NFTs are completely taking the world by storm. Everything from artwork and video game items to trading cards and video clips have been uniquely tokenized and assigned their own space aboard various high-security blockchain networks. Even Twitter CEO Jack Dorsey has got in on the action, selling the first ever Tweet in the form of an NFT for an earth-shattering $2.9 million. It only follows that the next thing to move into this thriving digital space would be musical creations.
What is NFT Music?
An NFT in music is a piece of media; this could be an album, a song, a short clip (or skit), or any other form of musical material that can be uploaded to a computer. By becoming NFT music, this material has been digitally autographed by the artists themselves, making it both distinctive and individual, and marking it with a symbol of rarity. Just as with autographed material in the physical world, rarity is what gives the music NFT its value; at least, when paired with demand for the media or artist in question. As a matter of fact, just as each physically autographed piece actually represents a one-of-a-kind creation (while two pieces may be similar, each one is special due to its relationship with the owner), music NFTs are completely unique in themselves.
This is what the “non-fungible” part of a music NFT really refers to. While fungible tokens (like Bitcoin (BTC) or a dollar coin, for example) are mass-produced and highly liquid, meaning they can be traded for an asset of agreed upon equal worth instantaneously, non-fungible tokens cannot. This is because they are one-offs, and (as explained earlier) their value is based upon demand — because their supply is literally fixed to one.
Music NFTs, and any other form of NFT or cryptocurrency for that matter, are secured via blockchain network encryption. To use the same autograph analogy as earlier, this means that the blockchain essentially acts as an official ledger which accounts for the authenticity of each autographed piece. Thus, while fakes still exist out there in the digital space, the legitimacy of a music NFT “autographed” album is, in some ways, easier to substantiate than an autographed album.
How Can a Song Be an NFT?
It can be hard for those new to the idea of cryptocurrency to come to grips with how a piece of easily-replicable media, like a song, can be turned into a token and stored on a blockchain. The basics, however, are that an artist will upload the piece of media they wish to turn into a music NFT onto an exchange platform, after which it will be converted into a piece of encrypted code. Here are the steps an artist would typically follow:
- Obtain a crypto wallet that is capable of storing non-fungible tokens. These are usually Ether (ETH) tokens, though there is talk of NFTs and smart contracts being added to the Bitcoin blockchain network at some point in the near future.
- Choose a platform. There are many out there that will happily “mint” (or convert into blockchain-secured code) music NFTs, so there is an abundance of choice.
- Connect the wallet to the platform. Create an account, follow the steps for NFT creation, then upload and convert the media.
- Pay charges. To mint a token (at least with ETH), the user will pay a cost known as a “gas” fee.
- List the newly minted music NFT on any given NFT exchange, allocate a price, and sell it.
NFT Music Marketplaces: How to invest in NFT Music?
Currently, the music NFT marketplace is highly competitive; with many different institution’s battling for the rights to secure digital copyright from artists and distribute the new, unique, and highly profitable material they are creating. In fact, there are so many companies battling it out in this space that we cannot mention them all here. So, just quickly, here are a few notable NFT listing and sales platforms, in no particular order:
- Audius: A blockchain-based music NFT streaming and sharing platform, Audius has been backed by artists like Katy Perry, The Chainsmokers and Jason Derulo.
- OpenSea: One of the leading platforms for digital goods and assets, many different forms of NFT are marketed and sold on OpenSea’s network.
- Bondly: Projected as a pioneer in the music NFT world, Bondly has been working together with all kinds of artists to secure rights to their work — including Canadian-born rapper Tory Lanez.
- NFT Showroom: An NFT marketplace built on Hive, NFT Showroom is a fast and relatively cheap blockchain designed specifically with digital art collectors in mind.
- YellowHeart: Based and created in New York (USA), YellowHeart is an NFT blockchain collectibles platform built by music artists themselves.
It cannot be forgotten that in order to buy music NFTs, one must establish a digital cryptocurrency wallet that is capable of storing ETH — as a vast majority of NFT transactions are based on the Ethereum network. Once this has been done, it is simply a question of purchasing ETH and finding an NFT platform to commence bidding. Music NFTs are often sold through a type of auction system, where bids will be placed upon the item in question and a winner declared at a time previously allocated by the seller or auction platform.
A graphic showing a monumental spike in music NFT investment earlier this year (Source: NFTnow)
What Are NFT Albums and What Are NFT Beats?
As with songs, any form of digital musical media can be converted into a secure and encrypted section of code that is then stored and authenticated on a blockchain. While the options for musical non-fungible tokenization are virtually limitless (music videos, written music sheets, album artwork, etc), two of the more common forms of music that can be made into an NFT and sold to the highest bidder are:
- Music NFT – album: An entire collection of different songs (usually 12 to 20), all grouped together and encoded as a single piece of media on a blockchain. A music NFT is essentially the digital version of a hand-signed (or autographed) album.
- Music NFT – beat: This is slightly more complex to understand, especially for those that were not previously, or are not currently, fans of hip-hop. An NFT beat is an instrumental, or backing track, which is generally intended for vocals but has no vocals present on the recording. The reason NFT beats are such an exciting and innovative idea is that it gives music producers the opportunity to sell their creations online without fear of having their copyright infringed upon. This can be a serious problem for all music, but especially for freelance and independent beat makers and instrumental designers. In fact, as we will see from the next section, this can be a serious problem with music-based NFTs too.
What Are the Dangers Associated with Music NFTs and Music NFT Ownership?
There are several potential dangers to consider when deciding whether to venture into the world of music NFT ownership, or even NFT ownership at all. These concerns have been narrowed down to just four here, as it is hoped that the environmental issues arising from the NFT trade will be mitigated by the Ethereum blockchain migrating to a proof of stake (PoS) system. These are:
- Copyright infringement: Another important aspect to consider when assessing potential risks and challenges in music-based NFT investment are intellectual property rights issues. It is extremely important to do due diligence when purchasing a music NFT to make sure that the seller actually owns the rights to the digital goods being sold. This is generally evident in the associated metadata of the underlying smart contract.
- Lack of regulation: As with many crypto assets, the regulatory aspect of music NFTs (and even just NFTs in general for that matter) can represent a bit of a legal grey area. This means that investments are rarely protected outside of the blockchain, and are subject to both law changes and geographical differences (for example, the EU may have different rules regarding NFT trade than the US).
- Maintenance and smart contract risks: As smart contracts are an integral part of how NFTs function, there are associated risks and their weaknesses are exploitable by experienced hackers.
- Market volatility: Just like many other forms of cryptocurrency trading, the trade of music NFTs is highly volatile and subject to rapid and unexpected fluctuations, in either direction.
Which Famous Artists Have Become Early Adopters of Music NFT Culture?
Since the idea of NFT creation first went mainstream, there has been no shortage of different renowned musical artists and social media stars jumping aboard the music NFT freight train. While some see this space as an invasive plague upon digital recording, most have been quick to recognize the potential for a power shift in the music industry; an industry which has seen large scale corporate enterprise pocketing the lion’s share of artists’ royalties for many years. With music non-fungible token creation allowing artists to bridge the gap, and sell their media straight to their fans online with no need for an intermediary, the notable and varied selection of anticipative backers include such names as:
- Kings of Leon NFT: Created as the first ever full music NFT album, Kings of Leon released the “When You See Yourself” NFT on March 5th 2021.
- Gorillaz NFT: Announced on March 26th 2021, Gorillaz were quick to get involved in the new musical crypto market — the celebrated band will be releasing a number of NFT collectibles that celebrate the 20th anniversary of their eponymous debut album.
- Tory Lanez NFT: The award-winning rapper brought out a series of three previously unreleased songs, before later announcing an NFT album project called “When It’s Dark.” The album dropped on August 10th 2021 to mixed reviews and minimal acclaim.
- Aphex Twin NFT: British electronic artist and music legend Aphex Twin sold one of his music-associated art pieces on March 14th 2021, promising to donate part of the profit to charity permaculture projects in an attempt to offset any climate-based damages incurred by blockchain technology use.
- Deadmau5 NFT: Electronic music producer Joel “deadmau5” Zimmerman ventured even further into the metaverse with another NFT collection, “head5” in November 2021. Completely based on artwork inspired by his own “Pomegranate” music video, Joel is no stranger to the NFT world, having released other, non-music related artwork collections in the past.
Music NFTs are taking the world by storm. Whether you are an already successful artist seeking to forge a new, direct connection with your legions of fans, or an independent underground musician looking for ways to get your name out there, this space is both exciting and groundbreaking. Music NFTs allow for a new stream of revenue, a way for an artist to place their signature upon the digital aspect of their recording careers, and for a new era of musical stars to put their mark on the musical and cryptocurrency industries.