NFTs. From Nyan Cat to Grimes, it seems creatives and entrepreneurs of all calibers are cashing in on the fascinating trend. An NFT can be anything, from an original artwork or song, to pictures of funny cartoon characters, or photos of people selling mirrors online. As long as you own it, you can sell it.
While some people might think that NFTs are just images you can screenshot, or a video you can download with a YouTube to mp3 converter.
We know that NFT’s can generate insane purchases, such as 5 Andy Warhol pieces selling for over $3 million, or Nas selling royalty ownerships for his track Ultra Black. Exciting possibilities indeed, but let’s jump back to reality for a minute.
The large majority of us aren’t rich and famous, or at least, Andy Warhol-level rich and famous. So, the real question we should be asking is, can artists who aren’t already millionaires actually make money from NFTs?
Truthfully, it’s a difficult question, with no easy answer. But that doesn’t mean we can’t take a holistic look at the existing NFT market to learn what’s working, and what isn’t. Whether you’re an indie artist looking to generate more income, or you’re researching NFTs as an investment option, here are some potential advantages and disadvantages of the digital phenomena.
— TerraZero (@TerraZeroTech) January 26, 2022
Here’s the USP (unique selling point) that make NFTs so enticing: unlike other cryptocurrencies, NFTs are non-fungible, meaning irreplaceable. Once an NFT is minted, whether it be an audio clip, animation, or something else, that NFT is one of one. Period. If you own the NFT of an album cover, no one else can own that NFT or duplicate it.
Viral entrepreneur Gary Vaynerchuck recently dropped two valuable nuggets regarding NFTs and the music industry. During a zoom discussion with NFT-utilising artists, he stated, “the consumer blockchain [NFT code recordings] is a ledger that is more effective as a piece of technology to distribute, than anything we have in publishing. It’s also a fundraising mechanism”.
This is a game changer if true. How? Instead of waiting for a record deal to foot your recording bills, an NFT of your existing royalties could raise funds to get you working on that debut album far sooner.
So, if you’re a blooming artist, why not upload your demos or artworks as NFTs? That way, if a backer really believes you have a strong future in the music industry, they can invest in you and own a slice of your musical pie, so to speak. A slice that they’ll probably sell off later for fat stacks to your newest die-hard investor, but hey, you earned that startup cash from them when it really counted.
Also, here’s another huge perk: when initially selling your NFT, you can customise it to pay you a percentage every time the NFT switches hands.
As you probably guessed, some ground-level artists are already taking full advantage of the NFT music market in its youth. Music and digital artist MadeByTzuki is already selling original NFT artworks that also include one of one exclusive music. His first minting, titled Cybers. Elf – Genesis, sold for 1.069ETH, which is about $2,580.44 AUD.
Elsewhere, singer/rapper Nardean teamed up with Budweiser to sell 500 NFTs, and they’re already getting re-bought on the secondary markets. Not bad at all.
Isaac Lewis, Sydney artist manager and founder of Bloom had this to say about the emerging marketplace. Following nine NFT-related meetings he had the very same day, Lewis believes “artists won’t just need a publisher, manager, and marketing team, they’ll need an NFT team!”
Why? Because an NFT can offer consumer benefits beyond the image, animation, or audio. For example, NFTs grant the opportunity for fans to invest in track royalties, but with this comes the requirement for coders to actually make these fund transfers possible. Sure, Nas could afford this, but what about unsigned artists?
— Made By Tsuki (@madebytsuki) April 16, 2021
The biggest fear in every NFT investor’s heart right now is the fickle nature of such trends. If people fall off the NFT bandwagon, question its existence, or simply forget it as a viable investment strategy, NFT creators lose. Big time.
Millions of dollars have already been shelled for NFTs solely based on perceived value. If NFTs aren’t adopted as a business practice by enough music industry heads, their appeal will start to shed, and investments could plummet in value. The looming factor that makes NFTs a wary investment is that they aren’t as tangible as physical ownership.
Ask yourself this. What’s more valuable? Owning the handwritten lyrics of Hey Jude, or the NFT of it? The former, obviously. It’s far higher on the liquidity scale because unlike an NFT, the owner has a tangible piece of memorabilia that cannot be replicated. The NFT, on the other hand, can be downloaded and viewed by anyone. Sure, its blockchain and ownership cannot be replicated, but the product itself has still lost part of its individuality.
Therein lies the crux for ground-level artists looking to jump into the NFT game. How can you make your NFTs as enticing and exclusive as possible? It’s certainly not going to help the perception of your brand if your NFTs remain untouched on the digital marketplace, or worse, fall in value.
If you are going to dabble in NFTs, how can you make them desirable? An eye-grabbing digital artwork or animation is definitely a strong foundation. MadeByTzuki certainly utilised his digital artwork talents as well as his musical talent to sell his.
Exclusivity is, of course, an essential factor to consider. Why not throw an unreleased B-side onto your NFT? It’s something fans will have to pay to hear, increasing your NFTs level of individuality.
There are a few companies worth spotlighting that have already carved out a name for themselves in the NFT space.
Songcamp is testing out an innovative concept dubbed Songwriting Camp (go figure), in which artists collaboratively work on songs from scratch, visual artists create a cover artwork for these songs, and project operatives “create and execute a web3 distribution plan” for said music. To cap off the The ‘songcamp’ is sold off as a 1/1 NFT, in turn funding the entire project.
Audius is another frontrunner, creating a space especially focused on streaming unsigned artists to incentivise potential investments. “Audius is clearly the way forward”, deadmau5 asserts.
Elsewhere, Madadao is peering into all nooks and crannies of the music/digital marketplace convergence. The platform emphasises a “dedication to the adoption of Web3 in the music industry via NFTs, micro-listening, DAO governance and DeFi”.
No matter where you stand on NFTs and their role in the music industry, it’s certainly a marketplace to keep your eye on. The potential of NFTs as not only an income stream, but a means of audience growth, is only in its elementary stages. Should ground-level musicians jump on the NFT train for maximum income?
Potentially, but we’d recommend as much research as possible, and a healthy dose of that creativity your audience loves you for, before hedging any bets. In the meantime Happy will continue to invest in forward thinking tangible content like our recent PS6 article.