The overlap between tech innovation and music over the past few decades promised a revolutionized music industry with space for all types of artists to prosper and find creative and monetary empowerment. Indeed there is no denying that this trend has created opportunities for some artists: social media and streaming services have given a platform to artists both big and small without having to cater to the press and have even gifted us Kanye West’s emotional rollercoaster of a Twitter account.
However, upon closer inspection, these changes have seen the music industry become more complex and inaccessible than ever. Streaming services have cornered the market, allowing only a small number of top artists to thrive; companies have kept prices artificially low to aid mass profit, and the complex world of social media has exacerbated the separation of the musician from the medium. The good news is that this has the potential to change. In this article, I will be exploring how NFTs have the potential to simplify the convoluted ecosystem of the modern music industry, thereby re-empowering both the musician and the fan.
But first, what are NFTs?
NFTs, or ’ non-fungible tokens’ are one-of-a-kind digital or physical ‘tokens’. They use blockchain technology, meaning each NFT has a unique digital signature that allows all transactions to be openly tracked. In the context of music and the arts, NFTs can take the form of anything from a digital painting signed by the artist, to a limited edition vinyl record, to a soundbite of a new song. Artists including Kings of Leon and Shawn Mendes have made millions in the last few months selling NFTs for cryptocurrency. Perhaps my favorite and definitely the most mind-boggling example of an NFT transaction is this flying cat gif that sold for nearly $600,000.
The key benefits of NFTs that are important to understand for this article are made possible by the traceability of NFT transactions and the blockchain technology they rely on. Firstly, unlike normal monetary transactions that require a bank or an equivalent, NFT transactions work on a decentralized network, meaning they can go directly from creator to buyer without use of a middleman. Their unique digital signature means they cannot be erased or altered – only transferred – so the original creator will continue to monetarily benefit from all secondary transactions. Finally, as we explored above, NFTs can take on any number of different digital and physical forms, so they don’t have to abide by the same limitations as regular currency and cryptocurrency.
So, what are the future potentials of NFTs in the music industry?
1. Sidestepping streaming services
NFTs have the potential to give power back to the artists. Currently, once artists have produced music, they are forced to go via streaming services in order to reach a large audience and as a result are paid a minimum amount off the back of it. In 2017, artists captured just 12% of music revenue, with other stakeholders in the music industry ecosystem receiving the majority of the profits.
Gareth Griffiths, DJ and Head of Sponsorship for O2/Telefonica UK, the mobile phone company and music sponsor, commented on this phenomenon:
“The biggest issues that artists have with their music is getting paid properly for people consuming it…what Napster did is allow anyone to access music anywhere, completely free and that’s a real problem for artists because the 90% of their income that came from recorded music disappeared…that is why the live music industry has become so big”
NFTs don’t require the use of a middleman, in this case, record labels and streaming services, for the artist to sell or profit from their music. This means that artists would be able to determine the value, monetary or otherwise, of their creation; sell directly to fans; and receive the full profit instantaneously without it being tied up for months in various legal channels. In essence, NFTs would allow artists to bypass the convoluted music ecosystem involving multiple corporate stakeholders and streamline the journey of music or art from its creation right to the listener.
This has huge implications for redefining the value of music from the artificially low prices of the world of streaming and for allowing the artist near to full monetary autonomy. Griffiths further comments on this, saying that “what NFTs allow artists to do is sidestep the streaming services and put stuff out themselves. It’s exciting, but easier said than done.”
2. Creative autonomy
One of the most interesting potential uses of NFTs is the creative autonomy it would allow artists. Rather than having to cater to the creative parameters of streaming services, artists would be able to define every aspect of a project including the time spent on it, the media used, and how it’s received by fans. This could range from changes as small as playing with the lengths of songs and albums up to creating entirely new ways of presenting music (I’ll leave the specifics of what this would look like to the musicians).
So far we have seen NFTs take the form of everything from digital art to limited edition concert tickets, but NFTs do not have to be only digital; they can also provide a digital certificate of authenticity allowing for transactions of physical objects such as vinyls, soundbites, albums, copyright agreements, and more. Grimes is an example of an artist capitalizing on this multimedia overlap; she sold various digital art pieces including images of babies brandishing spears through space with occasional snippets of her music attached, earning around $6million. If you thought the world of modern art was polarising, just wait for the advent of creativity with NFTs. The potential for true creative autonomy spanning the traditional and the digital in a context where musicians can profit directly is an incredibly exciting prospect that would allow artists to create in a way that is not possible for most in the age of streaming services.
3. Empowering smaller artists
The current world of mainstream music is defined by a very small number of artists who have successfully navigated the complex and multifaceted music industry. Here we come across the idea of the divide between musician and medium that has held back many smaller artists who are unable to use social media and streaming services to their advantage. This is quantified by a recent study showing 90% of streaming money goes to the top 1% of artists.
NFTs have the potential to right this imbalance by handing power to the fans. For example, if you were to stumble across a small artist you want to support, you could invest in them by buying an NFT. This monetary support would then be continued even if you were to sell this NFT, as the artist would continue to benefit and profit from all resells due to blockchain technology. Moreover, fans’ monetary investment in their favorite artists would create a sense of community and mutual involvement in an artist’s success.
Not only could we potentially be looking at a more accessible and artistically diverse mainstream music industry, we could also see songwriting become a conversation between the artist and fan, rather than a one-way street. Audius is a platform that is currently aiming to do this and with nearly $10 million in crowdfunded investment, it is a platform that I encourage all readers to check out for themselves.
Next steps and the future
It is not hard to see why NFTs in music have become such a popular topic of conversation and area of innovation over the past year. In the context of a music industry that favors large corporate stakeholders, a technology that has the potential to empower smaller artists, redefine the value of music, and provide creative and monetary autonomy to all creators is incredibly exciting. Indeed, a whole separate article could be written about the benefits of NFTs for fans. As with most blockchain technologies, the current infrastructure does not exist to help NFTs break into the mainstream music industry, but I hope this article has gone some way to helping you understand why many startups are trying to make this happen. The next few years will be a race to see who, if anyone, can create a platform powerful enough to capitalize on the potential of NFTs in mainstream music and help them become a reality.