An Introduction To Music NFTs

At one point or another, we’ve all imagined ourselves as a rock star. And why wouldn’t we? Musicians rake in a ton of cash, get to travel the world performing in front of thousands of adoring fans, and seem to live awesome lives.

While that may be true for the Drake’s and Taylor Swift’s of the world, the reality for most musicians is much bleaker. The vast majority of artists and bands live a lifestyle that would make fast food workers squirm. Forgot millions, even ‘successful’ musical acts are lucky to break even.

The reason for the lack of profits is the rise of streaming. Whereas before musicians could make a decent living selling albums, now they need to rake in 800,000 plays on Spotify a month just to earn the equivalent of $15 an hour. If millions of people aren’t listening to you, you’d be lucky to earn minimum wage.

Well, as is so often the case, crypto fixes this. Specifically, just like how NFTs granted artists a new income stream, they give musicians the potential to make a decent living.

Let’s dive further into how NFTs can revolutionize the music industry.

A Primer On Music NFTs

A music NFT is like any other NFT in the sense that it is a unique token on the blockchain. What makes a music NFT unique, however, is that the token is linked to either a song, an album, a music video, a concert ticket, or merchandise. Basically, anything that a musician can sell.

Music NFTs enable artists to reclaim ownership of their music through a unique and profitable way to interact with their fans. They also allow fans to have a way to support their favorite artists, earn exclusive prizes, and potentially make money if the price of the NFT rises.

In essence, music NFTs decentralize the music industry by shifting the balance of power from the streaming companies and record labels back to the artists.

It also gamifies the industry by presenting a gambling-addicted public with the opportunity to turn a profit.

In theory, it’s a perfect combo for industry disruption.

Promising Music NFT Projects

Although no music NFT project has yet taken off to the extent of an OpenSea or Bored Ape Yacht Club, there are several exciting projects currently being built:

Sound

Sound is a collaborative music platform founded by the son of the president of SiriusXM with investments from a16z and 21 Savage. Sound aims to replicate the emotional concert experience online by making the release of new music something fans partake in and look forward to.

Musicians sell a predetermined amount of Sound NFTs in correspondence with the release of a song. The people who buy the NFTs are granted the right to publicly comment about the song on the blockchain, with the idea being that you can raise your musical clout by proving that you found the song or artists first.

Then, NFT collectors can sell their collections on Sound’s secondary marketplace Sound Swap, with the artist collecting a 7.5% royalty.

So far, over 100,000 songs with over $10 million in trading volume have been minted on Sound.

Reveel

Reveel is a decentralized protocol for revenue sharing among creators. In other words, Reveel allows for the building of independent revenue paths outside of the normal model.

For example, artists can create NFTs that automatically share primary and secondary sales revenue with their collaborators, in essence turning them into a decentralized record label.

This is especially useful in the new age of AI-generated music, because as Grimes points out, this can be used to share royalties between AI music producers and artists.

Showtime

Showtime is a web3 social network for artist NFTs. The company creates a virtual economy where fans can collect, trade, and earn rewards for supporting their favorite artists.

The company achieves this by gamifying the experience with the potential of free NFT rewards for supporting artists. So far, this has proven to be a pretty successful model, with over 1.8 million free NFTs claimed.

Royal

Founded by Justin Blau (3LAU), Royal is a music NFT marketplace where users can buy and sell percentages of songs as NFTs to earn royalties.

On Royal, artists choose what percentage of a song’s royalties to drop, along with any other exclusive benefits they wish, such as exclusive tracks, tickets, or merchandise. Then, when users invest in songs on Royal, they receive an NFT signifying their ownership over a portion of that song’s streaming rights. As that song gets streamed, users earn royalties alongside the artist.

Royal’s attracted a ton of attention from investors, raising a $16 million seed round in 2021 led by Founders Fund and Paradigm and a $55 million Series A led by a16z and including musicians The Chainsmokers, Nas, Logic, and Kygo less than three months later.

Of course, these are not the only four music NFT projects, with other notable participants including the marketplace Catalog, the music aggregation platform Spinamp, the token-gated community Audius, and Mastercard’s music pass NFT.

Looking Ahead

Due to the brutal NFT bear market, music NFTs have yet to take off. But, there is cause for optimism:

• The music industry is one with entrenched powers, poor conditions for the majority of its participants, and a history of changing with new technologies. That’s an industry ripe for change.

• Every factor that contributed to the art NFT boom of 2021 is at play with music NFTs but magnified even more. Art is a big market, but everybody listens to music.

For these reasons, music NFTs are a niche worth watching.