Non-fungible tokens or NFTs are taking off in many industries, see how indie musicians are navigating the rapidly growing phenomenon.
Following a massive boom in the first half of 2021, the hype surrounding music NFTs got hit with a sizeable backlash, with fans decrying them as a money-grabbing, environment-ruining fad that brought too much crypto-related commerce into the art world. But for a segment of musicians, from big names to independent acts, minting tokens for songs, visuals, and more can reap rewards both financially and creatively. There’s a rapidly growing community of artists who support and encourage the experimentation and decentralization NFTs allow, bolstered by blockchain services that greatly reduce the environmental impact.
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, it can open up a world of opportunities in revenue and artistic innovation. Here are the basics to music NFTs, with insights from musicians and people on the business side who see the myriad possibilities this world has to offer.
What are NFTs?
For starters, NFT stands for “non-fungible token,” a unique digital asset that can’t be replicated. This is different from a bitcoin or other cryptocurrencies, which are fungible, meaning they have a specific monetary value and can be traded for an identically valuable asset, like swapping a $5 bill for another Abe or five singles. NFTs can be sold at a set price that’s determined by the creator or current owner, auctioned off, or traded for something that both parties agree is a fair value. In the music world, that might mean trading a song for a share of a limited-edition digital album cover — after all, you can’t trade a song for an identical song, as they’re all one-of-a-kind. The hypotheticals are endless.
NFTs are “minted” on the blockchain, a decentralized database that works as a public ledger, recording the origin of a digital asset and all transactions of it. Many NFTs are created on the Ethereum blockchain and sold via marketplaces like OpenSea, which had token sales of $3.4 billion this past August. All that’s needed is a digital wallet, which is unique to each individual and allows them to make transactions involving cryptocurrencies. As many users find, it’s a lot less complicated than it sounds. And the money is there — in the first quarter of 2021, over $2 billion in NFT were sold, compared to $93 million from the previous three months. Meanwhile, the CEO of the cryptocurrency exchange Coinbase, which had a $1.3 billion revenue in Q3 of this year, said he expects its upcoming NFT marketplace to be even bigger for the company.
What are music NFTs?
Music NFTs can be songs, albums, videos, visual artworks, ticket stubs, merch, tickets — there aren’t any constraints on what can be tokenized. Artists such as the Rolling Stones, Grimes, Chief Keef, Swedish House Mafia, and Kings of Leon have all gotten into the NFT space, with the latter band being the first to ever release an album this way. That 2021 LP, When You See Yourself, was also released traditionally, available physically, digitally, and on streaming services, but the NFT version added in extra perks like a limited-edition vinyl record, front-row concert tickets, and exclusive artwork.
Aside from those major acts, many independent artists are finding the NFT world to be a valuable way to interact directly with fans.
“You have this intimate connection with your fans,” says Rick Valentin, who’s part of the band Poster Children and records solo as Thoughts Detecting Machines. Earlier this year, he dipped into NFTs with 100 versions of a song, appropriately titled “TDM NFT,” that came with unique, numbered artwork and sold them 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.”
The financial boost
What’s also valuable is the directness of payment between artist and fan, not to mention the use of smart contracts that are embedded into the NFT and can pay royalties to the creator whenever the token is sold again. Some buyers will be true supporters of the artist, while others will be looking for an investment, a la buying a baseball card and hoping it blows up in value, but for the musician, the money is still the same in the end.
“It’s that transparent, immediate transactional experience that an artist can see once the funds hit their wallet,” says Matthewdavid, an electronic artist and co-founder of the Los Angeles experimental label Leaving Records, which uses Linktree to point fans to its NFTs and Discord. “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.’”
He’s also extremely enthusiastic about the fellowship among artists and fans that’s 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 success with NFTs, according to longtime industry pro Adam Fell. He’s one of the founders of the Quincy Jones-backed NFT platform OneOf, which is run 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. For emerging artists who don’t have Keef’s platform and are just finding their fanbases, Fell says NFTs are a great way to make money early on without signing away publishing rights or royalties. “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.
Because NFTs and the concept of a more decentralized internet are still relatively new, nobody’s quite sure how they’ll grow in conjunction with the music world, but they’re positive that the opportunities — from Kickstarter-like inventiveness to crowdfund albums to more equitable revenue sharing for artists — are limitless. That’s especially true now that environmentally friendly blockchains exist, allowing NFTs to be minted with far less impact than the production of a CD or vinyl record.
“It’s a very big opportunity to kind of 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.”