Music NFTs are empowering artists to connect with their fans and earn fair compensation. Learn what music NFTs are, their benefits, and how to invest in them.
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Non-fungible tokens (NFTs) have taken the crypto world by storm, hitting $25 billion in sales in 2021—a massive increase from $94.9 million in 2020.
Everything from digital art to tweets to real-world goods have been sold as NFTs, with records of ownership securely stored on one of the several blockchains (Ethereum is one of the most popular) available on the web.
With NFT’s disrupting a wide variety of industries, it’s no surprise that those in the music business also jumped aboard the NFT rocketship.
Songs, albums, artwork, videos, concert tickets—you name it, and it can become an NFT. In March of 2021, Kings of Leon (KOL) was the first band to release their new album as an NFT. They also released NFTs that featured live show perks and exclusive audiovisual art. Altogether, KOL generated $2 million in sales from their NFT collection release.
Last year, Grimes also jumped into the world of musical NFTs—creating a series of 10 pieces that included one-of-a-kind videos featuring original music and animations on Nifty Gateway. This release garnered $5.8 million in sales in under 20 minutes. Since then, more musicians have felt empowered to release their own music NFT creations, and not just because it’s trendy and new.
With the advent of NFTs, musicians are beginning to take control back from labels and streaming giants that are far from equitable when it comes to compensation. In essence, music NFT marketplaces are slowly redefining the music industry, with true fans and musicians benefiting from them the most.
Let’s walk through what music NFTs are and their benefits for musicians. We’ll also show you how you can invest in your first music NFT, as well as a few of the top music NFTs available today.
Much like some of the most recognized NFTs—think Bored Apes, CryptoPunks, or Beeple’s “Human One”—music NFTs are also unique, one-of-a-kind assets (or shares of one-of-a-kind assets) that are minted on a blockchain and sold via NFT marketplaces.
When a person buys a music NFT, they are given a digital certificate of ownership of that work, which they can then sell to another person. Musicians can sell a single music NFT to several buyers by breaking it up into multiple shares, or they can sell to a single buyer.
As touched on earlier, music NFTs can consist of:
Note: Like other NFTs, digital components of a music NFT can be easily copied and shared online—but the person (or people) who purchased the NFT maintain ownership over it and the original piece of art it holds and represents. For example, think of a music NFT like a one-of-one vinyl album. A single buyer (or multiple buyers investing together) could purchase this vinyl album. No one else could own this original work. However, others could own copies of it.
Music NFTs benefit both music fans and artists alike—a fact that has been instrumental in the success of several music NFTs launched and sold in the past year. Whether they are bringing fans closer to their favorite artists or giving control back to musicians, they are causing a ripple effect across the music industry.
Music NFTs enable music fans to rally behind their favorite artists. Not only can music NFTs provide fans with access to unique content and experiences, but they can allow token holders to maintain a stake of ownership in what these artists create. For example, music NFT marketplaces like Royal (co-founded by Justin Blau, the world-renowned dance music artist who goes by “3LAU”) enable buyers to purchase songs' shares and earn royalties via the smart contracts that hold NFTs. This gives fans a chance to invest in artists and share their success.
There are no label or streaming intermediaries for artists when they sell a music NFT. This means that they can build stronger relationships with their fans while being fairly compensated for their work. Many artists can incorporate streaming rights and transaction fees directly into NFT smart contracts, enabling them to earn royalties each time an NFT is bought and sold. This is huge for musicians that currently must split revenues 50/50 with agents, lawyers, and distributors.
NFTs also enable musicians to avoid streaming giants that take the biggest piece of the pie in terms of revenue. According to the Union of Musicians and Allied Workers (UMAW), the average streaming royalty for an artist on a platform like Spotify is $.0038. To put this in perspective, a single artist would need to have 657,895 streams per month to earn $15 an hour on a full-time schedule. Spotify's top 0.8% of artists earn less than $50,000 in streaming revenue each year, which is even more unsettling.
Investing in music NFTs is as simple as investing in any other type of NFTs. The first step is to find NFTs from your favorite artists featured on different music NFT marketplaces like FTX US. Once you’ve found a music NFT you’d like to buy, it’s important to find out which cryptocurrency is required to purchase it—as you’ll need to open and fund a crypto wallet with that specific currency via your chosen NFT marketplace.
How you purchase your music NFT depends on whether it’s listed at a fixed price or put up for auction. If it’s a fixed price, you can easily purchase it and have it transferred directly to your wallet. If it’s up for auction, you can place a bid on it and wait until the auction is over to see if you’ve won. As you start purchasing music NFTs, you can build a collection based on your priorities, which could be to support your favorite artists, personal value, or collectability.
Note: If you’re investing in NFTs strictly for collectability value, it’s important to study how the supply, demand, creativity, and rareness of popular music NFTs have affected their values before making a purchase.
Several famous musicians dove into the world of music NFTs in 2021, which captured the attention of die-hard music fans—many of which were brand new to the crypto space. While we mentioned Kings of Leon and Grimes earlier, here are a few other artists who took the music NFT world by storm last year:
If you’re ready to invest in your first music NFT, the FTX US NFT Marketplace makes it easy. As a US-regulated cryptocurrency exchange platform, you can rest assured your music NFT purchase is secure. Sign up on our website or app and purchase your favorite music NFT today.