In a music world dominated by stream-based broadcasting, YANs provide the kind of financial returns unattainable before – until now, at least. Several experienced people in the recording industry are well on their way to leveraging the power of crypto technology to do what they’ve been longing to do: get paid simply by creating music.
The income that musicians get from selling their songs and music in the form of non-futures tokens, or NFTs, generates significantly more income than the pitiful earnings of streaming channels such as Spotify. Everything you need to know about Spotify-Controversy as well! On top of that, they are providing a tangible example of using elements of web3, a favored concept for investors to venture into online services based on a blockchain algorithm that allows them to go beyond the activities of a single market actor.
Why use NFT
According to musician Iman Europe, a singer-songwriter who has made 22.2 airplay (about $60,000 to date), having managed to sell five singles and a video clip through NFT since November, one person bought his song for enough to make a million streams. That’s about $300 more than what the singer would normally get per month from streaming services, and that’s even though her songs have been listened to by about 4 million people on all sorts of platforms. More than 40% of her profits from NFT came from secondary sales, for which she received 10% of each resale.
The advantages and disadvantages of using NFT
According to Water & Music, an organization that analyzes digital music innovation, primary sales through NFT generated $83 million for the likes of Europe last year. And 70% of the revenues came from various artists. This has attracted the interest of many financial agents, including 12-time Grammy Award winner John Legend. Teaming up with many entrepreneurs and investors like John Legend this month, Legend is set to set up a platform for creatives to monetize their work based on such technology. There’s been a lot of Grammy Award depreciation lately, but Billboard Explains: What a Grammy Award Win Means.
Such demand for the technology may be because, unlike signing a lucrative recording contract with a corporation, the world of NFT is much more accessible. In releasing NFT, musicians can attach their media – such as music or a music video – to a digital token and then put it up on sites like Nifty Gateway or OpenSea. All of them are based on blockchain technology that records all transactions online.
Ultimately, ownership of this type of digital asset is acquired, as well as the ability to obtain the cache as a source of revenue from the release of something to a specific constituency of users, in some cases exclusively to a specific entity. Music may be available exclusively in NFT format; it is similar to purchasing a single copy of a CD of your favorite artist’s music.
How it works in real life for NFT owners
In 2021, a 25-year-old Brooklyn artist (D’Alelio) released his first NFT version of a song. It was produced by a very successful musician from Chicago, living practically next door to the city where he went to Northwestern College.
At the time, Chicago was not ready enough to be releasing NFTs, just a few people wanted to release such a kind of production. It was important to demonstrate that people could pay attention, that things were being bought, that many people cared, and that there was someone to do it. D’Alelio has acquired at least a dozen NFT recordings of various songs and artists throughout his career. He estimates the value of his records at about 4.85 ETH, which translates to about $12,000. Many of them were purchased for between 0.3 and 1 ETH.
Christian Kaczmarczyk, who runs Third Prime, an investment firm, owns more than 22 NFTs with records from various artists. He discovered various musicians directly on the NFT platforms. Nowadays the value of his collection can be estimated at $160,000.
The ability to multiply deposits becomes an obvious financial incentive for investors. According to London-based music industry experts, there are recent concerns that NFT music is being bought up by organizations and individuals with substantial cryptocurrency holdings.
Research has shown that the top 12% of NFT traders now account for an average of 82% of all trades, with 97% of the total token volume sold at least once. The main factor in NFT activity has been that many have accumulated cryptocurrency and are using it for more interesting purposes than just to buy bitcoin.
Why artists shouldn’t sell rights for original parts
However, there are certain aspects as well. For collectors, it may be possible to boast that they have the rights to the music and art in their NFT collection. But at the same time, they absolutely cannot own the copyright. One can’t always be clear whether collectors have rights for any modifications or reinterpretations of a song being purchased from the NFT. According to the artists and the companies they use, this is forbidden. (Unless the artists will sell the original parts or instrumental parts).
There is an equally significant threat to most NFT projects: the emergence of mainstream users in this area. The majors are trying to make money out of it. While independent artists provide most of the turnover, their competition with the musicians of the mainstream record companies is decreasing.