Can NFTs Rescue The Music Industry?
As non-fungible tokens (NFTs) and their impact in the art industry make headlines, Floww takes a closer look into their potential for the music industry.
WTF are NFTs?
NFTs are digital assets that contain information in the form of smart contracts. This information makes each token unique: they cannot be duplicated or divided. The smart contracts can include details of ownership, secure file links, and rules, such as how and when the token can be transferred. These details act as a certificate for the ownership and authenticity of the token.
Why is this useful for music?
With streaming—the most popular way to consume music—artists only receive 12% of all profits, with the remainder going to middlemen. This makes it extremely difficult to make a living from music, especially for smaller artists. Big players within the sector have attempted to provide alternative streaming platforms to combat this injustice, such as Jay-Z’s Tidal, which gives greater cuts to artists. Yet these have failed to reach the heights of Spotify or Apple Music.
NFTs provide a new solution.
By using NFTs, artists can retain ownership of their music as rules in the token’s smart contract can trigger royalties for sales or plays. NFTs also create perks for fans by providing authentic limited-edition items. Unlike other forms of digital or physical collectibles, NFTs cannot be shared or duplicated; fan ownership is truly exclusive.
Live performances can also be revolutionised by NFTs. By replacing gig tickets with ‘NFTickets’, event organisers can have sole control over resales, exchanges, and returns. This will ensure that tickets aren’t bought out by big corporations and sold on to genuine fans for quadruple the price. The income from each transaction can also be fairly managed, split between all partners involved meaning no more middlemen.
NFTs cannot be shared or duplicated; fan ownership is truly exclusive.
What’s going on right now?
On March 5th, Kings of Leon became the first major artist to delve into NFTs, as they released their latest album ‘When You See Yourself’ through the token, providing exclusive album artwork and a limited edition ‘Golden Eye’ vinyl. They were available for just over 2 weeks and an auction was also held for 6 ‘Golden Tickets’ which guarantee the owner 4 front row tickets to Kings of Leon headline concerts for life. From these sales, Kings of Leon have generated $2million, half a million of which has been donated to Live Nation Crew Fund to support live music crews during the pandemic. In the same month, the artist Grimes sold $6 million in digital art, including videos set to music, whilst Elon Musk proclaimed on Twitter that he was ‘selling this song about NFTs as an NFT’.
Other popular artists are also jumping on the craze. From Russian punk feminist group Pussy Riot, who are using NFTs to raise funds against domestic abuse, to Shawn Mendes, who has collaborated with Genies on NFT wearables: cartoon-like avatars that represent Mendes’ biggest life moments. One unique token is currently worth $357,420.
It’s easy to assume that the huge value of NFTs today means that they will shape our future. Yet this value is likely inflated, with investors who have already made a killing in cryptocurrency rushing in to dominate the new art and music markets.
There’s also a limiting factor of accessibility. Kings of Leon had to extend their original NFT sale due to fans, many of whom are newcomers to crypto, struggling with the new format. Moreover, are authentic collectables, only affordable for the super-rich, really a fair ground on which to remodel the music industry?
Regardless, with notable artists supporting NFTs, many are beginning to look away from streaming services and into a more artist-centric future for music – be it NFTs or something just around the corner.