NFTs for Musicians

For more than 20 years, musicians have been told that the internet was going to save the music industry. Fast forward to today, artists are generally seen munching on the peanuts that their yearly Spotify royalties could afford them. 

Musicians today receive an average of only 12% of all profits from the sales or streams of their music. The massive 88% mostly goes to middleman corporations, like labels. Yep, the saying is true. Musicians mostly are really in the ticket and t-shirts business!

With that being said, the rise of NFTs is probably the single biggest revolution to enter the scene and make things more artist-centric.

For the purposes of this article, we are assuming that you have an entry-level understanding of the blockchain. If you don’t, here is a quick 2-minute video that should bring you up to speed:

                   

Now that you've understood what a blockchain is, the following should be easier to understand. However, if you are very new to the Crypto space, then brace yourself, because things are about to get weirder.

 

What is an NFT?

Essentially, an NFT is

1. A one-of-a-kind, collectible digital asset
2. That holds proof of ownership inside a Blockchain.

The term NFT stands for “Non-Fungible Token”.

“Non-fungible” here basically implies that this token (which represents a digitally signed certificate) can’t be replaced with something else and is unique. For example, a $10 note is fungible. You can trade one for two $5 or ten $1, and you’ll basically have the exact same thing. A one-of-a-kind trading card or a piece of artwork is, however, non-fungible. If you traded it for a different card or a different piece of art, you’d have something completely different. NFTs are the trading cards/art here. 

NFTs can be used to represent items such as photos, videos, audio, and a lot of other types of digital files.

(Source: https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq)

Why would anyone make an NFT?

Out of the limited sources of income an artist has, NFTs are a solid way for artists to make some serious additional cash. In addition to that, artists can also program a royalty feature into their work so that whenever their NFT is resold, the artist gets a percentage of the sale profits.

In terms of digital art, one of the shortcomings in the industry is the difficulty in protecting artwork's online copyright. But if your work is made into an NFT, copyright problems will become a non-issue. 

 

Why would anyone buy an NFT? 

As an investment! Other than the obvious benefit that it lets you financially support artists you like, NFTs will work just like any other speculative asset, where you purchase it and hope that its value goes up one day, so you can sell it for a profit. 

Legally, purchasing an NFT also (usually) gets you some basic usage rights, like being able to post the image online or set it as your profile picture. 

Plus, of course, there is the flex of owning an NFT, the bragging rights that you own the art, with a blockchain entry to back it up.

Also, you can’t go thinking that you've hacked the system by right-clicking and saving the image of the NFT. That won't make you a millionaire because your downloaded file won't hold the information that makes it part of the Ethereum blockchain, which is sort of where the monetary value of it lies. Make sense?

 

How are musicians making use of NFTs?

Let’s talk about some real-world examples of musicians and how much money their NFTs have minted them.

3LAU 

Celebrated musician and one of the biggest blockchain influencers 3LAU via a partnership with Origin Protocol has made a record-making $11.6 Million by selling NFTs via an online auction in February. This was to commemorate the third anniversary of his acclaimed “Ultraviolet album,” the first-ever album to be tokenized. His fans placed bids on 33 NFTs during the auction period.

If this wasn’t interesting enough, here’s where things get even cooler. The owners of these NFTs will be able to redeem them for unreleased music, special edition pieces of vinyl, unique experiences, and bonus song NFTs. This way, this is not entirely intangible a purchase and has tangible real-world experiences tied to it. Way to go!

Kings of Leon  

The band Kings Of Leon has made over a whopping $2million from NFT sales of their latest album ‘When You See Yourself’. This new album, which was released in March 2021, is also one of the first major records to also be released as a collection of NFTs.

Rolling Stone reported that “The band is actually dropping three types of tokens as part of a series called “NFT Yourself,” people involved in the project tell Rolling Stone. One type is a special album package, while a second type offers live show perks like front-row seats for life, and a third type is just for exclusive audiovisual art. All three types of tokens offer art designed by the band’s longtime creative partner Night After Night; the smart contracts and intelligence within the tokens were developed by YellowHeart, a company that wants to use blockchain technology to bring value back to music and better direct-to-fan relationships. ”

Fans owning the Kings of Leon NFTs will be treated as the most important people at their shows, for life! A concierge at the show to take care of their needs, front row seats, a personal driver, a hangout with the band before the show, and exclusive lounge access is just the beginning of it. Artists attaching real-world benefits to buying their NFTs is an amazing way of not making the purchase feel entirely non-tangible, and fans are loving the special treatment.

 

Steve Aoki 

He recently made $888,888.88 by just selling a 36-second video as an NFT called “hairy” to John Legere, the former CEO of T-Mobile. And this is only one of the many NFTs that he’s sold to date.

As a real-world perk, John will also get a physical screen that will display the NFT.

 

Halsey

Halsey also stepped in and recently released her own nightmares into art with the NFT series "People Disappear Here,". Here is what the physical offering along the NFT looks like:

What do the numbers actually add up to?

 We noticed that no articles on the internet really dug deeper into how the numbers worked. So, we’ve obliged. (Psst. You can reap more benefits from our research by subscribing to our mailing list here.)

Let us take the example of Pak’s NFT, “A Cube”.

He sold “A Cube” at the price of $500 a piece.

As of 22nd April 2021, 11:00 PM IST, he has sold a total of 5148 editions.

Multiply the two numbers, we get that he made at least $2,574,000.

Upwards of $2.5 Million! At least.

What do we mean by “At least”?

We’ve only talked about the primary market price of this NFT up till now. If any (or many) of the 5146 people decide to sell their edition of this NFT (i.e Secondary market), then two things will happen.

1. If the NFT is doing well (it is), then the person selling his edition of the NFT will sell it at a higher price than he or she bought it for, and well, make a profit out of his investment.
   We see in the above stats that the average resale value of this particular NFT is $1233. Yes, an almost 150% appreciation of value.
   
2. Each time somebody resells his or her edition of the NFT, the artist (Pak) gets a 10% commission!

As of 22nd April 2021, 11:00 PM IST, at least 556 people have resold their editions of the NFT, and he has made almost $70,000 just by resale commission. Crazy!

Note that this is a much more mellowed-down example that we’ve taken here. Now try and imagine how 3LAU made $11.6 Million and counting.

Do I have diehard fans who will buy my NFT even if the same content is available elsewhere online for free?

I think we have made it pretty clear by now, that the NFT space is not just for diehard fans, it's for collectors and people who see value in what you're doing. They don't necessarily have to be fans of your music, they can find value in your music and believe that you're gonna grow in the next 10 years, hence they invest. Most people in the space look at it as an investment. An NFT can be resold once bought hence it makes the thing more valuable than a band t-shirt or a poster.

 

The implications of NFTs taking off are huge. 

Think about it. Aside from your fans, people will be investing in your NFTs as a speculative asset if they see potential in your music career. You can use this money to fund your own albums, cutting out the need for record labels entirely!

It is high time the power was handed back to the artists, and the humongous rise of NFTs only shows to prove that people agree. 

If Indie artists can come into this space, make some stellar art to accompany their music, and show the NFT space that they’re here to stay and grow as musicians, then a lot of stuff is possible!

Steve Aoki says that “NFTs are a juggernaut that can’t be stopped.” 

The internet is a crazy, and amazing place. The NFT revolution has already begun. Are you in or out?