It can be tough to get your feet wet in the music industry if you’re a newer artist. Who should you connect with, and what should you do as an unsigned artist? This post has compiled a list of dos and don’ts that every new artist should adhere to.
In 2021, there was a phenomenal surge in people using the digital technology known as NFT. NFT has become a popular sector for the trade of digital assets, with examples ranging from selling images of apes for thousands of dollars to selling a collage of 5,000 pictures.
Trade in non-traditional assets had reached $44.2 billion by the year 2021. Because of this enormous expansion, the company’s market valuation could reach $80 billion by 2025.
NFT has the potential to offer major benefits and use cases for musicians, music corporations, distributors, and music fans in the music industry. Younger generations, such as millennials and Gen Z, are showing a growing interest in NFTs.
This may give them the easiest way to communicate with their favorite musicians. In addition, the combination of NFTs and the Metaverse has the potential to bring about the most significant shifts in the music industry. In this blog post, we will discuss the effect that NFT has had on the music industry and the development of NFT’s marketplace.
What is an NFT?
NFT stands for Non-Fungible Token, a type of digital asset that is unique. In contrast to a general blockchain token that is divisible, each NFT token has a different value and cannot be divided into smaller fractions.
There are two types of NFTs: the most common is an ERC721 token which can be found on the Ethereum blockchain; the second type is NFT-based tradeable tokens that operate on their blockchains.
The Development of the Music Industry
The creative industry is characterized by several ongoing trends that dictate how content creators generate and disseminate their work. For instance, throughout the 1960s, most television shows were only on four or five mass media networks.
After then, more specialized and exclusive private channels were developed, ultimately leading to the development of video-on-demand services like YouTube and Netflix. From the artist’s perspective, negotiating a contract with a production studio or distribution platform was no longer fraught with obstacles for creators on YouTube.
They could directly share their work with the people in their specialized audience and keep most of the profits from this action. This pattern is still prevalent in modern times, with platforms such as Tik Tok, Instagram, and Twitter that are easily accessible to content makers.
In the past, for musicians to have any chance of ever-expanding their fan base, they needed to sign with a record company. Record labels were vital for a career in the music industry since they possessed all of the connections necessary to broadcast on the radio and distribute CD recordings across brick-and-mortar retail outlets.
Numerous do-it-yourself (DIY) musicians have been able to share their music and cultivate a following from the comfort of their home studios since the introduction of SoundCloud, Spotify, and other digital service providers (DSPs).
However, only a few people have successfully made music their principal source of income. This is because the record labels, the largest shareholders in Spotify, control the vast bulk of the company’s income from adverts and subscription fees.
The only way for music rights holders to profit from Spotify is if the service has millions of users. As a direct result, recording artists only account for roughly 12% of the total revenue generated by the music industry.
Only 42,100 musicians, or 0.53%, made more than $10,000 in 2018 on Spotify, out of the estimated 8 million total artists on the platform.
NFTs possess the potential to reduce the number of intermediaries involved in the music industry and to compensate musicians as the primary revenue generators for their work.
There were initial entrance barriers in the form of the gas prices associated with bitcoin transactions and the complexity of setting up a wallet to participate in the market. NFT marketplaces, on the other hand, are gradually reducing these restrictions by absorbing users’ gas expenses and permitting users to pay in fiat currency.
In addition, artists are educating themselves about cryptocurrencies. Artists can diversify their revenue from DSPs by releasing music NFTs and offering their curated audience exclusive ownership of music and other digital collectibles by selling these NFTs.
As a result, musicians with a fan base of any scale can easily make money off of their fan base to make up for the revenues they lost under the DSP model.
How do NFTs disrupt the music industry?
An NFT is a unique code linked to an artist, record label, or music rights holder. This token can be used as proof of ownership by the rightsholder and can be traded on any NFT marketplace. This allows both licensees and consumers to participate in the exchange of ownership. Businesses will only purchase or sell NFTs to acquire exclusive access to their respective rights or collectibles.
NFTs eliminate the intermediaries involved in the music industry by allowing royalty owners to distribute their assets through their fan base directly. This new technology can create several potential applications, such as music videos, merchandise, or live performances. NFTs have the potential to employ many aspects of the tourism industry by functioning as virtual collectibles and could easily be used as rewards for loyalty programs.
Through the direct distribution of rights, NFTs are a great way for artists to gain control again over their work. This control will allow them to manage their content’s production and distribution better. Through smart contracts, artists can quickly and efficiently issue licenses to anyone who would like to use them in a manner that is consistent with the artist’s wishes.
NFTs will provide greater transparency in music royalties, resulting in a more equitable income distribution.
NFTs allow musicians to give fans a stronger reason to share their music using reputation or social proof mechanisms.
A Note on Digital collectibles:
A digital collectible is linked to an author or artist and serves as a key for unique items. These items are often tied to IP (intellectual property) ownership, such as a piece of software or other intangible assets. When an NFT is launched, the token associated with it will represent some form of intellectual property (i.e., song, film, etc.).
A digital collectible’s value is measured based on its utility to exchange ownership. Since NFTs can represent the ownership of a song, film, or software code, there are now opportunities for artists to monetize and collect revenue from this original content. Digital collectibles also have the potential to be used as virtual “keys” for items that are not yet in existence (e.g., video games).
The impact that NFTs have on musicians
NFTs in the music industry is breaking down boundaries and changing the fundamental nature of the industry’s whole economic paradigm. Musicians have amassed more power by removing the need for a central authority, which used to be responsible for limiting their financial and creative success.
In this regard, non-profit music organizations are proving useful not just because they give power back to the creators whose work we admire but also because they are helping the music industry to devise a more equitable model for its overall prosperity.
The advantages of participating in music NFTs for performers go well beyond the development of a specialized fan base. Let’s center our attention on them.
As one can see, NFTs are a great opportunity for musicians to gain more control over their music and use the power they have accumulated through their fan base.
NFTs will not only allow artists to manage their content production better but also make greater profits by equitably rewarding stakeholders and allowing them to collect royalties transparently.
NFTs are revolutionizing the music industry by granting musicians more control over their work and making it easier for them to thrive financially.