NFTs Could Make the Difference for Recording Artists
The Covid pandemic has hit many people and industries — including the music industry. Live music which makes the most money for recording artists, and live performances have virtually disappeared over the past year.
Many artists and companies are unable to sustain themselves — and need new ways to make money from their talents. There is no better way to change the nature of online music distribution than NFTs, and anyone who develops a successful platform will create massive returns for everyone involved.
Crowd Records enables musicians, fans, and music investors to exchange services, song equity, and money in a fully decentralized marketplace
NFTs offer a potential new form of income that could make up for this lost income, while also providing fans with the opportunity to directly support artists they love.
On streaming media platforms like Spotify, just under 2% of artists are allocated 90% of royalties, and only 12% of total revenue in the music industry is in the hands of artists.
The short story is — most independent artists earn almost nothing from online music sales.
In fact, artists can be negatively impacted by the market because their work is under the control of commercial companies. They may not understand how the system works, and are willing to sign away rights for small amounts of money up-front.
How can NFTs help artists make more money?
Most online music platforms are very inexpensive, or even free for users. Even when fans want to support their favorite artists, the amount that an artist earns on a platform like iTunes or Spotify is extremely low.
From the fan’s perspective — the platforms also have a lot of power. Unlike the old days when a person who bought music would get a physical copy of the music, now the files are totally controlled by the platform.
Clearly — this is an amazing situation for an outlet like iTunes, but when it comes to the artists and fans — the situation is less than ideal. Now, NFTs are in a position to radically change how music distribution works, and the technology could put the power in the hands of the artists.
Here are some of the advantages that NFTs have in the digital music world.
Convenience and flexibility
One of the most important features of NFT is its convenience. Artists simply sign up to upload their work and other items, set the price they want, then wait for their fans to buy.
Fans only need to create a digital wallet to access and receive content, participate in the auction and have a chance to win this auction. This makes buying exclusive music as easy as shopping online.
In addition, artists will have a great deal of flexibility in terms of the items they wish to sell. As the owner of the rights to their work, artists can create whatever they like in the digital space.
Albums, digital works, sound clips, merchandise and concert tickets can all be issued in NFT format. Fans are willing to pay for all of these digital items, and artists can “sit back and enjoy” it — while making far more than they do with the present system.
For the moment, the NFT music industry is still in its early stages. There is no NFT-based iTunes, but this represents a massive opportunity for blockchain developers.
Unique abilities
Many artists are using NFTs to give their supporters a new ownership experience, including top tier tickets, personalized souvenirs, and more. This format can also be used for the music itself.
NFTs can be thought of simply as a “digital asset + authentication credentials”, which has great development prospects for any use case to connect the real world with NFT-based content.
Because an NFT is verifiable and extremely secure, artists can create new ways to interact, not only to get more royalties but also to reduce costs by cutting out the middleman. Successful musicians are already using NFTs. But they could become the default way to sell music in the future.
How can NFTs be used for music?
For artists, NFTs offer exciting possibilities to eliminate middlemen and third parties in the industry and encode their works in a whole new way.
Instead of dealing with a platform like Spotify, artists should be able to use a platform that allows them to connect directly with their fans, and sell NFT-based copies of their music. At their most basic level, an NFT is just a way to store some kind of unique data.
The vast majority of NFTs are issued on the Ethereum blockchain — but as the format has exploded in popularity, other blockchains have introduced protocols that support NFTs.
Like any good platform, the technical side of issuing, buying, and selling NFTs should be as limited as possible for the users. People who make music don’t need to be Python devs to issue NFTs. For buyers, the process should be as easy as using any other online shopping platform.
The short story is that NFTs can be used for music — and have already been. The key to developing the marketplace is showing both musicians and fans that NFTs are a revolution in digital music issuance and ownership — and provide real advantages over the current system.
Secure and decentralized
Let’s take a look at the secure and instant digital transactions that NFTs provide — and the advantages this format delivers.
NFT connects artists and fans directly. Digital currency can be used to create these connections. Artists are able to use NFTs for concert tickets, limited-edition experiences, digital content, merchandise, and most importantly, music.
These platforms do not involve third-party record companies, and artists can gain directly from their fanbase. Instead of buying the rights to listen to a file on a platform, fans will be able to own a copy of the music they love — and even sell it later on if they choose to do so.
The work that music lovers buy is stored securely in their digital wallets, and they can listen to the music whenever they wish.
In addition, the encryption blockchain uses makes NFT-music copy resistant. Once the file is encrypted as an NFT, it is very difficult to steal or transfer without the knowledge of the owner.
Recording artists can sell whole albums as NFTs, or single songs. It is also possible to create limited-edition music NFTs, which can be sold at a premium.
How would NFTs challenge Spotify?
The commercial ecosystem that NFTs create for recording artists is very different from what exists in the market at the moment.
Artists would be free from the interference of Spotify, YouTube, and other platforms. The people who create the music can make the most of their original work and sell it to fans who love it, and also offer their fans direct ownership (but not copyright) of the music.
NFTs allows artists to have more control and decision-making power, and it can also provide them with a new source of income, which is especially important today when the pandemic is not yet over.
At the same time, it gives fans the opportunity to enjoy the thrill of owning their idols’ global items and allows more fans to get closer to artists and acquire assets. NFTs also allow for verification in a safer and more secure way for everyone involved.
In addition, NFTs can be created to pay a ‘royalty’ back to its creator whenever it changes wallet addresses — for the rest of time. Think about it like a Compact Disc that pays the recording every time it sells, even second-hand, forever.
NFTs in music — the next level
Since the end of 2020, NFTs have impacted almost every creative sector on the planet.
Direct sales of music via an NFT is one area that has lagged — and this may be because the dev community lacks the vision needed to upend the established systems.
While there are a few platforms out there that are opening up the sector to development, a holistic approach will be needed to push the format forward at a global level.
Musicoin was one of the first projects to cater to the new growth of the music industry, providing a free platform for artists to receive rewards directly from their fans. New platforms such as Rarible, Nifty Gateway, and OpenSea cornered the market and created the NFT boom, but aren’t geared for music.
As more and more companies realize the value of NFTs for the music industry, the market is slowly starting to gain traction.
Catalog, electronic music publishing company XLR8R, TUNE.FM, STURDY.exchange are all operating in the space, and will need to connect with both artists, and fans to educate them about the massive advantages NFTs have for everyone in the commercial music ecosystem.
Each marketplace has its own value proposition to help artists connect with fans and easily monetize intellectual property. To date, no platform has been able to create an NFT-based music platform that both empowers artists and attracts fans.
Without a doubt, this is one of the biggest opportunities in the music industry since music went digital — any even with small margins — a successful NFT music platform will create massive profits.
Curious to see what we are making? Check us out at crowdrecords.com
