How is music playing a vital role in NFTs
By Gaurav Dagaonkar
At this point, almost everyone would have heard of NFTs. They are a class of crypto assets with unique identification and metadata, signifying ownership and originality. The nature of NFTs means that they could potentially have the utility to solve existing problems and also serve as means of innovation without involving too much complexity. This fundamental nature also lends itself to certain solutions in the music industry.
Before we try to understand how NFTs play a vital role in music, let us understand some of the problems that currently exist –
- It is tough for newcomers to make an impact.
- Most up-and-coming musicians don’t have the capital to promote their music or fund their future projects.
- Difficult for non-touring artists to make sustainable income off only traditional streaming platforms.
- Most streaming platforms pay only about $0.003 per stream on average and to be able to make a decent income off streaming requires millions of streams which is not practical for a lot of indie musicians.
- Illegal download of music aka piracy
- Globally, music piracy costs the industry billions of dollars. And in India, the piracy rate stands at 67% which is double the global average rate.
- Cancellation of tours/gigs due to the pandemic
- Touring is the number one income-generating business for a lot of artists, and when that came to a standstill in 2020, a lot of musicians were severely hit by the same.
Now that we have understood what NFTs are and some of the problems faced by musicians and artists in the music industry, let’s take a look at some of the ways in which NFTs could have an impact and contribute towards solving the aforementioned problems.
There are several ways that NFTs benefit the music industry, both for the artists as well as businesses. Some of these are:
- Music NFTs – This could be a song, an album, cover art, or even a music video. Artists can distribute and monetize their NFTs through platforms such as Opensea. Fans can support their favourite artists by purchasing such NFTs and in exchange, they get access to access to one-on-one conversations, exclusive previews of unreleased music, etc. Also, whenever the NFT gets traded after the initial sale, a cut goes to the original artist/creator of that NFT in the form of royalty.
- Apart from selling music as such, nowadays, fans can also ‘invest’ in their artist’s music – this way it helps the artist raise money while fans also get to earn from the royalties generated from the particular project. Royal is one such platform.
- Since each NFT holds a unique identity that is registered with the blockchain, replicating a song/album artwork becomes much more difficult and combats the age-old problem of music piracy.
- Ticket NFTs – The ticketing business is an industry where a lot of fraudulent activity occurs and this is a problem that NFT could solve in a big way. For instance, tickets can be resold and the revenue can be split amongst several rights holders. This way, the tickets can potentially bring in more revenue compared to the one-time payment that takes place with traditional ticketing. Also, the usage of NFTs as tickets helps organisers track.
All in all, NFTs can play a pivotal role in giving artists a mechanism to track things and also increase their revenue streams. With the advent of newer technologies, artists are not only able to monetize their music but also connect with their fans on a deeper level, which was not easy earlier. And it is not only the artists that benefit but also companies that are in the business of ticketing, streaming, etc. At a fundamental level, what NFTs will pave the way for is more transparency & accountability, thereby opening up new channels for growth and also helping reduce piracy and other nefarious activities that currently exist.
The author is co-founder,CEO, Hoopr