The NFT market — a large one, applied successfully in areas such as digital art, games, fashion, fan service, and sports as well as the metaverse. The music industry is no exception when NFTs Music has been receiving the attention of artists and fans, from young stars like Grimes to rock legends — The Rolling Stones. The NFT community believes that NFT has the potential to transform the music industry by making it more democratic and fair, as well as bringing artists and their fans closer together.
Let’s find out how the NFT has impacted the music industry? What are the potential and risk factors? This article will give you a better understanding of everything mentioned above.
How will NFT change the music industry?
Many artists hope that the NFT will provide a new opportunity to be fairly paid for their work through blockchain music licensing and royalties. While NFT music releases are unlikely to completely replace the role of record labels, they will most likely assist artists in diversifying and increasing their revenue streams.
Enhance artists’ earnings: Music sales are around $42 billion a year, of which less than 12% goes to the artists themselves. Selling albums and tracks no longer generates significant income for musicians. The majority make less money from streaming platforms. NFT is a new source of money for musicians, who can count on the support of loyal fans. So, NFT can be extremely profitable. Furthermore, the reduction of intermediary costs also saves them a lot of money.
A new way for musicians and fans to interact: Currently, Hundreds of artists and singers have released their own NFT, including Justin Bieber or Grimes. Because of the non-fungible nature of NFTs, it has opened up new avenues for artists to interact with fans. It can be released for anything: a song, album, video, concert tickets, photos, or performance rights.
A real-life example is Canadian singer Grimes, who has sold ten digital artworks and NFT videos, some of which include original songs. Grimes made $5.8 million in less than 20 minutes by selling “Death of the Old.” It is also a best-seller and has an asking price of $398,000. A few days later, American DJ Steve Aoki sold 11 NFT videos featuring the DJ’s tracks for $4.25 million in collaboration with renowned picture artist Anthony Tudiski.
Ability to share royalties with NFT holders: Smart contracts allow musicians to share a portion of royalties with token holders. This provides artists with an additional source of income when they sell their NFT products. As well as the ability for NFT holders to receive a portion of royalties based on Smart Contracts for each artist’s work on Spotify, Apple Music, or Web3 streaming services like Audios.
Crowdfunding schemes: Artists can raise funds for unreleased albums, and the owners of those albums can receive future royalties based on Smart Contracts. Such a fundraising scheme turns out to be more profitable for artists than recording on a record label. This also benefits fans, as it allows you to invest in your idol’s work.
Problems of the music NFT market
NFT music is a new phenomenon in the NFT industry, which, like all others, has regulatory risks. Let’s figure it out together.
The NFT industry is still unregulated, and its legal nature is solely based on tokens and Smart Contracts. The ownership of NFTs is not legally protected. As a result, the token holder receives no legal rights upon redemption. This raises the possibility of losing ownership.
Another problem is piracy. NFT holders only get to own the token itself, not the work behind it. Therefore, if the platform declares that it transfers the rights to the song to the token buyer, this does not mean that the transaction is legally valid.
Future of NFT Music
The NFT Music market still halts at users buying NFT products to show their support for their idols or simply owning a product related to their idols. For artists, NFTs Music opens up new ways for them to interact with audiences and also opens up more ways for them to earn more directly or simply to raise capital for their artists’ projects…
Only a small percentage of performers are now catching up to the new technology and making their way to the NFTverse. They sell NFTs based on their name and popularity, so NFT music is not the land for small or obscure artists. In the near future, when music tokens become more popular, more artists will know about NFT. That would be a revolution to alter the music industry.
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Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such.