The Promising Future of Music NFTs: A Game Changer for Artists
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Chapter 1: A Shift in the Music Landscape
The transition from the "We're All Gonna Make It" (WAGMI) mindset to a bear market has occurred rapidly. With the distractions in the crypto realm now diminished, it's an opportune moment for innovators to create authentic solutions. I have a positive outlook on Music NFTs.
While we often see artists flaunting luxury items like G-class cars and gold chains, the reality is that they earn a meager income from platforms like Spotify. In 2021, artists received a mere $0.00397 per stream, which means it takes 250 streams just to earn one dollar. Furthermore, when users pay for premium music subscriptions, a staggering 85% of that revenue goes to record labels, leaving artists with the least compensation. Many artists still opt for label contracts to receive upfront payments, enabling them to dedicate themselves fully to their craft and produce music videos.
If you're interested in understanding record deals and album advances better, be sure to check out this informative video.
Section 1.1: The Promise of Music NFTs
How can Music NFTs make a difference?
Musicians now have the opportunity to sell NFTs directly to their fans across the globe, allowing them to retain the majority of the profits. This approach shifts the financial dynamics from middlemen to the artists and their audiences. Additionally, artists can earn royalties from secondary sales indefinitely.
To illustrate the potential: previously, an artist earned $1 for every 250 streams. However, if 250 dedicated fans purchase a $400 NFT, the artist would generate $100,000, only needing to cover a 2.5% platform fee.
Subsection 1.1.1: Phased Adoption of Music NFTs
The adoption of Music NFTs will be gradual:
- First Phase: Selling logos, album covers, concert photos, and other iconic art.
- Second Phase: Offering utilities like concert tickets and VIP experiences.
- Final Phase: The sale of master recordings.
Currently, there’s no clear method for selling a song’s master recording, which presents a challenge. Artists will require legal guidance to draft agreements that clarify that the buyer owns the file but does not have control over its usage.
However, the NFT market is experiencing a downturn. For example, Jack Dorsey’s NFT tweet, which sold for $2.9 million, now has a highest bid of only $29. Similarly, a CryptoPunk NFT purchased for over $1 million is now valued at less than $140. Additionally, there was a recent phishing attack on the Bored Ape Yacht Club Discord that resulted in a $357,000 loss in NFTs.
Section 1.2: The Current NFT Market Landscape
Just as 60,000 tracks are uploaded to Spotify daily—many of which go unheard—there is a multitude of NFT projects, with 98% likely to fail. During the "NFT Summer," many overpaid for NFTs that have since lost value. We can expect Music NFTs to experience a similar trajectory, reaching a peak followed by a stabilization period, ultimately leading to the demise of a significant number of projects. This could happen within one year, five years, or even ten years.
Despite these challenges, I believe Music NFTs have great potential to address real issues. They offer collectible appeal for superfans, provide bragging rights to those who discover artists early, and their value can increase alongside the artist’s popularity. This creates a new investment opportunity where proceeds go directly to artists. The scalability of NFTs allows artists to focus more on producing quality over quantity; one exceptional song could secure their future.
Moreover, NFTs present an environmentally friendly alternative to traditional merchandise, eliminating the need for artists to put their logos on every Gildan shirt. Ultimately, music consumption and merchandise sales from beloved artists will continue unabated.
Chapter 2: Are Artists Embracing Music NFTs?
The first video titled "RANT: Are Music NFT's Dead?" discusses the current state of Music NFTs and their viability in today's market.
The second video, "3 Steps To Sell Music NFTs as an Artist in 2024 (Music Business)," provides valuable insights for artists looking to navigate this emerging landscape.
What does the future hold for Music NFTs? Instead of record labels acting as primary partners, fans will become minor stakeholders in an artist’s journey. This shift has the potential to transform the lives of underpaid and overlooked musicians.
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