How music NFTs are changing the game for musicians

Music NFTs started blowing up in the first half of 2021. But after the initial excitement wore off, fans began to view NFTs as a money-grabbing, environment-ruining fad that brought too much crypto-related commerce into the art world. Now, as blockchain services work to reduce the environmental impact, a rapidly growing community of artists supports and encourages the experimentation and decentralization of NFTs to allow.

For indie musicians who are newcomers to the space, NFTs can be confusing, intimidating, and – if you believe the anti-hype – off-putting. But for those willing to learn, they can open up a world of revenue and artistic innovation opportunities. If you’re new to the NFT space, you’ve got a lot to learn. And we’re here to break it down for you with insights from musicians and people on the business side who see the myriad possibilities this world has to offer.

What are NFTs, and what’s an NFT in music?

NFT stands for “non-fungible token,” a unique digital asset that can’t be replicated. Bitcoin and other cryptocurrencies, on the other hand, are fungible – they have a specific monetary value, and you can trade them for an asset with an identical value – like swapping a $5 bill for another Abe or five singles. If you create or own an NFT, you can set the sales price, auction it off to the highest bidder, or trade it for a value you think is fair. So what does that look like in the music world? It’s impossible to trade a one-of-a-kind song for an identical track. But with music NFT, you might decide to swap one of your tunes for a share of a limited-edition digital album cover. As the NFT owner, you can determine what a fair trade looks like.

NFTs are “minted” on a decentralized database that works as a public transaction ledger. This database is called a blockchain, and it’s where a digital asset’s origin and all related transactions get recorded. Many NFTs are created on the Ethereum (ETH) blockchain and sold via marketplaces like OpenSea. All you need to get started is a digital wallet, which allows you to make crypto transactions.

This all sounds incredibly complicated, we know. But it’s a lot simpler to get started than you might think – and with billions of dollars in NFT sales happening every year, NFTs for music are a huge potential moneymaker for recording artists.

What is an NFT in music?

So what does NFT stand for in music? It’s a type of non-fungible token that could include songs, albums, videos, digital art, ticket stubs, merch, tickets, or any other digital collectibles – the NFT meaning for music is broad, and the possibilities are endless. Artists like the Rolling Stones, Grimes, Chief Keef, and Swedish House Mafia have all gotten into the NFT space, and Kings of Leon was the first group to ever release an album as an NFT. The group’s 2021 LP, When You See Yourself, wasn’t limited to NFT-savvy fans – just like most albums, you could buy a physical copy or find it on streaming platforms like Spotify and Apple. But anyone who purchased the NFT album was treated to extra perks like a limited-edition vinyl record, front-row concert tickets, and exclusive artwork.

The music NFT world is also proving to be a fantastic way for independent artists to interact directly with fans. Rick Valentin, a solo artist and member of Poster Children, had a great experience dipping his toes into the NFT game. “You have this intimate connection with your fans,” says Valentin. He released 100 versions of a song, appropriately titled “TDM NFT,” that came with unique, numbered artwork. He sold the NFTs on OpenSea. “It’s like when we have a new record or T-shirt and sell it. I know everyone I’m shipping my stuff to. When you’re operating on that independent, smaller level, those connections are extremely valuable because those are the people who are supporting you.”

How can musicians create NFTs?

Getting started on the music NFT marketplace can seem overwhelming for musicians who don’t moonlight as crypto traders. But even if you’re just learning the ropes, you can easily create and sell NFTs thanks to programs that take the technical work out.

Linktree partners with OpenSea, the world’s largest NFT marketplace and one of the programs that make creating NFTs super easy for beginners. Creating an NFT on this platform feels more like creating a product listing for an old-school site like Craigslist than jumping into high-tech, virtual trading – that’s how simple it is. All you have to do is add a photo and name for your item, an external link, and a product description.

How music NFTs help musicians

Have we convinced you that making an NFT isn’t really so hard? What you may be wondering now is why you should do it in the first place. What benefits do NFTs offer that the traditional music industry doesn’t? Here are a few:

- You earn royalties on the secondary NFT sales: Once you’ve written your music and gotten it out into the world, you just wait for the royalties to pour in. Royalties are an excellent source of passive income for musicians and songwriters. And now you have another source of them: NFT music royalties.

What’s special about these particular royalties is the directness of payment between artist and fan. And with smart contracts embedded into each NFT, you’ll get a quick royalty payout for every resale of a token. They’re valuable for buyers too, but their motivations for purchasing music NFT may vary. Some will do it because they’re big fans of the music. But others see NFTs as an investment opportunity – for these buyers, it’s a lot like buying a baseball card and holding onto it until its value increases so they can turn a profit. For the musician, the royalties are all the same in the end, whether it’s coming from an investor or a tech-savvy music lover.

Selling music this way is even more gratifying than going the traditional route, according to Matthewdavid, an electronic artist and co-founder of Leaving Records, a Los Angeles-based experimental label that uses Linktree to point fans to its NFTs and Discord. “It’s that transparent, immediate transactional experience that an artist can see once the funds hit their wallet,” says Matthewdavid. “A percentage can split between the visual artists doing your cover art, the record label, your producer, or whomever. I tell people about that and [say], ‘Look, you’re gonna be really happy to sell one song for $2,500.’”

- You can build a community through your NFT projects: Matthewdavid is also extremely enthusiastic about the fellowship among artists and fans that are developing in this scene. “There are so many cool community experiments happening within the space,” he says. “As you spend more time interested and invested, underneath the hood is a community of people, artists, creatives with aligned values, wanting everyone to shine and prosper together.”

Understanding that there’s a passionate set of relatively early adopters is crucial to NFT's success, according to longtime industry pro-Adam Fell. He’s one of the founders of the Quincy Jones-backed NFT platform OneOf, which runs on Tezos, a blockchain that’s 2 million times more energy-efficient than other chains and lets artists mint tokens for an extremely minimal cost.

“Some artists really take the time to go on Clubhouse, Twitter Spaces, and Discord and really engage with the community that is supporting this technology, and their drops end up doing really well,” he says. For proof, he points to Chicago rapper Chief Keef, who, after spending a lot of time on OneOf’s Discord to learn about NFTs, had his multifaceted “GloGang” drop sell out in 37 seconds. Fell says NFTs are a great way to make money early on without signing away publishing rights or royalties for emerging artists who don't have Keef's platform and are just beginning to find their fanbases. “I love the idea of an artist being able to find money without collateralizing one of their future revenue streams and thereby putting themselves in debt for most of their career,” he says.

- You can get involved in music NFT DAOs: A DAO, which stands for Decentralized Autonomous Organization, is a community without a central authority. What’s that mean, exactly? Your fans are a real-world example – they build a community based on a shared love for your music. No one has authority over that community, but their shared love for your music brings them together. And thanks to NFTs, your fan base can form a virtual community as a DAO.

But the benefits of participating in a DAO don’t stop there. DAO members get more than just a sense of camaraderie – they become shareholders in a musician’s brand, which can earn them a cut of NFT royalties. If it sounds like your fans will get more out of a DAO than you will, think again. As a musician, a DAO will give you a loyal group of fans-turned-investors who’ll have a financial incentive to work for your brand, endorsing your music and putting the word out to help your fan base grow. It’s a win-win.

- You can link your NFTs to physical items: We’re spending more and more of our time in virtual spaces, and with all the buzz about new technologies like the metaverse, our virtual hobbies are likely to keep increasing. But we still live in the physical world. And you can reward your NFT-holding fans with physical items like exclusive merch, access parties, or backstage meet-and-greets. Remember that you create your own NFTs, so you decide the terms. If you want to include certain goods or experiences for your fans, go for it.

How to sell music NFTs

If you’re ready to use NFTs to start making extra royalties and connect on a deeper level with your fans, your biggest question now is probably how you can actually start selling these tokens. Good news: Selling NFTs is as easy as creating them. Once you’ve generated an NFT using a platform like OpenSea, you can use the same platform to sell it.

On OpenSea, for example, you’d select the NFT you generated and choose the option to sell it. You’d then set a price and the length of time you want the sale to last. Or if you want to see just how much the market thinks your NFT is worth, you can choose to go with an auction-style listing. No worries if you already have a buyer for the item – you can easily set it aside for them so no one else can snag it. Once you’ve got a buyer, the only thing left is to sign the transaction and confirm the sale. And that’s it – the deal’s done. NFTs may run on incredibly complex blockchain technology, but creating and selling them is surprisingly straightforward.

The future of the music industry and NFTs

NFTs and the concept of a more decentralized internet are still relatively new, so no one’s quite sure how they’ll grow in conjunction with the music world. But they’re creating all kinds of new opportunities, like Kickstarter-like crowdfunding for albums and more equitable revenue sharing for artists. The possibilities are limitless – and the future looks even brighter now that environmentally friendly blockchains exist, allowing NFTs to be minted with far less impact on the planet than the emissions put out by CD and vinyl production.

“It’s a very big opportunity to hit reset, like, ‘What do you want to do? What’s your idea? Let’s make it happen,” says Topshelf Records co-founder Kevin Duquette. “If you can think it right now, it’s probably doable. It’s a very exciting time.”