according to a market report prepared by journalist Cherie Hu.
We're still in the wild, but the music NFT space is already offering several opportunities that could be useful in the long run for transparency and financial independence for music artists.
Despite its infancy, the music NFT field continues to evolve quickly, and we believe 2022 will reveal how these early signals we've discovered will finally play out. Remember that most advantages in the web 3 world lay in concentrating on the stability and long-term expansion of culture and community.
Related Articles to learn more about NFTs and Web 3:
The Ultimate Web3 Marketing Guide For Every Brand
How NFT Artists can Create a Buzz on Social Media
Most Effective Metaverse Marketing Trends You Need To Know In 2022
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