Some artists in the music industry understand the diversity and potential of NFTs in the industry, and some major artists have already entered NFTs. Also, while the NFT marketplace has been trading music NFTs for some time, some start-ups have created music-only or at least music-focused platforms to create competition with streaming services. doing.
What exactly is an NFT?
NFTs were initially associated only with digital art and collectibles such as Bored Ape Yacht Club and CryptoPunks, but NFTs range from videos, images, songs, physical items to virtual or physical parcels of land. , Can represent almost everything.
NFTs or non-fungible tokens, like other cryptos, are crypto assets stored on the blockchain. Therefore, they behave much like them, except that each NFT is unique and indivisible and is not substitutable.
But what exactly is an NFT? Putting aside all the techniques and complexity behind how NFTs work correctly, they are actually digital certificates of authenticity that prove ownership of what a particular NFT represents. Not too much.
Music industry NFT
Some in the music industry have already understood the diversity of NFTs and have found a way to make a profit by tokenizing music and selling it directly to consumers. EDM artists were the most important front runners in bringing NFTs into the music industry. 3lau tokenized the album Ultraviolet in February 2021 and released it as a set of 33 NFTs, setting a precedent when it earned $ 11.7 million.
Since then, other artists, including popular artists such as The Weeknd, Shawn Mendes, and Grimes, have followed suit, releasing their own NFTs. Even Snoop Dogg, which acquired his label Death Row Records, has announced its intention to turn it into an NFT label.
A new way to connect artists and fans
Given the decentralized nature of blockchain and the technology on which NFTs depend, it’s ideal for connecting artists and fans. NFTs are a great opportunity for artists to monetize their music by selling directly to their fans without relying on third parties.
Music NFTs have been traded on the NFT Marketplace since the beginning of the epidemic, but new platforms have emerged that are specialized or primarily focused on trading and creating music NFTs.
Among them you can find Royal or Audi. But ambitious startups stand out, Sound.xyz. An NFT marketplace focused exclusively on music NFTs, promised to help up-and-coming musicians monetize music by tokenizing it into NFTs.
It was also announced that LimeWire is back as an NFT marketplace centered around music NFTs. Other types of irreplaceable tokens are also traded on the market and do not work on their own.
The revival of LimeWire is as ambitious as entrepreneurial bids should be, but the most shy of the two proposals in their approach. As Julian Zehetmayr, LimeWire Co-CEO said in a statement to the Business Insider:
LimeWire will be restarting as an additional channel for artists to sell their exclusive music and art directly to collectors, not as a replacement for streaming platforms.
Sound.xyz is more outspoken about the ambition to challenge the status quo of the music industry. According to Sound.xyz’s FAQ page, the company is embarking on solving two major problems in the steam-dominated music industry. That is, 90% of the stream goes to the top 1% of artists, with very little revenue per person. stream.
Defect model in the music industry
One of the main problems with the current paradigm is that music is too cheap. This is the result of technological advances. The combination of MP3 format and the Internet has enabled streaming services and made music readily available.
Today, about 80% of the music industry’s revenue comes from streaming. However, according to a Rolling Stone report, about 90% of all streaming revenue is in the top 1%. Currently, about 12% of revenue is paid to artists, as opposed to 7% before the Internet, but most artists on streaming platforms are still struggling to build a sustainable career. ..
This is tied to the fact that artists pay only a few cents per stream. Spotify pays about $ 0.003 and $ 0.005 per stream. So to earn $ 50,000, you need to stream the song about 16,670,000 times. Considering the numbers, the problem reaches an even greater proportion. Only 13,400 artists earn over $ 50,000 a year on Spotify.
Please enter the music NFT
NFTs eliminate intermediaries. With NFTs, artists no longer need labels to make music. When an artist creates his or her music in an NFT, it permanently records who created the music and when. In addition, you can sell it directly to your fans. Artists can also continue to make money from reselling NFTs in the secondary market.
Tokenizing music to NFTs allows artists to launch unique and collectable versions of their music. And by claiming uniqueness and rarity, the value of their music is thus boosted.
According to Sound.xyz CEO David Greenstein, music NFTs allow artists to make a living from music with only 100 true fans, as opposed to millions of listeners. This is especially true depending on how easy it is to create an NFT. In addition, there are many markets for creating NFTs for free, so artists don’t need a lot of budget to start making money.
Will NFTs overtake the music streaming industry?
With music NFTs, the world of cryptocurrencies has certainly gained a foothold within the music industry. And under the current paradigm of streaming services dominating the music industry, there is a high incentive for artists to start making music on NFTs as a way to monetize their work.
Perhaps it’s a bit early to start talking about the direct competition between streaming services and NFTs in the music industry. But even many major artists have launched their own non-fungible tokens for music, and the industry seems to be moving in that direction. You need to see if both models can coexist, or if one dominates the other.
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