NFTs for musicians: What new opportunities do musicians and platforms face?

Brief Introduction of NFT Music Industry Development

As digital trends continue to dominate traditional industries, platforms such as Spotify and Soundcloud have created new channels for musicians to monetize their music works and increase exposure. Next, NFT provides a similar solution through blockchain technology, allowing musicians to attract fans in a new way and earn more income.

Musicoin is one of the first projects to cater to the new development of the music industry. It provides a free platform so that artists can directly receive rewards from fans. Rarible , Nifty Gateway , OpenSea and other new platforms have monopolized the market and created the NFT craze. These platforms also provide a wide range of NFT products.

Since the end of 2020, NFT has set off a big storm in the music industry. As the epidemic has put many performances on hold, musicians are increasingly eager to earn more royalties from streaming services. This is where non-homogeneous tokens come into play. NFT provides new opportunities for music monetization through the unity of marketing records.

With the increase in demand and the development of new projects, the NFT music market is constantly expanding. The blockchain can authorize musicians to hold their music or videos through private keys, and distribute them through NFT, and buyers will have the right to obtain their unique copies.

In December 2020, Deadmau5 became the first big player in the industry to take the NFT route and auctioned a set of collectibles called "Rarez". The series does not include music works, but there are interesting objects such as artworks and stickers. Later that month, he again sold a single copy of In Titan's Light for up to $80,000.

Electronic record company Monstercat quickly joined in and sold the soundtrack produced by Varien for more than $500,000. Linkin Park lead singer Mike Shinoda sold a 37-second audio clip "One Hundredth Stream" for $30,000. Although Shawn Mendes did not release NFT music, he has already earned more than $600,000 by selling other collections.

The dance duo Disclosure performed a new song NFT-NRG on Twitch. The NFT version was quickly sold with a profit of approximately US$69,000. The famous electronic producer 3LAU received $11.6 million after selling 33 NFT works.

Finally, there is Kings of Leon mentioned at the beginning of the article , the first big hit band to sell the entire album in the form of NFT, sales have exceeded 2 million US dollars, and will continue to soar in the foreseeable future.

NFT cannot solve the livelihood problems that all artists have or are facing during the epidemic, but it still provides them with new opportunities.

NFT + music industry development potential

As we all know, in the art world, non-homogeneous tokens have caused huge waves. In the music industry, the hurricane effect of NFT is also coming as expected. Data collected by Water & Music shows that in February 2021 alone, the NFT music industry has made nearly 22 million U.S. dollars in profit.

One of the best ways to understand the NFT music industry is to focus on some of the key early players in the field. With the rapid expansion of music NFT, they are also leading the direction of its development. Statistics from Water & Music show that in the past six months or so, the sales of Music NFT has increased by 150 times. It seems that every musician and music company is trying to participate.

Music NFT can take many forms, including but not limited to concert (virtual and physical) ticket sales, sample packages, previews of unreleased songs, artwork, etc. As music NFTs continue to grow, the potential uses of this technology will rapidly expand, far beyond the way NFTs are used today.

Why buy NFT version music?

When You See Yourself this album has been released on streaming platforms such as Spotify and Apple Music, and has also been released on QQ Music. YellowHeart (a blockchain-based streaming platform) provides the NFT version of the album.

Many people will ask, since traditional platforms can find audio sources, why buy the NFT version?

Novelty effect

For some people, there is no doubt that NFT is novel and cool. In addition to providing electronic album download rights, the $50 package also has a limited-edition gold-eye vinyl record physical version and a unique collection of NFT albums. In addition, in the NFT Yourself series, Kings of Leon also released an auction of six "Golden Tickets". Fans who received the tickets can enjoy the first four rows of seats for their concerts for life. NFT's underlying blockchain technology can directly transfer gold tickets to fans' digital wallets.

NFT albums are still a relatively new concept in the music industry. For those unfamiliar with the NFT industry, this is a lot like explaining the Internet to someone who had never seen the Internet in the 90s. The highly conceptual and unprecedented innovation of NFTs is still new to many people. By purchasing NFTs issued by their favorite musicians, they can understand this emerging concept in the most direct way to some extent.

Limited rare

NFTs, "non-homogeneous tokens", are often limited or unique in number. This is precisely the key to the fan economy-from idols, and precious in limited quantities. Most musicians will release songs or albums in a limited mode to create unique and sellable digital products and artworks for fans, and bring a unique music experience.

Although NFT is a digital commodity, the underlying logic of buying NFT is actually similar to buying physical commodities. For example, even if an album can be played online for free or for a small fee, many fans will still want to buy a limited edition vinyl record.

The popularity of NFT has something in common with brands that rely on marketing to drive them. There is nothing special about the Supreme T-shirt, but it is still very special because it is only owned by a few people. Supreme's limited sale, collector's limited vinyl records, and the scarcity of NFTs make them a status symbol and souvenir.

It's not unheard of to pay sky-high prices for rare and exclusive music. The former pharmaceutical company CEO Martin Shkreli once spent US$2 million for the only album of the Wudang faction, "Once Upon A Time In Shaolin". British DJ Scaramanga Silk's humble single recently became the most expensive vinyl record on Discogs, priced at over US$40,000.

Unique rights

Some musicians are using NFT to provide their supporters with an unprecedented experience, including front-row tickets, personal souvenirs, etc.-in general, this is a rich and unique attempt. Therefore, the next time you buy an NFT from a musician, remember to buy a unique item.

Investment purpose

Some people may purchase NFT assets for investment purposes, hoping that their NFT holdings will be preserved or appreciated in the future and can profit from resale. The volatility and uncertainty of NFT make NFT holding risk higher than some traditional investments, but for many investors, they are willing to take this risk.

As mentioned above, NFT can be simply regarded as a hybrid of "digital assets + identity verification certificate" , which has great development prospects for any use case that can connect the real world with NFT. Because NFT can be verified and is extremely secure, musicians can better retain fans and create new ways of interaction, not only to obtain more copyright revenue, but also to reduce traditional inherent costs. To put it simply, NFT+Music actually connects music—songs, albums, etc.—with NFT.

How does NFT empower musicians?

For musicians, NFT offers exciting possibilities to remove some middlemen and third parties in the industry and tokenize their works in a brand new way. For example, Mike Shinoda, the co-founder of Linkin Park, once auctioned a 37-second trailer of an unreleased song, complete with audiovisual NFT animation, and sold for up to ¥30,000.

The point is that the full version of the song is about to be sold to the leading DSP entertainment company. After DSP and record company commissions plus marketing expenses, it is far from possible for most musicians to earn $10,000 in revenue. For most musicians, company managers, record companies, publishers, etc. make far more profits from their music than musicians, leaving them only a small part.

Although electronic artists are the first to join the NFT music industry, such as the highest-paid 3LAU, Deadmau5, etc., musicians of various genres are joining this emerging industry, including Kings of Leon.

This also brings new possibilities for musicians. Grammy nominated musician Illmind recently released the world's first beat sampling package in the form of NFT. Anyone can listen, but the ownership and usage rights belong only to the person with the highest bid. This sales model may have a significant impact on the licensing and sales methods of music.

Currently, for record companies, publishers and their lawyers, music authorization and ownership transfer is a rather cumbersome process. Manual removal of sample usage or ownership transfer may even delay the release date of the music. But using NFT can make music authorization and transfer as convenient and fast as online shopping, and document transmission is efficient and safe.

Josh Katz, CEO and founder of YellowHeart once said: "YellowHeart's mission is to establish a symbiotic relationship between artists and fans and empower them so that they can sell music and tickets directly to fans."

" Through NFT and smart contract technology, we are changing the way fans interact with artists. We are excited to work with Kings of Leon to create a transparent and fan-friendly experience that will ultimately return control to artists and fans."

Due to the heavy blow to the music industry caused by the new crown virus epidemic, more and more people believe that NFT can be used as a new way to reduce the piracy of digital works and help generate income for artists.

How does NFT empower music companies?

Shawn Mendes' manager, Andrew Gertler, collaborated with creative guidance agency STRODY to launch a new NFT music market called STRODY.Exchange , becoming one of the industry leaders. Prior to this, Gertler and Mendes had also ventured into the NFT market, selling exclusive accessories, such as Mendes' digital signature guitar with Fender.

Creative studio, record company, management company IAMSOUND , in collaboration with record companies 88Rising and Zora , held the first NFT art exhibition with Toro y Moi, Yaeji and Mura Masa in February 2021. One of the best-selling artworks, Yaeji's digital pet fish sells for the equivalent of US$27,000.

Warner Music Group has also been a supporter of NFT for many years. In September 2019, long before the NFT music hype began, Warner's Innovation and Emerging Technology Division invested in Vancouver-based Dapper Labs, the founder of CryptoKitties. Cryptokitties, a game that allows users to trade and sell virtual cats, the first non-homogeneous token game project. A year later, the two parties also collaborated with Muse, the rock band signed by Warner, and launched two limited edition NFTs inspired by the band.

NFT music platform

If the above introduction has given you a basic understanding of the NFT music industry, then Sophia (ID: lovebit98) will take a look at two relatively well-known NFT music platforms- ROCKI and Audius to help you further understand how the NFT music platform is. Empower fans and musicians.

ROCKI

ROCKI is a digital music streaming service and payment network, and the largest music platform on the Binance Smart Chain. It aims to directly reward artists through its in-app native token $ROCKS. The platform adopts a hybrid user-centric operation mode, and artists can obtain currency as rewards. It is worth noting that ROCKI is the first platform that rewards both artists and audience participation.

ROCKI has launched two unique music NFTs on the ROCKI platform-ERC721 "Royalty Income Rights" NFT and ERC1155 "Exclusive Listening Rights" NFT. Its unique hybrid subscription model allows musicians to earn streaming income in currency. The user-centered payment model is often called the fairest payment model for online streaming media. Driven by the French streaming media giant Deezer, it has won widespread media attention.

ROCKI has opened up new revenue streams for artists, while bringing new fan participation and value. The exclusive listening privileges of music NFT and the right of royalties of music NFT on ROCKI are the next development goals of ROCKI.

On ROCKI, regardless of the size of the initial audience of musicians, they can use their existing fan base to introduce music NFT and unique payment models. Even in the uncertain period when the epidemic is still raging, musicians can also have income.

In addition, ROCKI used ROCKS tokens to reward listeners on the ROCKI platform, thanking them for listening to sponsored and curated music, and expanded the definition of “fan-centric”. Listeners can earn ROCKS tokens when creating playlists, providing feedback and hosting social events, which is a precedent set by the streaming media platform.

ROCKI tries to solve the following problems:

• Eliminate middlemen and third parties, allowing fans and artists to establish a direct relationship

• Collaborating with artists who completely own their own music, that is, independent artists, is by far the fastest growing category of musicians.

• Use the power of blockchain to handle operations: transparency, security, trustless contracts, finance.

• Use a hybrid model to pay streaming royalties and share most of the subscription revenue with musicians.

• Reward the audience and attract more users to participate.

At the same time, the company successfully auctioned royalties for the song COTTON EYES by Israeli progressive house style DJ Guy J through Bounce.finance , which was successfully sold at a record price of 40 ETH.

Guy J Cotton Eyes

This new exclusive track sold 50% of the future ERC721 royalties of the work for a record price of 40 Ethereum (approximately $24,880 at the time of writing), and was auctioned through the decentralized auction protocol Bounce.finance.

The platform's native token ROCKI provides rewards for early participating musicians and listeners. The characteristics of the token can also encourage token holders to not use tokens as speculative assets, but to explore practical functions on the platform. ROCKI will also issue tokens as rewards for those individuals and groups who can provide help for the operation of the platform. In addition, ROCKI tokens are also designed to build an active community and are an important part of the development of the platform.

Artists and musicians hit by the new crown epidemic on the platform provide a much-needed source of income. Although the platform still only launched a test version, as of December 2020, the platform has thousands of independent artists and more than 30,000 tracks.

Audius

Audius is a decentralized streaming media platform that runs on multiple nodes to ensure that the music is completely owned by the artist. The platform has over 3 million monthly users and is designed to replace Spotify and SoundCloud. This platform opens up a new possibility: to include one's own NFT library into the network.

The platform claims to be "the cornerstone of the creator economy" and a hub for artist/fan interaction. The platform also enables Audius passports, allowing users to connect to the Web 3.0 ecosystem. No permissions are required for this network. Therefore, creators can use the entire library and use existing music to present new works with a new look and feel. In addition, network participants can run nodes, make contributions and receive rewards.

Unlike ROCKI, Audius does not sell NFTs. Instead, it has launched a "collectibles" feature that allows participating artists and users of a certain level (musicians and users must hold at least 100 Audio tokens-as of this writing Approximately US$240-to have a Silver Tier account and be eligible to use the Collectibles function.) Show the NFT they already have. This is a good opportunity for musicians to market and sell NFT collections, as well as a good opportunity for users to discover and purchase favorite digital items.

The collectible function sounds a lot like Lazy.com's NFT gallery, but Audius is characterized by embedding an exclusive music website. It's just that Audius can also be used to display various NFTs based on music as the center. Audius is currently compatible with the NFTs of SuperRare, OpenSea, Zora, Rarible, Foundation, Catalog and KnownOrigin, and cooperation is expected in the near future.

Audius allows musicians to distribute to fans and directly obtain revenue, featuring:

• An efficient token economy driven by Audius platform tokens ($AUDIO), third-party stablecoins and artist tokens.

• Decentralized storage solutions and ledger accounts for sharing audio and metadata.

• Programmable mechanism.

• A discovery protocol for users to efficiently query metadata.

• With a decentralized management agreement, artists, node operators and fans can all have individual or collective rights in the decision-making of platform changes and upgrades.

The Audius platform can also recommend popular songs based on users' likes, followings, and reposts, and players can get new pushes after refreshing. The platform also launched an APP version. At the time of writing this article, Boss Up Remix, the number one song on the platform's hot chart, has been played 4k+, and the melody of catching people has received many praises and reposts.

Boss Up Remix-Sango

Audius' native token, $AUDIO, improves network security, brings exclusive function access, and promotes autonomous governance in the community. The Audius agreement gives each user the freedom to share, monetize and listen to audio. Users who hold $AUDIO can make positive contributions to the network, gain the right to speak, and participate in the decision-making of the future development direction of the platform.

NFT's empowerment program for the music industry

intellectual property

As we all know, digital media can be copied, shared, and stolen: seed downloads and audio source leaks undoubtedly cut the profits of the entire music industry and threaten traditional distribution and monetization models. By investing in NFT, creators, curators, gallerists and other stakeholders in the music industry are trying to create and capture the value of "digital scarcity." The value of an NFT song is not only its sound, but to allow consumers to have unique ownership of the song file, and the ownership can be transferred directly from the artist to the buyer through the Ethereum blockchain.

For super fans, this glorious, show-off, and power may be enough to overwhelm them; and for the hundreds of speculators who flooded into the NFT market and pushed up the prices of NFT assets, such as GIF and JPEG, they hoped , The novelty of NFT music media will continue to accumulate value in the secondary market over time, allowing them to obtain more profits through reselling.

It can be seen from the successful sales case of Illmind sampling package that NFT can transfer the ownership of intellectual property rights such as songs, recordings and samples more easily, faster and more securely than currently . The transfer of ownership through the blockchain can be recorded through a "smart contract" and can be processed within a few seconds.

Additional income stream for musicians

The new crown virus has hit the music industry hard. The most profitable live music has almost stagnated in the past year, and many artists and companies are unable to maintain it. NFT provides a potential new form of income that can make up for this loss, and it also provides fans with the opportunity to directly support the artist.

Since streaming media platforms such as Spotify usually allocate 90% of royalties to less than 2% of musicians, most independent musicians earn almost negligible income. According to a comprehensive report by Citigroup on the music industry , only 12% of all revenue in the music industry ends up in the hands of original musicians . Therefore, in time, NFT music will become the preferred mode of independent musicians of all types.

In the best case, musicians can easily profit from the secondary market and earn a predetermined share of profits from the resale of digital music works in the future. In theory, it also encourages investors to look for talents who have not entered the music field, invest in potential music creators like stocks, and realize cash after they are welcomed.

Convenient and flexible

One of the most important features of NFT is its convenience. Fans only need to create a digital wallet to access and receive content, participate in auctions, and have a chance to win the competition. This makes buying exclusive music works as easy as online shopping. Musicians also only need to register to upload works, set willing prices and other items, and then wait for buyers to auction.

In addition, artists have great flexibility in the items they want to auction, which can be digital or physical. Albums, digital works, sound clips, merchandise, and concert tickets are all forms of non-homogeneous tokens that musicians can issue. Fans are willing to pay for this novel experience, and musicians can naturally "sit back and enjoy it."

Secure and decentralized

Digital transactions are safe and instant, and there is no middleman. NFT directly links musicians and fans. But what musicians exchange is not digital currency, but NFT, including concert tickets, limited edition experiences, digital content, merchandise and music. Fans participate in the auction of these tokens, and the highest bidder is directly deposited in the digital wallet through a secure transaction.

In these exchanges that do not involve third-party record companies, musicians can raise funds for their auctioned content and retain all content. Fans spend money to obtain unique content, the proceeds are safely stored in their digital wallets, and auction funds can be almost owned by musicians.

In addition, the encoding in the blockchain makes the NFT music industry persistent, which exists outside of any media platform. Once a file is encoded as NFT, it is difficult to be stolen or perform other illegal operations. As long as the blockchain is operating normally, NFT music will almost continue.

Creators do not need to be subject to the ever-changing interference of Spotify, YouTube and other platforms. Creators can make original creations play their full value and sell them to fans who cherish originality and value original creation while guaranteeing dissemination.

Ticketing events

For a long time, ticketing for live and virtual events has been facing many dilemmas: inefficiency, robot programs, scalpers, hidden fees, fake and inferior tickets, and so on. According to CNBC, 12% of people who buy concert tickets have experienced scams. However, the NFT supported by blockchain technology minimizes the possibility of fraud, the ownership transfer records are clear at a glance, and ticket verification is easily completed. NFT ticketing (or "smart ticketing") can also revolutionize the secondary sales market. If the ticketing company prohibits reselling and scalping tickets, smart ticketing can encode non-transferable information in its computer code to prevent ticket transfers.

Future challenges

Emerging musicians

The demand for NFT music tokens in the market often comes from the demand for the works of specific musicians. Popular or established musicians can easily attract fans and participate in auctions. But for emerging artists, this demand still takes a lot of time and energy to create. New artists do not have so many opportunities to benefit from this new form of music.

So far, the number of emerging artists entering the NFT market is still very small. NFT sales are usually driven by status and hype, rather than by level. Therefore, it is understandable that emerging artists have not become popular. In addition, many markets deliberately shut out lesser-known artists. OpenSea.io, the most mainstream NFT trading market, and other market platforms that are open to emerging NFT music often charge high upfront fees for casting or publishing works , increasing the barriers to entry.

Manufacturing scarcity

NFT can inspire new art forms, but if the value of art is purely its scarcity, then limited distribution and artist access are the top priority.

Digital scarcity is very different from physical scarcity. Limited seats are an example of the scarcity of live performances. This is also a limitation brought about by physical conditions. However, the number of tickets sold for NFT live broadcasts also needs to create scarcity, and the number of tickets sold can be determined by the artist. NFT relies on man-made concepts: let things that are not scarce become scarce, and value will naturally follow. But too high a price may also make many fans feel rejected and shut out many fans. The decision on the level of scarcity still depends on the scale.

Market bubble

Will this be a new round of bubbles? Are we overestimating anything because of the current popularity of NFTs? If the price of selling NFTs is based on hype and scarcity, then for those who buy NFTs as investment products, once people's interest declines, the risks they face will be immeasurable .

It can cost hundreds of dollars to own a song or album with an NFT tag. NFT music items are no longer simple music or MP3, but have entered the ranks of collectibles in a more sense, and the price is often much higher. In addition, some musicians are creating copies of works with the NFT label. In theory, it does make each work unique, but its value will also be greatly reduced in the real world. If, as a collector, you want to purchase assets that can preserve and increase their value in the future, you can try to buy truly unique works, not just copies with NFT tags.

intellectual property

Although Illmind's sampling package NFT can prove the potential benefits of using blockchain to transfer intellectual property ownership, there are still many uncertainties. In view of the fact that the technology has just been launched and the global copyright law is extremely complex, the smart contract in the decentralized system is likely to encounter problems, which need to be discovered and solved continuously on the way forward.

Selling model

NFT can be sold in the market. Most music NFTs use the auction model, but some are sold at a fixed price. Which method is preferred depends on the seller's wishes. Most markets do not accept credit cards or traditional cash payments, which to some extent hinders the entry of many fans.

But if you really want to buy NFT, the best way is to pay close attention to the Twitter of your favorite musician. Most of the music auction news will be posted on Twitter to pre-heat.

Environmental issues

Currently, writing new transactions for the Ethereum blockchain is extremely inefficient. In order to ensure the security and fidelity of the blockchain, large computer networks vie to become the first solution to come up with complex algorithms, adding new transactions and new "blocks" to the blockchain. The current "Proof of Work" process emphasizes unilateral efforts, resulting in a lack of interoperability between servers.

In 2018 alone, Ethereum verified that its blockchain used as much energy as the entire Icelandic country. Although engineers are working on a new consensus algorithm, the purpose of the algorithm is to reward Ethereum investors, not to increase computing power. This upgrade may take at least a year. For example, buying a concert video may consume the energy needed to power the entire community.

The future has come

As more and more companies recognize the value of the NFT music industry, this emerging market has gradually begun to gain recognition. Recently, Catalog is establishing a business model similar to Bandcamp, where artists can upload, collect, and trade unique digital items. As the company emphasized, NFTs on the market will be certified and recognized by the artists themselves. Musicians can choose between 0-100% of all sales. The value of Catalog is that it creates a one-to-one entry market based on uniformity and scarcity.

In addition, the established electronic music publishing company XLR8R mentioned the development of its NFT market. At the same time, TUNE.FM will also launch its own market. Currently, more markets, such as STURDY.exchange mentioned above , are under construction. Each market has its own value proposition to help artists connect with fans and easily monetize intellectual property.

If you are a musician trying to enter the NFT industry, you can design a limited and meaningful NFT so that supporters can buy authentic and unique items. This will not only bring more value to them, but also establish a close and trusting relationship between the two parties.

All in all, NFT will disrupt musicians and the music industry. It allows musicians to have more control and decision-making power, and it can also provide them with a new income stream, which is particularly important today when the epidemic is not over. At the same time, it gives fans the opportunity to enjoy the thrill of owning idol global items, and allows more fans to get closer to musicians, and to obtain verifiable NFT assets in a safer and more secure way.