Just like any other industry, the music industry has seen its fair share of revolutions, from changes in style and form to the foundation of streaming services. At present, it is again standing on the verge of another shift, Non-Fungible Tokens (NFTs). Let's dive deeper into what NFTs are, and how radical of an impact they can make on the music industry.
Non-Fungible Tokens or NFTs:
An NFT is also known as a Non-Fungible Token which are unique digital asset, representing ownership of a particular item. NFTs are not like Ethereum or Bitcoin, which are fungible or interchangeable. Instead, NFTs are one-of-a-kind. It is like a painting that cannot be replaced or duplicated. This quality makes NFTs such a great fit for the world of original and unique creations: the world of music.
The creation of NFTs includes various steps. Usually, these tokens are recorded on a block chain, a secure digital record that makes it easy to verify ownership. To create an NFT, you need to first need something that you can make into the NFT. This can be any form of digital content, such as a music video, an audio, or even a tweet. Then this asset gets turned into an NFT as it is put on a block chain. This block chain is the one that gives the NFT a one-of-a-kind identifier. The block chain also helps in proving the NFT's ownership and authenticity.
Uniqueness of NFTs:
★ Authenticity - every NFT has its own unique identifier along with a record of its past ownership history. This is why it is almost next to impossible to create a fake NFT.
★ Indivisibility - You can divide an NFT into different smaller pieces, it always stays a whole.
★ Ownership - when you own an NFT, it means you own a unique piece of digital content. There is only one NFT and it is only for you. Much like owning a limited edition of an iconic vinyl record.
Now that you have a basic knowledge of NFTs, let's get into the details of their impact on the music industry.
NFTs in the music industry -
To understand how NFTs work in the music industry, let’s imagine that it is like a new type of merchandise. Now, instead of t-shirts or hoodies, artists can sell unique digital assets or Non-Fungible Tokens.
● Music sells
One of the ways that NFTs can be sued in the music industry is that artists can “mint” their songs into an NFT and sell them directly to the fans. This would not be selling or buying songs on the iTues. Once you have an NFT of a song, this means you are the single owner of that version of the song. This creates a sense of exclusivity which can add value to the artist brand.
● Digital merchandise
NFTs offer new countless ways for artists to connect with their fans. Using NFTs, artists can create unique digital merchandise such as digital albums and single covers, or virtual concert tickets. This would be just like buying and trading physical merchandise, but in a digital format.
● Resale
One of the mesmerizing things about NFTs in the music industry is how they do resales. Once a fan or an NFT owner resells, the original artist can get a cut on the sale. This happens because of smart contracts, which is a block chain technology feature.
Also Read: Find out how TikTok is making an Impact on the Music Industry
What benefits do artists get from NFTs?
The benefits of NFTs in the music industry are mostly seen for the artists. They are -
● Creative freedom
NFTs give artists creative freedom, and the freedom to experiment. They are not just limited to album art of songs, artists can now sell any digital object that they want through NFTs. It might be a virtual meet-and-greet, a behind-the-scenes video, or even a digital art piece, the possibilities are endless!
● Direct-to-Fan sales
By using NFTs, artists can get past all the traditional distribution channels and they will be able to sell their music directly to the fans. This maximizes their profit from the music. At the same time, this also allows the artists to maintain control over their music as they are dealing with the selling and distribution by themselves. Artists can now create a song, mint it into an NFT, sell the NFT directly to the fans, and keep all of the profit for themselves.
● Long-term income
Artists are now allowed to get a cut whenever the NFT is resold, this creates a long-term opportunity for steady income, as the more times an NFT is resold, the more artists would be making money.
● Ownership
Using NFTs, artists would be able to prove that they are the sole owners of the music that protects the art from piracy, theft, or any unauthorized use. Moreover, the fans who bought the NFT can also prove that they are the sole owner of the digital art. It is truly a win-win situation for both parties.
What challenges do NFTs bring?
NFTs bring various unique advantages to the music industry, as well as some serious challenges. The following are the disadvantages buyers need to be aware of before buying an NFT -
● Exclusivity
The entire concept of NFTs is based on exclusivity. As they are not available to everyone, they can be pretty pricey to own. This would alienate the fans who will not be able to afford it, which can be a problem for artists who want to maintain a broad fan base.
● Unpredictable market
NFTs are comparatively new to the world, making their market unexpected and volatile. This is why the prices can swing pretty wildly, what is expensive today can quickly lose its value the next day. This can make dealing with NFTs risky for artists who only want to depend on them.
● Legal issues
As they are new to the world, the legal landscape of NFTs is still evolving. Issues regarding royalties, copyrights, and contract laws are still being figured out in the NFT landscape. So, artists need to be careful to protect their ownership rights.
● Impact on the environment
Minting digital art into NFTs and trading them on block chain can be really energy-intensive. Some people have already raised concerns regarding the carbon footprint of NFTs. This might be off-putting for the fans who are environmentally conscious.
Despite its challenges, the future is looking quite well for NFTs. Due to these digital assets, there might be an increase in virtual concerts. There might also be a possibility for interactive music videos to become a reality!
