The Beginner's Guide to Music NFTs
levychain
0x7466
May 9th, 2022

NFTs are opening the door to a new business model for musicians, allowing them to monetize their music in a way that has never been done before.

The world music artists live in is arguably corrupt as they go through complex steps to get their music heard and fight with treacherous TikTok and audio streaming algorithms to achieve virality and make money.

Not everyone is a social media artist and minimizing the value of art to a price-per-stream is outdated, leaving a long tail of creators struggling to make ends meet, until now.

Enter: Music NFTs

Tokenized WAV files are the latest rage across web3 with platforms putting independent artists at the forefront, liberating their creative freedom and giving them a new medium to build, monetize and own their audience.

This blog post compiles my insights from Season 4 of the podcast, spanning over 30 episodes featuring the top minds in the music NFT sector.

By the end of the guide, you’ll have more context into music NFTs, why they’re important, and how to properly navigate the latest opportunity in web3.

Article Breakdown

  • What do Music NFTs Look Like?
  • Why are Fans Lining up to Buy Music NFTs?
  • Why are Artists Selling Music as NFTs?
  • 2 Different Types of Music NFTs
  • Who Are the Top Music NFT Artists?
  • Who Are the Biggest Buyers of Music NFTs?
  • How Do NFTs Help Musicians Better Monetize Their Work?
  • Top Platforms To Collect & Mint Music NFTs
  • Where to Publish Music in Web3
  • Best Communities To Join in Web3 Music
  • Best Content To Consume in Web3
  • Conclusion

Let’s dive right in. :)

What do Music NFTs Look Like?

There are many different ways to characterize a music NFT. The most common is that it’s an audio file that holds the music you wish to purchase (or have purchased), which could be a single, an album or a playlist. Then there are “visualizations” of said music, including still images or videos, and often accompany an audio file.

Why are Fans Lining up to Buy Music NFTs?

One question I’ve heard is, “Why would anyone spend money on an NFT that supports music artists?” There are many reasons why NFTs for music could be desirable.

Fans want to own a piece of history, and NFTs are a great way to collect rare music with the security and ownership that comes with blockchain verification.

For fans of artists like Grimes and Kings of Leon, this has been an opportunity to get closer to their idols, while others have seen the potential for making money.

Artists and bands oftentimes tie in additional perks to their NFTs where fans can secure access to exclusive rewards and experiences like VIP tickets for the next tour or studio sessions with band members. Take Alaina Castillo for example, who recently sold-out a drop on Sound.xyz. The winner of her Golden Egg received 2 VIP passes to Weekend 2 of Coachella and watch her perform live. How cool is that?

So, why would anyone pay over $1,000 for a digital record?

The answer is simple: the people buying this NFT aren’t just buying a digital file. They are investing in the future of their favorite artists, and an opportunity to support them in an entirely new way.

Why are Artists Selling Music as NFTs?

Musicians are selling their songs as NFTs for a variety of reasons. Some may see it as a way to diversify revenue streams, while others may view NFTs as a marketing tool or simply an extension of their brand.

The potential benefits for artists who sell music as NFTs include:

  • Generating new income streams
  • Increasing fan engagement
  • Gaining instant exposure to a new type of audience online
  • Building your brand and reputation in the industry

Take Daniel Allan for example, who raised $180,000 for his EP titled Overstimulated. The project and story are a true work of art and exemplify what's possible with just 300 Twitter followers and an ambition to succeed.

Even if they don’t directly profit from selling NFTs initially, they may gain new fans who will buy merchandise or attend shows in person later on.

Independent artist Queen George, for example, hosted a concert during at Eth Denver in February of 2022, where she performed for a crypto-native audience. She minted tickets for free as NFTs and gained over 100 Ethereum collectors who attended future concerts, purchased her NFTs, and now regularly listen to her music.

2 Different Types of Music NFTs

The main types of music NFTs today revolve around two themes: patronage and ownership. You own both NFTs at the end of the day, though what you own differs across each type. Throughout this section, I'll be including some episodes from the podcast for you to reference.

Patronage NFTs

Patronage-based NFTs are collected to support an artist with collector upside derived from appreciating secondary sales.

Artist royalties are accrued through secondary sales and, depending on their popularity, often outpace what one would earn through web2 streaming platforms. Reference RAC as an example:

Patronage evangelists argue that, for the first time, there’s finally a way to value a song in its proper artistic form, hence why it’s worth collecting.

You can gain a solid understanding of this narrative by listening to my episode with Catalog founders Mike Mckain and Jeremy Stern, who shared why music NFTs and the art of collecting are merely the start of building a better future for the music industry.

It’d be worth checking out Mint Song’s take on this narrative as well as LimeWire’s perspective on this model.

Ownership NFTs

Ownership-based music NFTs involve buying a fraction of a song’s IP, with collector upside generated through copyrights and streaming royalties accrued by the song on web2 platforms like Spotify and Apple Music.

While ownership on-chain is still a grey area, some call this format a meme, while others argue this is the most authentic way to value a song.

NFT thought leader, EDM DJ, and founder of Royal.io Justin Blau outlines his perspective on the two different formats and why the ownership model will eventually prevail.

Who Are the Top Music NFT Artists?

As a medium that's still in development, there are few prominent music artists churning out fully-realized NFTs. The list is quite short, and includes some of the following:

Some artists worth keeping an eye on

Who Are the Biggest Buyers of Music NFTs?

Who's putting their money into this new technology and making it grow? The list includes everyone from everyday NFT collectors to super fans, large investors, and other musicians to record labels. These are the people who are fueling the rise in music NFTs—and helping them scale from a niche market into a mainstream phenomenon.

In Mint Season 4, we learned that Justin Blau doesn’t understand the value of collecting purely patronage-based NFTs, while collectors like Cooper Turley have spent over 100 ETH on them.

Cooper’s session ended up being the most extended episode in the season, coming in hot with 1.5 hours of pure alpha.

We talk about everything from his NFT investment thesis, buying editions vs. one-of-ones, tokenomics, and so much more.

Another collector worth checking out is Brett Shear, aka BlockchainBrett. He's the head of venture investments for DJ Kygo's Palm Tree Crew fund. He's one of the OGs who started collecting music NFTs before anyone really knew what they were.

I've curated the top 300 music NFT collectors by Twitter Handle, Crypto Address, Platform Collected On, and Estimated Portfolio Networth.

To view this detailed database, you'll need to collect Mint Season 4's Participation Pin and unlock the page for access. More info can be found here.

How Do NFTs Help Musicians Better Monetize Their Work?

The upside for musicians is that NFTs are a new way to monetize their work in the digital realm. Especially when paired with streaming services, NFTs provide a new digital way for fans of the music to buy and collect it. Collectors can trade or resell their digital assets with true on-chain ownership of an artist's NFT at will.

NFTs have a number of potential benefits for musicians, including:

  • Enable them to sell a one-off item
  • Provide a new revenue stream from sales of "collectible" versions of their art
  • Provide a way to sell a "digital experience."

Top Platforms To Collect & Mint Music NFTs

I'm also looking at the opportunity from an investor standpoint. There are already numerous examples of people earning returns that would be considered life-changing for most people.

So, here's a list of a few platforms to collect and mint music NFTs. Some are gated and undergo a highly curated process, while others are free to mint. Every platform is open to collectors.

Curated and gated NFT minting

Free NFT minting

Where to Publish Music in Web3

Beyond publishing your music on Spotify, Apple Music, and related streaming platforms, I highly recommend you explore Audius, the SoundCloud of Web3.

The decentralized streaming platform allows artists to host their music and listeners to stream it. Like SoundCloud, Audius lets you upload your songs, create playlists and follow other users. But unlike SoundCloud, Audius is decentralized and peer-to-peer so no one can censor your music.

What does that mean? Instead of having to pay for data centers to store the music files, Audius shares all files and metadata using IPFS by creator node services, registered on Audius smart contracts. And instead of having to pay for servers to route traffic between users, Audius uses IPFS to connect users directly with each other.

Furthermore, Audius may be a better solution for artists and listeners over centralized platforms like SoundCloud and Spotify in the long run as all users have platform upside via the $AUDIO token on Solana.

Best Communities To Join in Web3 Music

You may have heard about these crypto-based communities, known as web3 groups. These are often on Discord, Telegram, and other platforms, where fans can congregate to discuss particular NFT projects.

Here's a list of some of the best web3 communities for music NFTs:

Additionally, all of crypto and web3 lives on Twitter, so if you don't have an account, start one. If you already have an account, engage with the right thought leaders and shit posters to curate the ultimate feed. A good place to start is following some of the folks I follow: https://twitter.com/levychain/following

Best Content To Consume in Web3

With the explosion of non-fungible tokens (NFTs) in 2021, there’s an increasing demand for content that can help people understand why NFTs are important. The following resources will help you learn what you need to know about web3, DAOs, social tokens and NFTs:

Conclusion

The guide is only a short introduction to the world of music NFTs, but hopefully, it provides you with enough information to begin your artist journey in web3. There are many more aspects of the ecosystem that have not been covered in this guide, and future posts will likely go more into depth on specific topics.

If you have any questions about NFTs or preparing a drop, hit me up whenever on socials: @levychain everywhere.

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Nothing here is intended to be financial advice. Always do your own research!

Full Disclosure: I’ve invested in some of the projects mentioned in this post.

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