Music NFTs Explained: Transforming How Music is Sold
by corporate trash
3/16/2022
Music NFTs stand out amongst a sea of other NFT categories, particularly profile picture (PFP) NFTs which dominate the current landscape. Music NFTs are essentially collectible audio files as music releases (like an album), but can take several other forms, from royalties to event tickets.
Many NFT collectors, analysts and influencers in the NFT space have suggested that music NFTs present a major opportunity, yet are still flying under the radar.
There have been many different platforms experimenting with NFT music creation, royalty sharing, production, and music releases as NFTs. In an industry where the top one percent of artists get 90 percent of the total amount of streams, music artists — especially those with smaller audiences — have looked for alternative revenue sources in NFTs.
Music NFTs as Collectibles
Collectibles are perhaps the simplest way that music NFTs can be brought to fans. With collectibles, artists own all of the rights to their music, but can add additional perks for their collectors — like music stems, real-world experiences, and art. Since streaming platforms only bring in a few thousand dollars per million streams (Spotify pays as little as $3,000 for a million streams), this offers a viable alternative for artists who want to build their community of fans with music NFTs.
It also allows them to monetize their work immediately, instead of waiting for royalties to come, or a label to publish and promote their work.
The music NFT industry has already come along way since Kings of Leon released the first-ever album NFT in 2021. There are a variety of collectible music NFT marketplaces available, each with their own niche.
Where to buy Music NFT Collectibles?
One of the most popular marketplaces is Sound.xyz. Sound’s NFTs are sold in editions, and there is a primary and secondary marketplace. Releases on Sound can be singles, albums, EPs, or even mixes — as seen by Snoop Dogg’s first Death Row Records NFT release on Sound. After minting, editions can be purchased on OpenSea.
Collectors who mint a project are featured as audience members, and the NFT is tied to the ability to make comments on the NFT (a direct way to connect with the artist), similar to SoundCloud. One commenter will receive the “golden egg” — a 1-of-1 edition of the release — by commenting in a randomly hidden timestamp on the song.
Catalog is another music NFT marketplace, but these are 1-of-1 NFTs (similar to Foundation or SuperRare for art NFTs). This means that only one of these NFTs exist. Capitalizing on scarcity reminds us a little bit of the infamous 1 of 1 Wu-Tang Clan album which Martin Shkreli once purchased for $2 million.
Electronic music platform RCRDSHP on the Flow blockchain says it has paid out its creators over $600,000 since it began in late 2021. RCRDSHP is a platform and marketplace which drops curated packs of songs across a variety of genres, with visuals to match. Packs start at $9 USD, which is an affordable entry point on a blockchain with no gas fees.
Glass.xyz is an NFT project that allows collectors to buy editions of videos. Many musicians have used the platform to sell music video NFTs, while allowing the artist to still control ownership of their creations.
Music Brands Entering the NFT Space
Large, well-known music brands like The Grammys have also announced NFT collections, which can be a good entry point for consumers who are new to NFTs.
Another one of these is Warner Music Group, who has a partnership with Genies, who sell NFT avatars and wearables on the Flow blockchain. Universal Music Group also announced a partnership with Genies, which includes artists like Taylor Swift, Drake, Ariana Grande, Justin Bieber, and many more.
Universal Music Group added to its NFT interests by recently announcing a Billboard partnership to create ChartStars, an NFT collection on the Flow blockchain. These collectibles will be for fans to own certain historic moments in time from the Billboard charts.
In addition, Universal Music Group announced they are working with the Curio NFT platform to create digital artwork and collectibles for its artists.
Music NFTs for Royalty and Masters Sharing
One of the most interesting uses for music NFTs is the sharing of royalties and masters between artists and their fans. Artists focus on fewer numbers of fans who are incredibly passionate, rather than casting a wide net.
These fans want to be deeply invested into the artist’s music, and that includes new models of partial ownership and revenue sharing.
EDM artist 3LAU founded Royal, a platform that sells song rights as NFTs. The platform has grown rapidly as they aim to democratize access to music rights.
The rights for Nas’ song “Rare” was sold on Royal as 1,110 tokens, raising $369,000 in minutes. The tokens offered various ownership rights and benefits, ranging from costs of $99 to $9,999.
Audius has been touted as a Spotify competitor and is backed by music industry giants like Katy Perry, Nas, and Jason Derulo. Audius is an NFT music streaming service that allows users to upload their own music (for free), and monetize it through tokens. Audius claim that 90 percent of the artist’s revenue goes directly to the artist with their decentralized platform, which is run mainly on the Solana blockchain.
Music NFTs for Music Production
Collecting and royalty sharing are just the beginning for music NFT use cases. DoomsdayX is a Web3 studio which offers fans a producer credit on their favorite artists’ music videos. Instead of simply collecting, these NFTs unlock the possibility for fans to be directly involved in the creative process, including governance rights for marketing decisions.
Songcamp is an experimental “camp” where artists come together in a month-long hackathon format. They create music, art, and visuals for the NFT that is a result of the experiment. These are essentially songwriting classes with a twist, and they are on their third “camp” so far.
Pixel Bands is a generative NFT project on the Solana blockchain, where every NFT musician comes with a unique sound — guitar, drums, bass, or keys — that was created by a community member (allowing each of them to make royalties from their sales). The NFTs of each band member and instrument can be combined to create a song with a Pixel Band pass, essentially making each Pixel Band holder their own producer.
Cartoon Bands creating Music NFTs
Remember the band Gorillaz, who were represented with cartoon monkeys? Well, Web3 has made it possible to make more bands represented by cartoons — this time, with NFTs.
In November 2021, Universal Music Group founded KINGSHIP, a band made up of four Bored Ape Yacht Club NFTs owned by well-known NFT influencer j1mmy. Because BAYC comes with full commercial rights, j1mmy will get to profit from the sales of music from KINGSHIP.
Snoop Dogg recently purchased Death Row Records, and he is morphing it into the first NFT record label. His new album, Bacc on Death Row, was made available for sale on the blockchain, and he released a mix in collaboration with Sound.xyz. Snoop is known for collecting NFTs under the pseudonym Cozomo de’ Medici on Twitter.
Snoop recently signed two Clone X NFTs to Death Row Records, and looks to continue to push music NFTs into the mainstream.
Music NFTs for Live Events
One of the most obvious use cases for music NFTs are for them to be used as tickets or passes to live events and concerts. NFTs have a level of proof of ownership that regular tickets, even electronic tickets, don’t have.
Coachella music festival offered their first ever NFT collection this year through FTX on the Solana blockchain. Ten unique lifetime pass NFTs sold for more than $1.5 million total. These will get the holders into Coachella every year for the rest of their life, with other special privileges at the festival as well.
Centaurify is building multi-chain NFT ticketing platform, using Solana as its first blockchain. This allows artists to ultimately offer secure NFT ticketing solutions for live events on the blockchain of their choice. Cutting out the middleman (Ticketmaster, Stubhub, etc.) and replacing it with the blockchain helps artists retain more of their revenue. It also helps customers have an authentic and easily transferrable ticket, which can double as a memento or even have additional utility after the show.
At EDC Las Vegas 2021, festival goers were able to claim a Polygon NFT using their Ticketmaster account to commemorate attendance — similar to a POAP. Every day, there was a new claimable NFT at the festival’s Coinbase activation.
Music NFT Roadblocks
There are some roadblocks and dependencies for some of these music NFT platforms to find success. To reach the mainstream, there a few gaps that music NFTs still need to close.
Complexity
As many NFT beginners know, it can be daunting to get set up with an Ethereum (or other crypto) wallet to buy NFTs. For music NFTs to gain widespread adoption, it is also dependent on NFTs themselves to continue their momentum. The NFT space also needs to continue to evolve to make it more beginner-friendly so that move people can get involved.
Crowded NFT Landscape
In early 2021, there wasn’t a lot of competition in terms of new NFT projects. Now, with a new project dropping seemingly every 15 minutes, there is a lot of noise out there.
Music NFTs will have to break out above the multitude of PFP, metaverse, gaming, and other forms of NFTs to get the attention of collectors. This may take some time as the format gains traction with a larger NFT collector base.
That said, as more musicians with already wide audiences dip into NFTs — like 3LAU and Snoop Dogg — it brings more adoption to music NFTs.
Legal Issues
Traditional copyright laws for music haven’t evolved to a place where they are directly enforceable for NFTs. These music NFT platforms are building in parallel to figuring out how complex copyright laws will be enforceable or applicable to their offering.
Many other NFT sectors like real estate and healthcare face similar challenges.
Storage Concerns
Some of the storage solutions for NFTs on the blockchain mean that they can sometimes not be 100 percent on-chain, as we see for many types of NFTs. If they aren’t truly on-chain and hosted on a decentralized cloud solution somewhere, there is some risk that if this cloud solution goes down or is transferred elsewhere, your NFT is gone. These types of concerns make way for innovative smart contract solutions (like Manifold.xyz and the like) which empower artists to create their own secure smart contracts.
TL;DR on Music NFTs
Music NFTs have come a long way since their inception, and there are so many use cases for both collectors and artists to take full advantage of them. Though some roadblocks exist, music NFTs can be used as collectibles, production tools, vehicles for royalty sharing, live performance tickets, and more.
In order for music NFTs to reach their full potential, we are going to need lots of artist participation, which has already ramped up significantly in the last year. For artists who are interested in getting started with music NFTs, check out this thread from @Cooopahtroopa with artist application links to many of the platforms mentioned in this article.