This time around, the revolution will not be televised, instead, it will be minted. Earlier in 2021, there was a massive surge and then fall of nonfungible tokens (NFTs). They dominated the mainstream media and popular culture. Many have heard of these tokens, but was the hype real?
Top media moguls and businessmen like Gary Vee and Mark Cuban still advocate NFT use and the role smart contracts will play soon, as new NFT exchanges and drops continue rolling out every week.
Currently, Jay-Z’s Twitter profile picture features an NFT CryptoPunk. This high-value and majorly unique rewards system that the nonfungible tokens provide is revolutionary and quite an appealing opportunity for musicians.
With or without all this buzz, one of the most overlooked and powerful impacts of NFTs is on the music sector. NFTs have the power to alter the space for independent artists by offering a new way to earn some income, while simultaneously connecting with the fans. Many say that this type of change has been long overdue.
Musicians And Music
There are several aspects of NFTs that make them quite appealing for most musicians. First is the financial aspect: nonfungible tokens have been selling at high prices, with superstar artists like Steve Aoki and Kings of Leon having sold NFTs for millions of dollars.
Even those lesser-known content creators like Vérité and Zack Fox have made tens of thousands of U.S. dollars through the sale of their NFTs. Interestingly, the artist Young and Sick had about 27,000 followers on Instagram when he sold his NFT for $865,000.
All these numbers seem incredible, mostly when compared with the payout rate of streaming platforms. The streaming platforms have been a primary revenue source for musicians in the digital era and even became more dependable during the COVID-19 pandemic in 2021 when live show revenue stopped flowing.
Nonetheless, payout rates of these platforms are not significantly high. This has always been a major topic since their creation. Spotify reportedly pays out around $0.003 to $0.005 on average per stream. This equates to nearly $3,000 to $5,000 for 1 million streams. Nonetheless, one million is an uphill task for an independent artist.
Last year, there were just 13,400 artists that generated more than $50,000 of annual revenue on Spotify, which is the median wage for United States workers. With these analysis reports and statistics, it is clear to note why the NFTs seems to be a real opportunity.
Artists can sell a song or a collectible and make more money with one sale than they could make in their entire career from a streaming platform. Nonfungible tokens can also offer a recurring revenue: in some cases, they can be coded so that the original creator gets 2.5% to 10% of a sale each time the token is resold. That is quite nifty.
NFTs For The Musicians
The other value of the nonfungible tokens for musicians is their ‘unlockables’ feature. It enables creators to simply include extra perks within the contract of an NFT. These can vary from one-on-one video calls with fans to physical products or shoutouts, or even giving up partial ownership of a song.
This last case is unique since it enables artists to treat songs as equity investments where they can develop an NFT and give away up to 30% ownership of the song. This strategy allows those contributing money to get a real return on their investment, while the artists get some money in their pockets. Hence, it is a more rewarding version of a crowdfunding site.
Even in India, nonfungible tokens and crypto are gaining massive popularity. Today, more than 15 million Indians hold nearly $6.6 billion worth of cryptos. Visual artists have also started making entries into the NFT metaverse selling 2D and 3D art pieces.
In May 2021, a South Indian musician sold a nonfungible token of a demo of his $200,000 (15 million rupees). Currently, there is still a lot that needs exploration in the NFT space, but the potential is there. High value and unique reward systems that NFTs offer is quite a revolutionary opportunity for musicians throughout the world.