A part of the blockchain realm, together with cryptocurrency, NFTs are of interest to the Exeno team. The philosophy behind NFTs really resonates with the purpose of our very first crypto payment-only online store: making crypto purchases convenient. Just like NFTs, we want to take the relationship between people and crypto to the next level.
NFTs are a true game-changer, as they have introduced the possibility of trading previously non-tangible goods. Thanks to them, it’s now viable to sell something as abstract as a tweet, through granting the buyer exclusive ownership rights. How can this new reality change the way we consume music? It’s prime time to take a closer look at the impact of these developments, both current and potential.
How have NFTs changed the music industry?
An NFT (or non-fungible token) is an e-certificate of digital asset ownership. It can be bought with cryptocurrency and affirms unique ownership of whatever a musician, among other people, decides to sell this way: an album, a unique track, behind-the-scenes materials, merchandise, concert tickets, or anything that represents their brand.
Before the pandemic turned the world upside down, artists used to make a living by touring. Since this is currently largely impossible, performers started to look for other sources of income. Issuing NFTs is particularly appealing, as it doesn’t require the engagement of intermediaries, the likes of distributors, publishers, or labels. This can make quite an impact, given that, in a conventional setting, these middlemen take home a significant portion of the overall profit: in the UK musicians get 50 per cent of radio revenues and only 15 per cent of income generated from streaming.
With the use of NFTs, entertainers can auction unique music directly to their fans, and thus retain almost all the profit from the deal. There are only two major expenses: a fee for the digital platform hosting the auction, and a gas fee for creating the NFT itself. Even combined, these are miniscule compared to what
From the perspective of musicians, the main problem surrounding NFTs stems from complexities regarding ownership of a particular piece: some of the rights belong to record labels releasing the tracks. This complicates NFT sales. Importantly, however, this issue does not apply to new, previously undistributed tracks, in which case all rights usually belong to the artist(s).
NFTs benefit both the musicians and their fans
In addition to having quite the potential in terms of generating profits, NFTs are also a great way to get reach and bond with the artists’ audience.
- NFTs are convenient
NFTs are significantly more straightforward and time-efficient than traditional methods of music distribution. This is true for both sides of the deal: musicians can create NFTs relatively smoothly, and fans can effortlessly participate in an NFT auction. A potential buyer simply needs to create a digital wallet, and then look for NFTs as if they’re doing regular online shopping. It’s quite like how the Exeno store operates. As a reminder, to benefit from our innovative platform just create an Exeno wallet, top it up with your crypto, and buy products from your favourite brands with only a 1.8 per cent fixed commission.
- Musicians are fully in charge of their money
As previously mentioned, the use of NFT in the music industry eliminates the middlemen who seek to get their share of the artists’ income. Record labels and streaming platforms operate on the premise of getting some of the money generated by musicians. Thus, artists often don’t get fair compensation for their work. Contrastingly, as NFT transactions proceed directly between the artists and their fans, it’s the creators who are the main beneficiaries.
Linkin Park co-founder Mike Shinoda shared his thoughts on NFTs on his Twitter account after getting a $10,000 (£7,000) bid for his NFT. He asserted that he would never earn this much through partnership with a label.
Another musician, André Anjos who goes by the stage name RAC, sold his NFT called Elephant Dreams for $26,000. He said that it would’ve taken him three years to make such a profit on Spotify.
- NFTs bring artists closer to their fans
Artists may auction virtually anything (not only digital assets) connected to their music. Many fans are willing to pay significant sums for exclusive content from their beloved star, especially as NFT ownership signals the one-of-a-kind nature of the experience. Sadly, this means that NFTs are profitable mostly for established musicians with a solid fan base. NFTs created by beginner artists can easily go unnoticed, making them an unreliable and precarious source of income.
In summary, NFTs are an excellent method of digital monetization of musicians’ work and a great alternative to more traditional approaches.
However, as NFTs are not yet well-established, financially relying solely on these tokens is risky. This is especially true for young artists. Yet, that doesn’t mean they’re not worth keeping an eye on! When they gain prominence and reach their full potential, NFTs may completely revolutionize the music industry, just like the Internet did at the beginning of the century.