Non-fungible tokens create unprecedented earning opportunities for musicians
Non-Fungible Tokens, or NFTs as they are now popularly known, are a one-of-a-kind digital “asset” that is purchased through crypto currencies. Further, as NFTs use blockchain technology, each NFT has a unique digital signature that allows all transactions to be openly tracked.
Courtesy: Wanicon
In the context of music, NFTs can take the form of anything from a digital autograph signed by the artist to a limited edition vinyl record or to a soundbite of a new song, leading to artists receiving royalties even when the original buyer resells it. As examples, American rock band Kings Of Leon and Canadian singer Shawn Mendes, earned millions following their respective March 2021 album launches by selling NFTs. Kings Of Leon offered their new album, ‘When You See Yourself?’, as an NFT, and auctioned it for 56 hours in four NFT packages: Golden Ticket Collection, Yourself Album Edition, Open Edition, and Limited Edition, reportedly generating accumulated revenues of US$2 million. Other international artists that have used NFTs include hip-hop artists such as Lil Pump, Eminem, and Snoop Dogg.
Closer home, in May 2021, Tamil singer-composer Kaber Vasuki’s 2012 phone-recorded demo of a song called ‘Vasanam’ was sold as a NFT for the price of 50 Ethereum, a crypto currency reportedly second only to Bitcoin, which was roughly valued at ₹1.5 crore at that time.
Next, in August 2021, Pune-based Ritviz [Srivastava] and Ahmedabad-bred Nucleya [real name: Udyan Sagar] combined their talents to launch a collaborative album consisting of eight tracks, ‘Baaraat’, for which the duo put together a package of NFTs that were associated to different benefits linked to their respective universes.
Before proceeding further, it is necessary to be able to comprehend the key benefit of NFTs, which is why they have become the new catch phrase of the decade so far:
Unlike conventional monetary transactions that necessitate a bank account, NFT transactions work on a decentralized network, meaning that they can move directly from creator to buyer without the usage of an intermediary. The unique digital “signature” of non-fungible tokens mean that they cannot be erased or altered – merely transferred – so that the original creator continues receiving monetary benefits from all transactions, be it primary or secondary.
Courtesy: Ditto Music
NFTs have the potential of monetarily powering artists. Currently, once artists have produced music, they are almost compelled to approach streaming services in order to reach a large[r] audience and, as a result, are paid a minimal share by the service provider [generally, three paise to five paise per stream]. Therefore, the biggest issue that artists have with their music is not getting paid [sufficiently] by people consuming it, thanks – or, depending on your perspective, no thanks – to the model initiated by Napster, probably the world’s first audio streaming service provider that was originally launched on June 1, 1999, which allowed anyone to access music anywhere, at a zero cost! The obvious result was that artists immediately lost income that originally arrived from physical product and/or from paid downloads, which was rendered virtually nil, overnight, as consumers suddenly had access to content for free. Hence, artists then focused on the live event space and, with it, the concert/touring market became huge as it became the artists’ primary – if not the only – source of income, as it is also remains now.
But artists suddenly find themselves with an alternative source of income considering that NFTs do not require the service of intermediaries – in this case, record labels and streaming services – for the artist to sell or profit from their music. This means that artists would be able to determine the value, monetary or otherwise, of their creation; sell directly to fans; and receive the full profit instantaneously without the content being tied up with intermediaries for an indefinite period of time who, in any event, would keep a sizable revenue share for largely providing distribution services. Effectively, NFTs would allow artists to bypass the conventionally intricate and not necessarily transparent music ecosystem, often involving innumerable corporate stakeholders, by streamlining the otherwise arduous journey of content from its creator directly to the consumer. This has obvious implications for redefining the music value system of permitting the artist as close as possible to full monetary autonomy.
While NFTs in the music world could range from audio and audio-visual content to limited edition concert tickets with a redeemable option of listening to unreleased songs, NFTs do not necessarily have to be merely in digital format; NFTs can also provide digital certificates of authenticity to physical objects such as vinyls, soundbites, albums, merchandising, memorabilia, and more.
Courtesy: Rebeat HD Vinyl
Artists could press limited edition vinyls, or duplicate a miniscule quantum of cassettes, without being entrapped to manufacture huge quantities that music labels are presently demanding for granting them rights for replication. As a corollary, artists could now commence selling their music as an NFT, offering limited editions as Kings Of Leon did, as also concert tickets, digital artwork, redeemable tees, a meet-and-greet for fans, or whatever else that artists may consider for monetization. The NFT makes perfect business sense as the creator receives a percentage every time the NFT is sold and, of course, resold.
Hence, NFTs now have the potential of correcting/curing imbalances within the music ecosystem by handing power to both artists and to fans. For example, if you were to support an independent artist, you could invest in them by buying an NFT. This monetary support would then be continued even if you were to sell this NFT, as the artist would continue to benefit and profit from all resales due to blockchain technology. Further, since NFTs are a global, indigenous creators can present their work to a worldwide audience. It is a decentralized network with no hierarchy and everyone gets compensated in a transparent and open market space.
Currently, while there is no legal framework specifically created for NFTs in India, you can easily buy one from platforms such as BuyUCoin, Binance, and WazirX, among others, by paying either through the respective platform’s wallet or via cryptocurrency.
Nevertheless, as much as artists would like non-fungible tokens to succeed, it will take time to garner mass acceptance, assuming that they are accepted at all. But until that happens, NFTs have already changed revenue models for those artists who have ventured to embrace a potentially disruptive revenue-generating technology system that has since got even cool stakeholders within the music ecosystem breaking into a sweat!
