Blockchain, crypto, and non-fungible tokens (NFTs) are revolutionizing the music industry in ways we haven’t seen the beginning of the ipod and Napster. Rather than simply a business strategy to make money, NFTs have become a foundation for artists to build a movement around their creative process.
NFTs help musicians distribute their music directly to fans via smart contracts, cutting out many of the intermediaries. This ensures musicians get a larger percentage of the profits and generally means more money in their pocket.
This blockchain-driven strategy is in stark contrast to the traditional way of earning royalties. Musicians generally must go through record labels and then streaming services such as Spotify and Apple Music which take large commissions.
But this time, artists and musicians have the option to sell their stuff directly to fans in exchange for access to exclusive content and experiences, i.e., early access to music, backstage passes, and limited-edition merchandise.
With NFT technology, there hasn’t been any other time in history where it has been easier to make lots of money — potentially missions of dollars as an artist. All you need to do is be a little creative and think outside the box. And we all know musicians are great at that.
1 – Auction Unique Content
Musicians can create tokens representing their work and sell those assets on the open market just like they would with a unique piece of art.
If they release an album, they can auction limited edition figures and other collectibles based on their music to increase exposure and generate more revenue. It wouldn’t be that hard to make a sales pitch for a music collectible since music artists usually have loyal followers who’d do (and pay) anything just to get a hold of their unique work.
Using a blockchain platform called “YellowHeart,” American rock band Kings of Leon sold over $2 million from the album “When You See Yourself.” The staggering amount is attributed to it being minted as an NFT.
2 – Sell Exclusive Merchandise
Musicians have long-sold limited-edition merchandise, including vinyl records, cassettes, special edition CDs, tour posters and other collectibles that will appeal to fans who want something rare—an item that not everyone can get their hands on. This type of marketing is nothing new in the music industry; artists and fans get into bidding wars over certain limited collection pieces. Some of these records get sold for millions, especially when there’s a massive demand for them.
Earlier this year, artist and producer 3LAU sold an exclusive NFT collection for over $11 million through an auction.
3 – Share Unreleased (or Hidden) Tracks
Musicians make unique tracks and offer them exclusively to their fans. They could auction off unreleased music to their most loyal supporters to get exclusive content while earning money based on the demand for the track. By selling unique pieces directly to their fans, musicians continue to build an engaged community who’d be happy to support them—and more than willing to pay for it.
Canadian rapper and producer Tory Lanez shared three unreleased tracks that were part of his new “PLAYBOY’ album and minted them into NFTs instead. The tracks were made available via the BondlyFinance platform and got sold out in hours.
4 – Sell Shares in Their Songs and Albums
NFTs open an opportunity for musicians to crowdfund their subsequent albums and singles, allowing them to get paid upfront before the song’s release. This is an excellent way for musicians to raise funds and engage with loyal fans who want exclusive content and pride themselves in helping the artist succeed.
NFT allows anyone to invest as little as they want in a song or album, and owning part of it entitles them with royalties until the investment is returned.
5 – Reach New Fans
Musicians can even monetize their social media following by minting custom NFTs based on their Twitter accounts, Facebook page, YouTube channel and other platforms. They’ll partner with social media influencers to create limited edition NFTs, allowing them to earn money while at the same time promoting their music. The more followers they get on their social media accounts, the higher demand, which means another revenue stream outside of the music album.
Why NFTs Make Sense to Musicians
NFTs allow artists to monetize their work differently and generate revenue while expanding their brand and fan base. The popularity of NFTs couldn’t have come at a better time, considering the impact of the pandemic on the music industry. With the usual revenue sources being shut down, i.e., concerts, TV guesting, endorsement deals, etc., they need to figure out how to stay afloat and continue producing music.
NFTs provide musicians with the opportunity to work outside traditional revenue streams. They can easily use blockchain technology as part of their marketing strategy, which includes offering fans limited edition pieces that are only available for a limited time.
Furthermore, there’s a high demand for personalized and customizable memorabilia that musicians can get their hands on—and they’re able to do that through NFTs.
New Artists Struggle to Keep Up
But the popularity of NFTs isn’t advantageous to all music artists. Instead, new and up-and-coming artists are at a disadvantage because they don’t have the established fanbase to generate interest.
Even if there’s no need for a substantial financial investment in marketing, artists who have yet to build a name for themselves struggle to get the attention of their target audience. So, although it’s easy to mint an album or track into an NFT, the question is if anyone is willing to purchase it.
NFTs offer musicians a new revenue stream, but copyright infringement could become an issue. There’ve been several cases of artists using copyrighted images in their fan art, which is the main reason why the music industry is very protective when it comes to protecting its copyrighted material. While using an image in a creative piece does not constitute copyright infringement, artists should still make sure they have the rights before putting it up for sale or auctioning it off.
When a musician works with a record label, they’re required to sign a contract. When music artists produce and distribute tokens, they must be conscious of any provisions in the agreements. The contract should state how and when the tokens will be distributed.
Additionally, artists need to ensure that they don’t violate any securities laws by selling NFTs as an investment method.
Unable to play live shows, musicians have been heavily impacted by the pandemic. While more established artists seek refuge in a streaming service, others are not as lucky. Independent artists have always relied on album sales, concerts, and tours for revenue. But with the restrictions, in the past two years, it’s almost impossible to retain a profitable musical career
With blockchain-related technologies such as NFTs, artists find an alternative source to generate revenue, sometimes millions of dollars. As a result, NFTs offer an unprecedented opportunity that music artists can capitalize on and even make millions. Nonetheless, no one expects this to last forever. So, it’s best to strike while the iron is hot.