NFTs (non-fungible tokens) are not just affecting the art or book industry. Their influence is beginning to change the music industry as well. Historically, the music industry has been rather harsh to artists, with the musicians getting only a fraction of the profits, as the rest goes to the record labels. NFTs may give the music industry more of an equal playing field and allow artists new methods of making profits and bringing fans into their creative process.
Background: Digital Items and Music
NFTs are unique because they show complete proof of ownership. Their digital code allows them to be certified as authentic, making them worth more. The prices for NFTs range quite dramatically, but people have made lucrative profits from selling them online. NFTs can appeal to almost anyone, as they vary in product types, but all are digital. These items can be great for collectors looking for original works or fans who want exclusive rights to a meme. NFTs have already shifted how people see value for digital items and will continue to shift some of the biggest industries in our society.
Analysis: NFTs make the Profits Go Up
Unlike the art industry, where all NFTs are visual, NFTs in the music industry range. From original or exclusive tracks to concert tickets, artists have used NFTs to encourage more fan engagement or make a more significant profit. One artist, Daniel Allan, has already seen a substantial profit improvement thanks to NFTs. Though he had millions of plays in 2020 on song streaming apps, he only got a few hundred dollars for his hard work. However, once Allan built a reputation within the NFT community and then crowd-funded his upcoming album, he found he had made a profit of over $140,000. Allan also sells his songs as NFTs and has found that with this new method, 85% of his income comes from NFTs.
NFTs allow artists to crowd-fund their albums and get more fans involved in the creative process. Fans can feel closer to their favorite musicians and have items that show exclusive rights to some of their favorite songs.
This process also allows fans to have some say in the music, whether lyric ideas or style. This creates a cycle where the artist makes more fan-approved music, which fans purchase as NFTs, and so on. Here this cycle cuts out the middle-man, the label producer.
Outlook: Trouble for Label Producers
While NFTs seem beneficial for both artists and fans, they could spell disaster for label producers. As the cycle of NFT production does not include the label producers, they miss out on the profits. Some of these companies are already shifting to more NFT-based products, such as the Warner Music Group partnering with Genies, a company making digital avatars. Even the Grammys are selling NFTs using OneOf, an NFT marketplace. It will only be a matter of time before the music industry has to make a significant shift to adapting NFT technology, for better or worse.
Kenna Castleberry is the Science Communicator at JILA and a staff writer at The Quantum Daily and The Deep Tech Insider. She has written various pieces on diversity in deep tech, covering stories from underrepresented communities, as well as discussing how science fiction contributes to the reputations of deep technologies. Follow her on Twitter @kennaculture