As the music business industry continues adapting to the ever-evolving technology around us, even the cultural mentality around “collecting” music has changed dramatically. The days of amassing physical albums and artwork have long been replaced by the ability to stream anything at any time, all with the click of a button.
But many music fans felt something was missing that couldn’t quite be replaced by simply owning a digital copy of their favorite album. It became harder to duplicate that unique feeling of personally owning a sealed first pressing of Meet the Beatles or having an authentically hand-signed copy of Purple Rain, of which only a handful will ever exist. With scarcity and uniqueness comes value, and the unique emotional connection that came along with personally owning a part of an artist’s legacy had become seemingly lost with the arrival of the digital age.
But new technology is aiming to change that — technology that allows fans to own the true original master recording of their favorite song (of which, only one provably exists) that is authenticated by the artist themselves. Enter NFTs, or non-fungible tokens.
“Fungible” means you can exchange one item of a set value for another just like it of equal value. Currencies like the dollar, euro, gold, and bitcoin are fungible. Non-fungible is the opposite, meaning only one of an item exists because it is 100% unique, and there are no others like it; therefore, it can’t possibly have a set value equal to anything else. Take a Van Gogh painting, for instance. There is nothing the original painting could be traded for on an equal one-to-one basis simply because an exact duplicate can never be made, so the value is ultimately determined by whoever is willing to pay the most.
NFTs are therefore a very unique emerging digital asset class, with widespread use cases and tremendous potential to create value in multiple industries.
I operate at the intersection of technology and music and have personally witnessed this firsthand, both as an artist manager and label CEO, in addition to my background in cybersecurity and risk analysis.
Thanks to NFTs, artists now have a way to offer one-of-a-kind original masters of their music, videos and other works, which are publicly and provably authenticated by the original artist themselves. These works are immortalized on the blockchain, the secure underlying tech that powers bitcoin and other cryptocurrencies.
Without delving into all of the technical jargon, the underlying tech is actually more reliable for verifying the authenticity of a digital work than are current methods for verifying the authenticity of a physical work. There are still many famous works that have their legitimacy disputed to this day. While these pieces of art can be fraudulently replicated by various means, NFTs cannot.
In short, blockchain data can’t be tampered with, spoofed or manipulated — arguably the primary reason why blockchain has gained so much trust and value across the globe. Having to trust another human in any way is entirely removed from the equation. Transparency is also on full display as anyone can view these blockchain records and transactions, allowing for immediate public verification of any NFT — including its creator and history of ownership.
However, this whole premise begs a common question: Why would someone pay for a song’s NFT when they could just stream it? Why would they spend hundreds of thousands or even millions of dollars on owning an image or video that anyone could download for free off of the internet?
NFTs, through their enhanced security, transparency and means to establish original ownership of unique digital assets, now provide exciting opportunities for collectors as well as new lucrative methods for creators to monetize.
Artists can now digitally sign their original masters and auction them off to anyone who wants the bragging rights of being the one true owner of the original version — and they can show it off to anyone in the world with a single link.
Some of the biggest names in music, including Halsey, Linkin Park’s Mike Shinoda, Kings of Leon, Grimes, and Steve Aoki have already launched highly successful NFT auctions. What is less talked about but equally exciting is the growing number of lesser-known artists who are generating career-changing revenues off of NFTs. For instance, Young & Sick, despite their relatively small number of Instagram followers, has developed and successfully monetized original artwork for an NFT portrait series Nifty for NIVA.
The best part of NFTs? Artists can set a perpetual royalty percentage on each NFT, so they are automatically and instantly paid every time it gets auctioned off to someone else.
NFTs can also be utilized as a unique way for fans to directly invest in an artist if they believe the value of the artist’s brand will increase over time. This creates a win-win scenario where the artist’s career is supported by the NFT purchase and the investor makes a profit by reselling in the future. This then benefits the artist again through the established royalty percentage.
From Beeple’s $69 million digital art sale to a screenshot of Jack Dorsey’s first tweet selling for $2.9 million, there seems to be no end to what people will find value in. NFTs have become yet another way blockchain technology is revolutionizing mainstream business models that have been unchallenged for decades.
While the NFT space is rather new, there are already over a dozen auction sites offering NFTs to the public.
However, these platforms can be very overwhelming to many people (especially to those not already familiar with cryptocurrency) either due to unintuitive UX or an overreliance on crypto-specific language. While I’ve done consulting work on this topic, educating the artists I manage on various terms and all things NFT, I’d prefer that these platforms were simpler to navigate to begin with. For this reason, I see tremendous opportunity in making a more streamlined and user-friendly NFT platform for both creators and collectors — similar to how Coinbase made it easier for the masses to purchase cryptocurrency.
NFTs are redefining how we approach and think about value, and I look forward to seeing how they will continue to positively impact the music industry— especially in providing smaller artists greater levels of autonomy and more options to help finance their careers.