How NFTs Are Revolutionising the Music Business
Years ago, the only way that musicians could publish music was through a record company. The amount of royalty income they received - after the label, manager, lawyer and so on had taken their cut - was comparatively small.
Then along came Spotify and other music streaming platforms, which gave people access to a vast range of music digitally, either free or for a monthly fee. Great for the audience and for the music companies, and in terms of reach, artists built up their fan bases, as music-lovers discovered new bands whose albums they might not have paid for. But again, the artists received only a minimal proportion of the revenue (around 20%).
Musicians and Streaming Services
Certain highly successful musicians don’t (or didn’t, for a period) allow their music to be streamed on Spotify for this reason. As Taylor Swift put it: “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.” Her music wasn’t available on the platform from 2014–2017.
Pink Floyd’s opinion said: “We hope that many online and mobile music services can give fans and artists the music they want, when they want it, at price points that work. But those same services should fairly pay the artists and creators who make the music at the core of their businesses. For almost all working musicians, it’s also a question of economic survival.”
Why should Musicians Use NFTs?
Now NFTs are changing the entire status quo of the music industry. Like with art NFTs, musical creators have much greater power over what they release, how and when, and where the proceeds of the NFT sales go. Musicians can monetise their work with full creative and financial control. In 2021, Kings of Leon was the first group to release their album as an NFT.
Musicians and bands can engage directly with their fans and sell tokenised versions of their songs, whether a single, album, or even music together with associated artwork.
As with art NFTs, by selling to the fans without a middle-man, musicians are keeping a far higher percentage of the profits. The marketing of their content is also in their hands, in terms of creative image and timing.
How Music NFTs Work
A musician decides which composition they want to release to their fans as an NFT, and then they create the digital token(s). They release the NFTs on a chosen platform, such as Fayre Marketplace, letting their fans know about the drop. If they choose to, they can sell only the digital audio file itself, not the copyright to that work. Alternatively, they could release a set amount of copies of the same file.
The NFT owner can resell the copyrighted digital music file, and — here is the key for the music artist — the creator can earn a profit from the resale of their own work. This becomes, in effect, an income stream which is a game-changer for musicians moving into the NFT space.
Why Music Fans Love NFTs
Not only the songs themselves can be created and sold (and resold) as NFTs. They can be combined with digital art as JPGs or GIFs , thereby creating artworks with their own soundtrack — a unique digital collector’s item. In addition, lyrics and short excerpts of tracks can be created and traded as NFTs.
Further ways of generating income, and connecting with fans, include signed merchandise, limited-edition releases, and privileged entry or private concerts for NFT holders only. With this exclusive access to digital assets, musicians can reward fans for their loyalty and grow their brand. Fans love the idea of an article that is scarce and collectible, with a set number of units, especially in the music world. The fans, in turn, build a closer relationship with their favourite groups.
What Creators Must Be Careful About
Music NFT creators must be sure that they are using a trusted platform like Fayre Marketplace to create their NFTs. They also need to be careful about the fees that they are charged for creating and selling NFTs, as these can eat into the profits made from selling digital music files. On our Marketplace, creators will be charged zero transaction fees.
Kingship — The Bored Ape Club NFT Band
Last year, Universal Music Group announced that four characters from Bored Ape Yacht Club — three Apes and one Mutant Ape, including rare Golden Fur and Bluebeam — were forming a metaverse band called Kingship. The part of UMG behind the project is called 10:22PM, a Web3 label that develops artists, brands and digital creators.
So this is a win-win situation for both music creators — and their brand — and fans. Musicians can create their own NFTs, using exactly the content they choose, without needing technical knowledge or a financial outlay. By rewarding their fans with special releases, bands can create a closer connection. But most importantly, the fruits of their labour are not sucked dry by global corporations, instead growing stronger to invest in their own future.