If you’ve been around in the past year or so, you’ve probably seen the term NFT. You may even have ventured into buying a few. While the space is fascinating to watch just for its newness and rapid changes, it’s also really exciting to explore the value and benefits it can bring to creatives.
In 2021, digital artist Mike Winkelmann (known online as Beeple) sold his piece Everydays: The First 5000 Days for US$69 million at Christie’s. That’s made even more incredible after knowing that the most Beeple had sold a print for prior to this was US$100.
In the realm of music, electronic artist 3LAU sold tokenised versions of his album Ultraviolet for a grand total over US$11.6 million. Dance duo Disclosure sold one of their singles as an NFT for US$69,000. Electronic music producer deadmau5 reportedly raked in US$4 million in NFT sales with his digital collectibles. Kings of Leon released NFT versions of their latest album and donated part of the proceeds, in excess of US$500,000, to support live event workers during the Covid pandemic.
SO, WHAT EXACTLY ARE NFTS?
With how much money is already being exchanged in the space, it’s no surprise that the term is increasingly thrown around anywhere and everywhere. But what exactly are non-fungible tokens in the first place?
At its most basic definition, an NFT (non-fungible token) is a one-of-a-kind digital item. Utilising blockchain technology, they’re stored on public-facing digital ledgers – that means it’s possible to definitively prove historical ownership of any given NFT at any time. Due to the nature of the blockchain, it’s also virtually impossible to counterfeit.
While some still dismiss NFTs simply as digital ‘art’ or an ostentatious display of social status, the real value lies within its flexibility. Since NFTs are programmable, their purpose – utility – can be expanded over time, spanning both the digital and physical worlds. Think of it like a website; creators can attribute an extremely wide range of functions and benefits to your NFT.
As Harvard Business Review points out, "NFTs can function like membership cards or tickets, providing access to events, exclusive merchandise, and special discounts — as well as serving as digital keys to online spaces where holders can engage with each other." Owning an NFT essentially grants you access to an exclusive ‘members only’ club with as many or as few benefits that the creator includes.
THE VALUE AND BENEFITS OF NFTS FOR CREATIVES
The clearest value that NFTs bring to artists, musicians, writers, and other creatives is a direct line to their audience. Since NFTs are part of a blockchain-powered system, they allow artists to sell their digital artwork and music directly to buyers without having to go through a third party. The immediate result? Higher profit potential.
Yet, there’s a question many in the general public will ask first here. If NFTs are digital, can't somebody just copy them? Can’t I just download a version of it?
Sure, it’s very possible that millions of copies of an NFT digital art piece or music will crop up. But there is only a single, or very limited number of original pieces and owners. What the owner has is a promise from the creators that there will be no more release of 'the originals.' Especially if the NFT is tied to different utilities, like acting as a ticket to real-world events, only the true buyer and owner of the unique NFT can cash in those benefits.
For creatives, the power of NFTs and their possible utilities also allows you to cultivate your own audience – a community built on and connected through these digital tokens. By fully utilising the inherent rareness and exclusiveness of NFTs, it’s easier than ever to give your supporters direct benefits that in turn, turn your community into even bigger supporters. Think: NFTs as early-bird passes to your future collections, exclusive access to unreleased music, lifetime tickets to your concerts…
Lastly, NFTs usher in new profit models for artists and creatives. Since they’re programmable, NFTs make it possible to seamlessly compensate artists with resale royalties. That means every time your original NFT is resold, you receive a share of each and every transaction with no other middleman.
WHAT CAN NFTS DO FOR MUSICIANS?
Where musicians and NFTs are concerned, the first thing that comes to mind would be exclusively released albums and singles. Yet, benefits can take many other forms: concert tickets, handwritten lyrics, custom sound samples, unreleased images, and more.
As many sources point out, public distribution of these items helps to ensure transparency and keep things honest by preventing tampering and fraud. It perpetuates the attributions of rights and tracking transactions. In many ways, it’s like owning a photo of your favorite musician that’s been hand-signed; people can copy the photo as much as they want, but you own the original.
There are already a number of online sources that offer music or audio NFTs. Sites like Rarible sell or auction a wide array of NFTs linked to its music. Mintable says it offers musicians a way to mint “gasless” NFTs, without the charge normally levied when making transactions on the blockchain. A relatively new NFT source is Myx. There, among other things, artists can release unlimited tracks and collections as one-of-ones or multiple edition NFTs, which then automatically appear on popular NFT marketplaces like Polygon and Open Sea. There are even genre specific NFT sites like XLR8r, which caters just to electronic music.
On the other hand, MusicArt connects the music with visual arts, presenting music photography, original album art covers as well as music itself. For example, they offer music connected art from album cover giants like Ioannis, who created album covers for bands like Deep Purple, Allman Brothers, Uriah Heep, Styx, Blue Oyster Cult and others.
THE FULL POTENTIAL OF NFTS
To really appreciate the importance of NFTs’ opportunities, it’s good to remember that music is a highly centralized industry. Three key major labels – Sony, Universal, and Warner – control the lion’s share of the industry with an estimated 66–80% market share.
The situation didn't get any better with the advent of streaming services like Spotify; most of these platforms keep a large portion of all revenue, with little making its way to the original artists. Up until now, it was then left to musicians to generate 75% of their revenues from touring and doing live shows. Clearly, the Covid pandemic hasn’t exactly helped the situation, especially for smaller, lesser-known acts.
Cue NFTs: an opportunity for artists to deliver their music directly to consumers, without the need for a third-party intermediary.
We’ve already seen many artists and bands release their latest singles or albums as a limited NFT release. Kings of Leon released their album When You See Yourself through traditional methods like iTunes and Spotify, but also released an exclusive NFT version that included a digital download of the music. It was bundled with special perks like a limited-edition vinyl version of the album, digital artwork, and a token that proves ownership of the asset.
In addition to the standard NFT versions of their album, Kings of Leon also released a very limited number of “golden ticket” NFTs with exciting perks for fans. These lucky owners got access to front-row tickets to any concert on any of the band’s tours, for life. Kings of Leon also didn’t do too shabby, generating over US$2 million in sales just from their NFT releases.
So, whether you’re still a little skeptical or fully on-board, it’s clear that the possibilities and advantages of NFTs for creatives and artists are many. The most exciting thing? There’s still so much left to be explored.
Cover Credit: Michael Tullberg / Getty Images
Writer | Ljubinko Zivkovic
Started out as a freelance journalist, did stints as a diplomat and a translator, and now back to freelance journalism. Keeps on clicking on those keyboard keys. Find him here.