Music NFTs Are More Than Just About the Money
To understand "why so many people are willing to spend huge sums on avatars that look rather ugly," Twitter user cwweb3 spent two days researching, trying to grasp the underlying significance. Still unsatisfied, they decided to spend 1.4 million yuan on a Bored Ape. After gaining access to this exclusive community, the final barrier broke down — they began to understand the true meaning behind the seemingly abstract concepts of open spirit, culture and community, celebrity and brand effect that underpin scarce top-tier NFTs. One could say that the 2021 NFT boom was almost entirely centered around culture, community, trends, creativity, and individuality.
So, what interesting stories unfold when we shift our gaze from image NFTs to music NFTs? What do music NFTs truly mean for artists ranging from unknown indie musicians to world-famous singers?
1. Music NFTs Bring Far More Than Just Wealth
If we pose all questions about music NFTs to artists like 3LAU, Kings of Leon, or Whitney Houston, the answers become remarkably straightforward.
On March 5, 2021, the renowned Kings of Leon released their latest album, When You See Yourself, in NFT format. Fans could purchase a token for $50, receiving a limited-edition vinyl record shipped for free, album download rights, and a rare piece of artwork. Over the following two weeks of NFT sales, Kings of Leon earned $2 million. By contrast, releasing the same album's songs through traditional streaming would require approximately 400 million plays on Spotify (roughly 1.3 clicks per person across the entire U.S.) to generate the same revenue.
Kings of Leon's resident crypto expert, Followill, believes that "within the next decade, 70% of albums will be released as NFTs."
For Kings of Leon, music NFTs represent wealth and the future. But for another well-known musician, 3LAU, music NFTs symbolize wealth and career.
In November 2021, Royal — a blockchain-based music tokenization platform — raised $55 million in funding, attracting strategic investments from renowned artists including The Chainsmokers, Nas, Logic, Stefflon Don, Kygo, Joyner Lucas, and Disclosure. Royal was founded by acclaimed musician and producer 3LAU (Justin Blau). This was Royal's second round of funding following a $16 million raise in August of the previous year, and ranks among the largest financings ever secured by a blockchain-based music platform.
3LAU is also one of the earliest artists in the music world to embrace music NFTs. As early as the fall of 2020, 3LAU sold their first batch of NFTs — but this pales in comparison to the auction at the end of February 2021, when this electronic dance music star earned $11.7 million from a three-day auction of their album Ultraviolet. Following this, Justin Blau became one of the most prominent global advocates for music NFTs.
For well-known musicians Diana Sinclair and Whitney Houston, however, music NFTs represent a blend of entertainment and wealth.
On December 13, the music NFT marketplace One Of auctioned Whitney Houston's One of One NFT record, which included a recording demo Houston made at age 17 — a track never heard by anyone before. Paired with a digital video created by the 17-year-old acclaimed artist Diana Sinclair, this single sold for $999,999. The auction winner of One of One received full personal usage rights to the song. While usage rights are not equivalent to public distribution rights, the owner holds complete private usage rights.
But for musicians like Terra Naomi — who started out unknown and gained global attention through sheer talent — music NFTs represent trust, care, empathy, and continuation.
In 2006, Naomi livestreamed their "virtual" summer tour on YouTube, causing a sensation across the global YouTube community. In June 2006, their song Say It's Possible was recorded in their Hollywood apartment using a Sony portable camera, then uploaded to YouTube, generating tremendous interest. With Naomi's healing lyrics and vocals, paired with the song's beautiful melody and rhythm, it instantly inspired hundreds of thousands of fans worldwide. Naomi subsequently signed with Universal Music and Island Records, performed solo concerts at Wembley Stadium, and toured across Europe and the UK.
Terra Naomi
In 2021, Naomi reclaimed the copyright to Say It's Possible from Universal Music, recorded a brand-new version, and partnered with the music NFT platform async to release this new version as an NFT.
On async — a music and art NFT minting and trading platform — users can purchase blank film strips issued by the platform using ETH or credit cards. These film strips come in silver, gold, and platinum tiers. Users can then "remix" an original song by a specific artist, ultimately minting an NFT record that is entirely their own. To illustrate the remix process using Say It's Possible as an example: async breaks the song down into components based on its style — bass + strings, guitar, drums + percussion, bells + synthesizers, vocals, and more. Each component is further divided into several subtly different versions for investors to choose from, which are then "synthesized" into a complete song.
In her introduction to the music NFT release, Naomi wrote, "Fifteen years ago, I wrote a song called Say It's Possible, and it changed my life."
Regarding her determination to transform her music into NFT format, Naomi explained that she had grown from an unknown artist into the most-subscribed musician on YouTube, with hundreds of thousands of people worldwide creating cover videos of her song. However, the experience with Universal Music was a whirlwind journey — one that Naomi felt did not maximize her best interests or bring greater satisfaction and joy to the music career she loves.
Clearly, the path of music NFTs means far more to Naomi than the song from 15 years ago — it represents a rebirth for both the song and her music career, enabled by NFT technology.
Finally, someone has to pay for music NFTs, right?
2. Who Is Paying for Music NFTs?
Mid-December, water&music — a professional music NFT research organization — conducted a survey among music NFT investors, categorizing the reasons for investing in music NFTs into four main groups: 1) supporting a specific artist; 2) FOMO; 3) curiosity; 4) other reasons.
Among all investors who purchased music NFTs, 45% were already deeply familiar with the crypto space. In other words, there are virtually no non-crypto investors buying music NFTs. The music NFT market remains confined to the crypto circle.
However, Audius may be poised to change this. Audius is a unique music streaming service. Launched in 2018, it is completely artist-controlled and community token-owned, with over 5 million monthly active users currently. In an agreement announced in mid-August, Audius revealed a partnership with TikTok to make songs from its 100,000+ artists available for TikTok videos.
Why is the music world embracing blockchain and NFTs? Grammy Award-winning British singer Imogen Heap believes that blockchain enables artists to take control of their music and the content they want to express on a much larger scale. Its many advantages include: 1) artist returns autonomy; 2) brand new revenue streams; 3) solving royalty challenges; 4) digital ownership.
Let's focus on the brand new revenue streams and digital ownership that Heap mentioned.
One key advantage of music NFT products is sustainable income. For fans, purchasing a music NFT achieves a similar purpose to buying a vinyl record, but the difference is that every buyer gains access to detailed sales information about that NFT, creating a stronger sense of participation. Additionally, when an NFT is resold on the secondary market, the creator receives a share of the resale revenue — an advantage that traditional music distribution methods lack.
On royalties: releasing a song requires collaboration from lyricists, singers, musicians, producers, recording engineers, and other contributors. When a song is played, all contributors associated with it should receive royalty payments. Under traditional streaming models, musicians frequently encounter issues of unpaid royalties and copyright infringement. Even when royalties are received, the lengthy settlement process means musicians must wait six months to a year before finally getting their returns — how many young musicians' dreams are shattered by this system!
By digitizing music distribution through NFT technology on the blockchain, and leveraging blockchain's transparent system and the automatic execution of smart contracts, artists will experience instant royalty payments.
It must be said that digital art/collectibles/music offer a more vivid illustration of what blockchain can do. Although the NFT art market remains niche, its flourishing development has already caused the global traditional art market value to drop by 5% in 2021, and has attracted hundreds of thousands of artists worldwide to the NFT space. The transformation of the music industry through music NFTs has only just begun.
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