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NFTs in the music industry

A new way for artists to generate more revenue, or will record companies be the first to take advantage of the NFT movement?


In an industry where record labels and streaming services retain a large portion of artists' profits, Non-Fungible Tokens (NFTs) are increasingly being used as a new and independent source of revenue for musicians. Music-focused NFTs offer a new way for artists to become independent (indie) and monetize their work on the blockchain without the need for a third party.


  • Blockchain for artists

  • The antiquated model of the music industry vs. NFT marketplaces

  • How do audio NFTs work?

  • A beneficial opportunity for musicians

  • The NFT marketplace: still young but growing


Non-fungible tokens (NFTs) offer artists the opportunity to exploit their work in unprecedented ways. Whether in the art or music industries, there are many middlemen in the creative industries who take a large portion of the artists' profits in exchange for distribution, marketing, or access to large volumes. Whether it's an art auction house or a record label, NFTs offer a unique opportunity to completely overturn an outdated system and provide more equity, not only for art creators but also for consumers and fans. This is why NFTs have gained so much notoriety in such a short time.

NFT-enabled creative works use automated smart contracts (automatically executed programs on the blockchain) that authenticate a work and track its provenance and value as it changes hands - a process that was tedious, slow, and error-prone before the advent of the blockchain. Original artists can now keep most of their profits when they first sell their work - by current standards, NFT artists keep around 80-90% of sales - plus receive a percentage of each subsequent sale. These processes are cryptographically secured and guaranteed by smart contracts that eliminate the need for costly middlemen and gatekeepers. With the ability to give musicians more money on the first release of an album or song - and the ability to guarantee payment of pre-determined blockchain royalties from that point on - NFTs make a strong case for completely reinventing the prevailing music industry payment model.


Just as blockchain technology and cryptocurrencies are bringing the ethos of decentralization to the traditional financial sector, the music industry is ripe for a radical restructuring of value creation. The music industry is a highly centralized one, with three major record labels - Sony, Universal, and Warner - controlling the lion's share with an estimated 66-80% market share, a figure that fluctuates slightly from year to year.

Unfortunately for many music creators, many indie record labels are also owned by a parent company that is affiliated in one way or another with one of these three giants. For music artists, this means that there are not many opportunities to generate independent income, even if they are traditionally called "independent".

With the digitization of music, which started with Napster and led to the ubiquitous growth of Spotify, recorded music sales have taken a back seat to streaming services, which are also notorious for hoarding much of the revenue, so that very little goes to the original artists. With most of the revenue being siphoned off by the labels and streaming platforms, it is estimated that music artists earn 75% of their income from touring and live performances.

The unfortunate reality is that music artists are suffering - both from the traditional industry model and from circumstances that limit their ability to host live events - and many are eager to explore new revenue streams. NFTs offer artists the opportunity to deliver their music directly to consumers without the need for a third-party intermediary. Many artists hope that NFTs will provide a new way to get paid fairly for their work through blockchain music licensing and royalties. And while NFT music releases are unlikely to completely replace the role of record labels, they are likely to help artists diversify and increase their revenue streams.


NFTs have so far mostly been linked to an image or video. In most cases, this is also true for music artists. Most musicians who have experimented with NFTs so far have released an image or a video that has been combined with an audio pair that runs in a loop. You can think of the image or video pair as a kind of album cover; it's an original image that is inseparable from the music.

Even in this early form of music NFTs opened up whole new possibilities for musicians and visual artists to work together and create unique collaborations. Many music artists seek out visual artists as collaborators to create their NFTs. Each NFT can be programmed using smart contracts with different specifications, but this is just for illustration.

As an example of what this process might look like, let's look at the NFT release of Kings of Leon's album "When You See Yourself". In this case, the band released the album through traditional channels such as iTunes and Spotify and released an exclusive NFT version that included a digital download of the music. There was also an exclusive NFT version that included a digital download of the music and came with special extras such as a limited edition vinyl version of the album, digital artwork, and a token proving ownership of the asset.

Artists can release rare, one-off NFTs via auction, sell a limited number of NFTs at a fixed price, or release an unlimited number of NFTs for a set period of time. In this case, Kings of Leon only offered their NFT album for sale for a fortnight, after which no more copies were produced and those in circulation became collectors' items.

In addition to the normal NFT versions of their album, Kings of Leon also released a very limited number of "Golden Ticket" NFTs, which offer fans exciting benefits such as lifetime tickets to a front-row concert on one of the band's tours. Anyone who owns these NFTs can access these benefits, which are easily and transparently transferable via the NFT standards, should a holder ever wish to sell their NFT. In this way, NFTs can be creatively designed to create special relationships between artists and their fans.

While extremely rare and collectible items like these golden tickets were made available to superfans and sold for prices in excess of $90,000 USD, a wide range of fans were still able to participate in Kings of Leon's NFT offerings by purchasing the standard NFT version of the album for $50 USD.


Even if NFTs do not revolutionize the economic model of the music industry, music artists can benefit from NFT technology even if they sell individual tokens. Many major artists have already started to monetize their music with NFTs. For example, electronic music artist 3LAU tokenized versions of his album "Ultraviolet", which were then sold as NFTs for a total of more than $11.6 million. Dance music duo Disclosure sold an NFT version of a single song for $69,000. Kings of Leon released NFT versions of an album and donated the proceeds of more than $500,000 to benefit workers at live events. And Grammy-winning music producer RAC has earned a reputation as a pioneer in the field, experimenting with various forms of NFTs since 2017.

Although NFT music still has a long way to go to become an industry standard or even a commonplace phenomenon, this exciting new method of music release is already showing signs of life thanks to these pioneering artists. Although only a few NFTs have been released so far, they are generating a lot of interest and engagement from fans, collectors, and speculators. Music artists around the world have become aware of NFTs and have begun to use them as a creative outlet and potential source of income.


NFTs represent a new technology that is still in its early stages, and many believe that the impact of NFTs on the prices of art, music, and collectibles will be determined by "firsts" such as the first NFT album, song, or painting of its kind. This focus on precedence is not new in the world of art, as collectors have long valued first edition books, records, and more.

NFTs not only provide an equitable payment method for artists and a potential new revenue stream but also open the door for artists to find new ways to release music and collaboratively create unique artworks to share with their fans. It remains to be seen how widespread the NFT phenomenon will become, but the music industry has targeted NFTs as a potential new frontier in music.


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