How NFTs are changing the music industry – for the sake of fans and artists
Now you will know all about Non-Fungible Tokens (NFT). You might think it’s just those shoddy monkey designs that people who made too much money off a coin decided to buy for way too much money. Granted, it’s one element of the NFT space, but there’s a lot more that NFTs can offer people. Super useful stuff. Whether you are a “crypto native”, you don’t know your Axie Infinity from your animal crossing, or you’re so sick of seeing the three-letter acronym, give us a few minutes of your time here. You see, aside from lame JPEGs, the technology could actually revolutionize many industries. Nowhere is this more relevant than in the music industry.
In short, an NFT is a type of token made on the blockchain, like a cryptocoin, except it is not fungible, which means it has value like a work of art as opposed to a dollar bill. £50. You can trade one fifty for one fifty, or two twenties and one tens; a work of art for a work of art is a bit fuzzier: how many Peter Doyles is a Basquiat worth? Hard to say.
As for the NFT itself, it works much like a zip file with nice artwork on the front. Inside the folder, you can have one or more assets (images, music, tickets, videos, private URLs, etc.) and you also have a piece of code. When you own an NFT, you actually own the code, not the assets. Which means the person who created the assets can edit or update them. Clever.
The technology is still quite new, so it needs to be improved. Luke Kovic, Head of NFT Consulting at TokenTraxx, says “we’re probably the equivalent of the Commodore 64 when compared to the technological heights of things like a PS5, Xbox Series X or Nintendo Switch”. Mila Lolli, founder of NFTUK, a community aimed at “unifying, developing, connecting and educating” people about NFTs and Web3, agrees that NFTs are primitive. “There is still work to be done. UX [user experience] is still not developed the way it is in Web2, which has proven to create issues in various use cases,” she says.
Lolli is also keen to point out that while it’s still early days for NFTs, the potential is beginning to materialize. “We already have great examples of artists who have embraced NFTs, like Linkin Park’s Mike Shinoda and Kings of Leon.” In March 2021, Grimes launched an NFT campaign, selling NFTs featuring artwork and videos set to original music. She earned $6 million, which equals a few billion Spotify streams.
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This amount of money is at least competitive with record labels and allows the artist to retain all masters and ownership of their work. If the artist added a royalty structure to smart contracts, they could continue to earn a percentage each time the NFT is sold.
A smart contract is perhaps the most exciting part of NFT technology. It is an unalterable agreement that you can attach to your NFTs. Within these you can do various things like set a price and a resale price, fans can get a percentage of royalties when they sell it, the creator can choose to give himself royalties or give l money to charity, and more. This gives the artist full control to do whatever they want with their work. And because it’s decentralized, there’s no need for middlemen, ie. record labels.
Simon Hudson, founder of photography marketplace NFT Cheeze and huge Apple fan explains, “NFT is usually stored in some kind of crypto wallet. Much like Apple’s wallet functionality, but decentralized and very secure.
This wallet offers a lot of potential, like allowing concert tickets to be issued (or minted) as NFTs. The smart contract could make it impossible to resell them for more money (or it could cap the maximum price). Considering the security aspects, it is also almost impossible to make a fake that would also be accepted. Of course, crypto (and concert ticket) scams are everywhere, so no doubt the usual suspects will take a chance.
Ticketing also applies to sports and other events, while the art world can also offer fans unique designs as NFTs. But music benefits from the combination of all these things. Much like someone might seek out a rare vinyl pressing of a record or make a point of buying a deluxe version of an album for extra demo versions of a favorite song, NFTs allow artists to drop more intimate creations to dedicated fans. In a real world context, highly secure and digital wallets mean that selling tickets could actually make selling a thing of the past.
Like any product, however, you need to be able to buy and sell these NFTs somewhere. A showcase of trust is necessary. The solution seems to be a market. Enter: TokenTraxx, an NFT marketplace that’s currently in open beta mode, which means you can use it, but it’s still heavily tested and updated. They plan to launch fully later in 2022 and will focus on the intersection of music and NFT.
As TokenTraxx’s Kovic explains, “Sound.xyz is probably the most dominant music NFT marketplace right now, and we respect what they’re doing. We want to be more flexible with the creative nature of artists and changing consumer appetites in the NFT music space. What Kovic is referring to is that on TokenTraxx artists will be able to “drop songs, but really anything the artist wants to create”.