Music industry

Can NFTs Challenge the Traditional Music Industry?

A version of this article originally appeared in the TIME Into the Metaverse newsletter. Subscribe to receive a weekly guide to the future of the internet.

It’s brutally hard for most musicians to make money in the age of streaming. Artists are paid fractions of pennies per stream, and many struggle to find significant audiences: data from 2019 and 2020 shows that 90% of streams go to the top 1% of artists. Even a moderately successful artist like Daniel Allan – whose songs have been played in the millions in 2020 – received only a few hundred dollars a month from streaming, which left him with tasks such as mixing and mastering. music from other artists to pay the bills.

But over the past six months, Allan has turned to a different model that allows him both financial and creative freedom: NFTs. As the pandemic has kept Allan largely at home and unable to earn money playing live gigs, he has been selling digital copies of his electronic pop songs as NFTs – non-fungible tokens – for thousands of dollars each. He spent months cultivating relationships with NFT enthusiasts, built a community of devoted fans online, and then leveraged that popularity to raise 50 ETH ($140,000 on trading day) in a campaign. a day to finance his next album, Overstimulated. The campaign auctioned off 50% of Allan’s share of future master royalties – half that he keeps a much better deal than most major label artists – while giving him a sizable lead and creative autonomy. . Allan also sells songs individually on the catalog of the NFT music platform, which does not require him to assign the rights to his work. Together, he says he now earns 85% of his life from NFTs.

Hundreds of musicians follow Allan into this world. On Catalog, 140 artists have sold over 350 records for over $1 million combined. Within the Songcamp digital collective, dozens of musicians from all over the world form teams to create musical and multimedia creations. Overall, the goal of these NFT-based musicians is not to top the charts, but to push technological boundaries and earn a living outside of the record label system, which dominates the music industry for decades. “I don’t think it creates rich artists,” says Allan. “What it does is create a musical middle class.”

Time will tell if music NFTs are a mere by-product of a crypto bull market or a transformative force destined to shake up the music industry. While optimists speak of a new “creator economy” and artistic autonomy, skeptics voice concerns about the usefulness and whether the current model of musical NFTs will expand beyond a handful of artists heavily involved in the crypto community.

Can NFTs replace record labels and streaming giants?

Who spends thousands of dollars on records that cost 99¢ on iTunes? Many of the early buyers of musical NFTs are crypto enthusiasts who are financially invested in seeing these spaces succeed; their purchases are both speculative assets and ideological positions. “In the same way that you buy art that you want to put in your apartment, I want to listen to that music and enjoy it – and it’s a different feeling to own it,” Brett Shear, an NFT collector who owns 45 songs on Catalog for which he paid over 40 ETH (currently $177,000) says. “I’m happy to spend money on artists who I believe in their vision – and on top of that, I think musical NFTs will be much more valuable in the future.”

Some artists are raising unprecedented funds from these deep-pocketed fans: Chicago rapper Ibn Inglor, for example, raised $92,000 by selling various opportunities to fans, including shares of royalties from his upcoming album, as a than NFT. But for many artists, the emergence of dedicated fanbases that coalesce around groups on Discord, the favorite platform for NFT and crypto enthusiasts, is equally important for financial windfall. Allan subscribes to the idea that having “100 real fans” is better than having many casual fans. So he spends 6-8 hours a day interacting with his fans on his Discord, where they offer encouragement, comments and memes. Because many of them bought him a share from his masters, they are emotionally and financially invested in his success. For his next project, he wants to break down the wall between artist and fan even more. “I want to be like, ‘Here’s 20 demos, let’s do an EP together,'” he says. “There are a lot of creatives in my Discord but they don’t necessarily have the mechanisms to be able to exercise their creativity.”

Read more: As the NFT Market Explodes Again, Artists Push Back on Old Art World Power Structures

By creating community and infrastructure, Allan and others see NFTs as a viable alternative to the current system of major music labels. Labels have long been powerful in the music industry because they provide artists with upfront money, mentorships, mass distribution, and strategies to thrive. But in return, they usually assume creative control and master rights over an artist, allowing them to use the music in perpetuity. (Owning masters was so important to Taylor Swift that she re-records all of her old albums from scratch.) NFT musicians believe that a new model like the one offered by Catalog might be able to provide financial stability, creative freedom and a community for all. In one time.

Haleek Maul became a proponent of the power of NFTs after a decade in the music industry, including label signings, led to him becoming disillusioned with the system. “There was a great degree of manipulation and a lack of respect for my larger vision as an artist,” he says. Last month, Maul sold 4 songs as NFT for 56 ETH (now $261,000). Maul also has a thriving Discord, owns his masters, and uses funds he has made from NFT sales to build a music and arts studio in Barbados, which he hopes will uplift a suffering community. often brain drain.

“Before, your fanbase couldn’t be in label meetings with you. But now we’re all the label together,” he says. “It’s like being in the window of the auction house instead of going out and campaigning for what you believe in.”

Latashá, a Los Angeles-based musician who has sold more than 50 music and multimedia NFTs, says labels’ ability to nurture talent from scratch was already in decline before the rise of NFTs. “It’s been years since I’ve been in contact with a label that was fully dedicated to developing artists,” she says. “Artists had to before really cultivate numbers on platforms like Instagram, TikTok and Twitter before a label even looked at them. I think it’s important for artists to think about their autonomy.

Musician Latashá has sold over 50 musical NFTs.

Latacha Alcindor

As individual artists build ecosystems around them, more collaborative efforts are also gaining momentum. Songcamp, a collective founded in March, has organized songwriting camps for dozens of previously unconnected songwriters, with these new creations selling for thousands of dollars on Catalog. The songs subsequently received both visual treatments from artists and accompanying narrative stories in their public deployments. “Songwriting camps are often not fun once the music is created: it gets stuck in what we call the music industry, and no music comes out,” says Matthew Chaim, founder of Songcamp. “We decided: let’s run camps where speed and fun continues in visual creation, release distribution and monetization of music, since we now have the canvas to do it in Web 3.”

Major industry players are also dipping their toes into the space, hoping not to be left behind. Warner Music Group has a partnership with Genies, a company that creates digital avatars and wearables. The Grammys sell NFTs. And Universal Music Group is hoping to strike gold with a Bored Ape Yacht Club band, featuring primate characters from the incredibly popular NFT Collection of the same name.

A technology in its infancy

NFT recordings will probably never replace streaming powerhouses and their ease of use. (Audius, a crypto streaming platform built in 2018, has around 7 million monthly active users, compared to Spotify’s 381 million.) capable of constantly being online and posting content. “You can’t give so much of yourself to your community,” Maul says.

And for now, the purpose that NFTs serve music fans on Catalog is more conceptual than functional. It’s not like Martin Shkreli bought the only copy of the Wu-Tang Clan Once upon a time in Shaolin. Others can still listen to the song as much as they want. In most cases, buyers are also not buying the actual rights to the recording or composition, meaning they are paying primarily for virtual bragging rights and to support artists they believe are undervalued by the traditional system.

Mat Dryhurst, a technologist who works on cutting-edge digital music projects, including AI, is skeptical of how NFTs are being deployed in the music space. “I’m not 100% convinced that collectibles mechanics are a good fit for a crypto music ecosystem that I would like to see,” he says. “I’d like to see ways to support artists in the album process that don’t involve doing all the things that Web 2 [the current iteration of the internet as most people know it] made you do, like go online all the time and update people with the music you made in the last week.

Dryhurst is more interested in examining how NFTs and NFT-adjacent technologies could be used to cultivate music collectives that might jointly own a physical concert space or recording studio. “Fundamentally for me, the lifeblood of a lot of music is giving people a place to make music and enjoy music together,” he says. “The optimistic part is thinking about how to take the vibrancy of strangers with a common purpose in virtual space – like a Discord group – and coordinate them to support spaces, or a network of spaces, in life. real.”

But if musical NFTs ever reach mainstream saturation, they have already transformed the lives of many artists for whom the previous system failed. “I felt that a big part of my career was making a certain type of music that I had to make – and sometimes I didn’t really connect with it,” Allan says. “From an artistic standpoint, I just feel like NFTs and Web 3 in general can create a much brighter space for art.”

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