Your Complete Guide to the NFT Music Ecosystem
Music NFTs have the power to completely change the trajectory of an artist’s career. Don’t believe me? Just ask Daniel Allan, Latashá, Black Dave, or any of the dozens of producers, DJs, and musicians who have found it possible to sustain themselves by immortalizing their musical creations on the blockchain.
With music NFTs, artists are charting new pathways to success that aren’t reliant on record deals, year-round touring, and industry cosigns.
The bottom line here is this: Artists are getting paid, and fans are getting rewarded.
But before we get into this burgeoning blockchain music ecosystem, let’s clear up some of the mysteries surrounding music NFTs. To help introduce even the most novice NFT enthusiasts to Web3 music, we’ve cooked up a guide to present a clear and straightforward overview of Web3 music, and all things music NFTs.
First things first — What’s a music NFT?
In short, non-fungible tokens (NFTs) are unique cryptographic tokens that are recorded on the blockchain. They can be linked to digital or physical assets to provide the token holder with proof of ownership. That asset could be a video, image, or any other media file you can think of.
A music NFT is simply an NFT that is linked to music. It can come as a single song, an entire album, a music video, or even a generative piece of music — in other words, a composition created using a computer program that algorithmically introduces random patterns, colors, sounds, or shapes into the piece.
Typically, one music NFT contains only one song — the same way you’d expect an NFT containing 3D art to contain a single 3D image. But that’s not always the case. What’s more, music NFTs can also be linked to things that are related to music, like concert tickets or album covers.
TL;DR? Music NFTs are directly linked to digital assets that fall under the “music” category.
Types of music NFTs
There are a few different kinds of music NFT drops, and each comes with a different level of exclusivity.
1/1 NFT: A 1/1 NFT (or one-of-one) means that the NFT has been issued as a single, unique item. In this respect, it’s completely exclusive. Such NFTs are a little like real-life paintings in that only one exists. Due to their rarity, 1/1s usually carry a much higher price tag than NFT editions.
Open edition: An open edition is an NFT in which an unlimited number of editions can be minted. However, don’t confuse “open” with “unlimited.” Many open editions are only available to mint for set periods. After the time window closes, no new NFTs can be minted.
Limited edition: A limited edition is restricted to a predefined number of editions. In other words, a finite number of NFTs are available for minting. Many such collections consist of 10,000 editions.
It’s important to note that there are benefits and drawbacks to each kind of release. A 1/1 increases the scarcity of the NFT. As noted, this may increase its value. Editions have less scarcity, but they are generally better for community building and increasing fan loyalty. For example, if you want NFT holders to have access to exclusive offerings in the future, like ticket presales or subsequent drops, an edition may be the better option.
So, what type of NFT drop is most popular? Honestly, it really just depends on the artist. Some musicians have chosen to mint each track on an album as a 1/1 and auction them individually. Others have minted tracks as limited or open editions.
Music NFTs versus streaming
Although the rise of streaming platforms has created a kind of golden age for fans by giving them easy access to virtually any song, it hasn’t been so kind to artists. The music industry’s current business models seem to reward big labels and platforms — often at the expense of the indie creators who are the industry’s lifeblood.
In fact, artists typically only make $0.003 to $0.005 per stream. What does this mean when it comes to total earnings? Let’s turn to Spotify for the answer. It is a $43 billion company, but only roughly 7,500 artists on the platform earn $100,000 or more per year. These figures considered, it seems that streaming benefits the consumer and the provider much more than it does the artist.
NFTs created a new economic model, opening new avenues that can be used to profit off of intellectual property without needing to rely on any third-party intermediaries. Additionally, thanks to mechanisms built into the blockchain, NFTs allow creators to earn royalties from secondary sales. These features help creators take ownership of their work and help mitigate problems associated with musicians earning excessively low rates from centralized streaming services.
The benefits of music NFTs for artists
Simply put, many people buy music NFTs because it’s a way of better empowering and financially supporting the creators they love. Instead of relying on a label or streaming service to get a song circulating — both of which take a cut — artists can mint their own music to a blockchain and sell their NFT independently.
In this respect, music NFTs not only present a massive opportunity to bring power back to the creators of the music we love. They also create entire ecosystems around these artists through Web3 community building. Through NFTs, we can formulate a more equitable model for prosperity, and a big part of this will be through community ownership. Through decentralized platforms and organizations such as Friends With Benefits, SongCamp, Zora, and the like, artists are breaking into the Web3 music space and bootstrapping their unique fanbases through NFTs.
Let’s do a small case study using Daniel Allan to demonstrate exactly how this works.
Allan says that he started making music when he was just 14. In his early 20s, he headed to California to pursue a career in music. Sadly, he wasn’t able to make it work. He was forced back into his parents’ basement in Louisville, Kentucky. Labels just weren’t interested in him — they told him he needed a larger social following, viral videos on TikTok, and more.
But Allan just wanted to focus on his music, so he decided to go it alone. He first began turning heads with the completion of a nearly 50 ETH ($140,000) crowdfund for his EP, “Overstimulated.”
Today, he has carved out a unique niche for himself within the NFT ecosystem by selling a laundry list of impressive releases via curated music NFT platforms like Catalog and Sound. What’s more, his endeavors have won him financial security, newfound community, a TIME Magazine feature, and inspired others to become involved in the music side of NFTs.
How you can buy music NFTs and support new talent
Finally convinced Music NFTs are the right way to go? Here’s how you can buy them.
The first step when purchasing any NFT is to get a crypto wallet. If you’ve become interested or involved in NFTs at all, you’re sure to have already completed this step. If not, consider checking out our guide on how to set up a Metamask.
Once you’ve set up a crypto wallet, you’ll need to fund it with…well…crypto. Purchasing crypto from an exchange could not be easier. Regardless of the exchange you choose, you’re likely to encounter a decent amount of handholding to guide you through. After you’ve purchased and transferred your crypto into the wallet you intend to buy NFTs with, the next step is to decide on a marketplace to start your Music NFT collecting journey (more on marketplaces later). Creating an account on a music NFT marketplace is akin to making a new login for any e-commerce site.
Finally, then comes the time to either mint or purchase and NFT. Once you’ve found a music NFT that you’d like to purchase, you’ll more often than not have the opportunity to buy it outright. Most of the time, you’ll be interacting with a smart contract to pay a set amount to mint (create) an NFT that will be sent directly to your wallet. In other cases, you purchase an already minted NFT that is part of a collection. These two are more or less the same.
And in some cases, you’ll need to bid on the NFT of your choice and wait until the auction closes. If this process reminds you of eBay auctions, you’re on your way. The major difference is that instead of fulfilling payment afterward, your crypto wallet is charged automatically, and the NFT is sent directly to you.
For a more comprehensive look at the nuances of collecting and storing NFTs, give our NFT 101 guide a look-through.
The benefits of music NFT for fans
More often than not, music NFTs grant collectors ownership of a percentage of a song — or of royalties accrued from that song via streaming, record sales, and so on. Such is the case with NFTs from the curated platform Royal. With Royal NFTs, holders receive a percentage of royalties from streaming services.
Through this type of shared ownership, NFTs can be valued in parallel with the success of an artist, or that artist’s song, and incentivize fans to take part in funding budding artists out of their own volition or with the hopes that someday that value will be returned in the form of a royalty kickback.
If we consult the “1,000 True Fans Theory” proposed by Wired magazine founder Kevin Kelly in 2008, it’s clear to see that what we now view as decentralized collector communities — like what both Allan and Royal have mustered — were conceptualized before streaming went global. In short, the theory states that artists lacking fame and status can still thrive with 1,000 true fans. With this community, an artist can maintain a fruitful career, which means incentivizing fans through shared ownership of NFTs could be a crucial threshold for many budding artists.
i’ve personally made 12.5 ETH (~39k)
which is equivalent to 9.75 million plays on spotify
so yes, 100 people generated more income than 9.75 million users.
just gonna let that sink in.
— rac.eth ⌐◨-◨ (@RAC) March 25, 2022
So, where do these artist/fan relationships start? Well, with decentralized platforms and organizations like Friends With Benefits, SongCamp, and Zora. But even beyond these hubs of Web3 music, the ground floor of any NFT sector is, of course, where NFTs are bought and sold: NFT marketplaces. Let’s take a look at a few.
Music NFT marketplaces
Catalog is a mix between a streaming service and an NFT marketplace. On Catalog, artists can add a record to Catalog’s open music library, which fans can then purchase either with a “buy it now” price, by participating in an auction, or by making an offer. The platform is exclusively a 1/1 marketplace, meaning scarcity is high. This is a great place to collect a unique, one-of-a-kind music NFT from your favorite artists.
Sound.xyz combines streaming with minting. On Sound, artists can launch a listening party for new song releases with a series of open or limited edition NFTs. This platform also isn’t limited to single tracks, but full projects, and has even hosted mixes like that of Soulection+, which featured 18 different artists.
Async Music is the music-focused arm of the prominent NFT platform Async Art. On Async Music, each track (guitar, piano, vocals, percussion) is uploaded separately and in several different versions. This allows artists to mint music in a dynamic way that lets fans collect specific layers piece by piece in order to form one master track.
Mint Songs is one of the only dedicated music NFT platforms that isn’t closed or invite-only, which means that a wider variety of artists are selling on the platform. With a core mission to help artists build a sustainable and livable income from creating music, Mint Songs is a great place to find innovative artists to support. The platform also runs on Polygon, which makes it accessible with the absence of high transaction fees.
Royal, previously mentioned, is a superstar producer/DJ 3LAU’s music NFT marketplace that gives NFT owners the rights to songs sold on the platform. This means that those who collect a Royal NFT will be able to receive a portion of royalties generated by that song across traditional streaming platforms (Spotify, Apple, etc.). Users can purchase NFTs using crypto or a credit card, which is a unique feature by any standards.
OneOf is hosted on the Tezos blockchain. The platform is currently highly curated and doesn’t allow for independent minting, but because of this, it acts as a base for many high-profile NFT drops (like Doja Cat, The Game, Alesso, and others). Speaking of Tezos, Objkt and Kalamint have become the de facto marketplaces to trade NFTs on the Tezos blockchain and are great places to find music NFTs.
The future of music NFTs
Although we’re still far from 1,000 true fans becoming a sustainable norm for independent musicians across the board, it’s become clear that Web3 music tech, especially music NFTs, has the potential to revolutionize the creative economy for music and change the current industry model.
From landmark sales and groundbreaking events to entire ecosystems forming around Web3 music, this erstwhile-niche sector has become a significant facet of the NFT market.
As more established artists make their way into NFTs, we will undoubtedly see growth on an exponential scale within the music NFT ecosystem. Yet, unlike the legacy music industry that fills small artists with disdain, there truly seems to be grounds for everyone, from beginners to veterans, to prosper in Web3 music.
The post Your Complete Guide to the NFT Music Ecosystem appeared first on nft now.