In 2021, the music business began considering NFTs seriously. A few artists started NFT initiatives that drew much attention from fans and brought in millions of dollars.
The NFT and cryptocurrencies in the music industry are still in the early stage of development. However, the potential for refreshing methods to monetize work without releasing music conventionally and more direct artist-to-fan engagement enables such an exciting technological advancement.
Here's all you need to know about music NFT investing and participation.
Introduction to Music NFT
Although NFTs are commonly associated with digital photos traded as commodities with blockchain as the foundation, users may actually use them in various options. The NFT business has catapulted it into one fast-growing ecosystem when it comes to music.
What is music NFT? On the surface, music NFT seems to be another blockchain based option in addition to iTunes purchases. Purchasing a track on iTunes means that users are just buying the right to listen to that song without actually owning it. Music NFTs, on the other hand, let anybody listen to tunes while simultaneously granting ownership of the material.
Hence, music NFTs beg us to question why we might want to pay for music we can already listen to. Some people think of it as purchasing JPEGs, in which users can just save with a right-click. Businesses and markets alike highly value the ownership of original and creative commodities.
For some of these businesspeople, such value generates from a more devoted connection with a favorite artist. Others may be interested in gaining financial exposure to a singer they feel will succeed. The value of the invested music NFT might soar if the musician turns out successful.
Besides making a lot of money using NFTs, there are other benefits like many different ways to use them. For instance, artists can give fans access to in-person meetups, exclusive sections during concerts, and reduced concert tickets.
The entire process depends on how the artist wishes their NFTs to be structured. Though, music NFTs, like JPG NFTs, don't grant customers any royalty or copyright rights unless they specify it.
10 Types of NFT You Need to Know, Which One You Like?
Music NFT Marketplace
Even though OpenSea, the largest marketplace for NFTs, offers a curated archive for music NFTs, most singers opt to start on a music-based podium instead.
Catalog, for instance, is a safe, decentralized platform for buying, selling, and storing cryptocurrencies such as Ethereum, Bitcoin, and others. It has been one of the leaders in the collection of single-edition music NFTs (or referred to as 1/1s) significantly. An estimated $2 million profit from music NFTs has been generated here.
Besides this type, singers also like to go with limited editions where several tokens of NFTs are linked to one soundtrack. FormFunction, Arpeggi, and Foundation are among these platforms that allow singers to create 1/1s.
Furthermore, distinctive genres have specific places, such as Groovetime for dance music. Beat Foundry allows users to create generative music, an innovative genre that builds collaboration between humans and computers.
Music NFT DAOs
Decentralized autonomous organizations, or DAOs, are not that much different from cooperatives that utilize crypto-based investment. Some also provide funding to NFT creators. Subscribers of MusicFund, for instance, receive NFTs that they vote on each month. The vote aims to award ETH to three musicians, where the selected ones will each obtain 0.15 ETH, 0.25 ETH, and 0.6 ETH. Receiving recognition is also one of the perks besides the money.
Other DAOs that focus more on investing are usually designed to foster the artists while supporting music NFTs. Noise DAO is one of the good examples of this. They have launched with 65 members who have collectively accumulated up to almost 1,800 ETH.
Theoretically, music NFTs are only available to verify on-chain ownership of a token linked to a sound file. No more rights and most critically, royalties, are granted, including, most critically, no royalties. However, things have changed, and marketplaces have begun to challenge this status quo.
Royalties assist singers in producing royalty-bearing NFTs known as LDAs (Limited Digital Assets). This process makes it easier for fans who own NFTs to share earnings from streaming royalties. 3LAU, for instance, received the marketplace's first LDA in October 2021 for his song Worst Case and related work. The streaming royalty rights are split 50/50 among the NFT holders.
One more place that attempts to bind royalties into music NFTs is Opulous, where a part of the music copyright belongs to the token holders after an agreement is established with the artist.
How to Invest in NFT Music
Blockchain technology might help artists build more immediate contact with their followers, but note that it's not free, especially if you're thinking about minting NFTs. The costs of releasing it can quickly mount, and it's also the case in music NFTs' purchases. Ethereum network gas fees, marketplace costs, and other possible royalties withheld by the artist may abate your resale earnings.
To purchase an NFT, you will need Ether because most NFTs are housed on the Ethereum blockchain. However, other blockchains like Algorand are also fast-growing into NFTs. Once you've completed a quick identity verification process, you can proceed to purchase the cryptocurrency you require on platforms such as Binance and Coinbase.
Remember that historical works of art are essential not simply because of the creativity involved or the piece's overall quality. They're also valuable since they're one-of-a-kind, a refreshing quality in today's music industry. Rarity is also worthwhile (think about a vintage vinyl record with minimal copies created!).
Some initiatives produce many digital tokens that signify ownership of a digital copy of the music and related artwork. All in all, it's essential to consider that supply and demand are crucial factors when it comes to purchasing music NFTs.
As musicians begin to toy with NFTs and communicate with their fans in a new fashion, the crypto industry saw their chances to interfere with such a refreshing battleground. It breathes new life into what has been an impersonal musician-fan connection in the age of streaming. Since purchasing music NFT isn't for everyone, proceeding with caution is highly advised.