2021 was the golden year of cryptocurrencies and NFTs. Statistics from DappRadar reveal that the total market capitalization of NFTs reached more than $22 billion by the end of the year. The art and gaming community were the two leading players in this NFT market boom, covering most sales. While very few individual artists, like The Weekend and well-known rapper Nas, entered the music NFT industry, they are already disrupting the music industry, which middlemen and gatekeepers run.
It is challenging for most musicians to make money off their music in today's streaming era. Only a fraction of a cent is paid to an artist for every stream, and most of the revenue goes in the pocket of streaming apps. On top of this, it is difficult for artists to find a sizable audience as the top 1% of artists gets more than 90% of streams. Even moderately successful artists with millions of streams only earn a few hundred dollars from it every month. Artists are compelled to take on odd jobs like mixing and editing other artists' music for a living. But now, music NFTs are providing artists a much larger opportunity in the music industry by giving them a method to generate revenue and interact with fans simultaneously.
Non-fungible tokens or NFTs are unique and non-interchangeable digital assets with undeniable ownership proof. We can give any form of digital art or collectibles the certificate of authenticity with NFTs. NFTs are a relatively new concept and will eventually flow into various industries. It is only the beginning for the music industry as it gets involved with NFTs and realizes the potential. If you want to learn about NFTs in-depth, check out our guide: What are NFTs: How They Work and Why They're a Gamechanger?
Musicians and artists have started to use music NFTs for interacting with fans providing them with extra perks such as special album incentives, fan club membership, and exclusive access to live-stream performances. Artists can do and achieve limitless things with the tamper-proof concept of blockchain technology, and one can only be limited by creativity. With music NFTs, artists can also sell directly to their fans without middlemen, such as streaming and third-party services. Artists can also integrate royalties in their NFT contracts to earn residual income from their music.
Blockchain technology can store anything and everything as a limited edition collectible. Using NFTs to distribute music also removes piracy issues because the complete distribution network from artists to fans is verifiable. Musicians get complete control over the rights and ownership of their music and decide how they want to distribute it. So the question remains, how can NFTs be applied to the music industry?
With the rise of NFTs, many artists and musicians have joined the frenzy, including a few famous ones. For now, we have only seen individual songs and even albums being offered as music NFTs. However, artists can do many more things in the music industry, such as packaging multiple items as a one-off collectible and distributing them as NFTs. These packages can include but are not restricted to a private performance, live-stream concerts, interviews, and even limited edition albums.
Blockchain is like a blessing for artists and musicians as it lets them directly interact with their fanbase using NFTs. It dramatically helps level the playing field against the prominent music distribution platforms. The most significant advantage of NFTs in the music industry is giving the artist 100% of the money from their work and giving fans complete ownership of the music rights they paid for. Without distributing profits among various third-party platforms, making music becomes more financially lucrative. This will, in turn, result in more people aspiring to be musicians and not worrying about struggling to make money when all the generated revenue and resale royalty goes to their pocket.
Blockchain can create new ways for fans to support and interact with their favorite artists. Although the majority of the artists are still with traditional streaming platforms, blockchain makes a strong case for them to consider migrating. On the blockchain, even post-career earnings can live forever. Generation after generation, an artist's music will live forever, making it priceless.
Owning something directly from one's favorite artist is a dream of every fan, be it a private concert ticket or a limited edition collectible. With NFTs, fans can to directly support artists and own something that has a deeper meaning, as it is not coming from any middlemen. Removing the middlemen gives the fans a more rewarding experience and a financially rewarding experience for the artists. Creating a stronger artist-to-fan relationship is one of the main driving factors in the potential boom of music NFTs.
Within just one year, NFTs have exploded and penetrated every corner of the global art market. It is easy to predict that the same will happen for the music industry as well. Since the early 1900s, the music industry has continuously evolved, and technology has played a significant part. We have seen it grow from vinyl records to tapes, then from tapes to walkman, and finally to streaming apps. Blockchain is another revolutionizing technology that can continue this trend with music NFTs. Artists will soon realize their potential and join the NFT revolution.