The revolution will not be televised – it will be shaped. Earlier this year we saw the meteoric rise (and fall) of non-fungible tokens or NFTs in mainstream media and popular culture. We’ve all heard about it, but was the hype real? Top business people and media moguls like Mark Cuban and Gary Vee continue to advocate NFT usage and the role smart contracts will play in the near future as new NFT exchanges and drops roll out every week. Jay-Z’s Twitter profile picture is an NFT CryptoPunk.
With or without the buzz, one of the strongest and most overlooked effects of NFTs on the music industry. NFTs have the power to change the game for independent artists by providing a new way to earn an income (and connect with fans at the same time), and that kind of change was long overdue.
Related: Beyond the hype: the real value of NFTs has yet to be determined
Music and musicians
There are some aspects of NFTs that make them very attractive to musicians. The first is financial: NFTs are sold at extremely high prices. Superstar artists like Kings of Leon and Steve Aoki have sold NFTs for millions of dollars. Lesser-known artists like Vérité and Zack Fox have also made tens of thousands of dollars selling NFTs. Artist Young and Sick only had 27,000 followers on Instagram when he sold an NFT for $ 865,000.
These numbers are incredible, especially when you compare them to the payout rate of streaming platforms. Streaming platforms have been one of the main sources of income for musicians in the digital age and grew even more during last year’s COVID-19 pandemic as income from live shows dried up. However, the payout rates from these platforms are not very high yet. This has been a hot topic since its inception. Spotify pays out around $ 0.003 to $ 0.005 per stream on average. That’s about $ 3,000 to $ 5,000 for 1 million streams, but 1 million is a large number for an independent artist.
In 2020, there were only 13,400 artists on Spotify who made more than $ 50,000 (the average wage for U.S. workers) of annual sales. With these stats, you can see how NFTs look like a real opportunity – sell a song or collectible and you can make more from one sale than you could get your entire career from one streaming platform. NFTs can also generate recurring sales: they can be encoded so that the original creator receives between 2.5% and 10% of a sale each time the token is resold. That is quite nifty indeed.
Related: Non-fungible tokens from a legal point of view
NFTs for musicians
For musicians, the other value of NFTs is their “unlockables” feature – basically, creators can add extra perks to an NFT’s contract. These can range from a personal video call with a fan to shoutouts or physical products, or even giving up partial ownership of a song. This last case is unique in that artists can now treat songs as investments – they can create an NFT and give up 30% of the ownership of a song. This gives those who donate money the chance to get an actual return on their investment while the artist has money in their pocket. This is like a more rewarding version of a crowdfunding site.
Even in India, where I live, NFTs and cryptocurrencies are gaining popularity. Currently, over 15 million people in India own cryptocurrencies valued at around $ 6.6 billion. Visual artists in India have made the leap into the NFT metaverse with the sale of 2D and 3D artwork. In May, a South Indian musician sold an NFT of his demo for $ 200,000 (15 million rupees) – that’s crazy. There is still a lot of research to be done in the NFT space, but the potential is there. The high quality and unique reward system that NFTs offer is a revolutionary opportunity for musicians – one that I definitely recommend.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are those of the author alone and do not necessarily reflect the views and opinions of Cointelegraph.
Jay Kila is an international hip hop artist based in Mumbai, India. Originally from New York City, his music combines witty lyrics with crisp performance to create party anthems. His work was featured in Rolling Stone India, Desi Hip-Hop, Hello Magazine, as well as on The Today Show. He just got the first hip hop NFT EP from India called. released No free tracks.