MUSIC NFTs  – How to buy, sell or make.

Whether your reaction to the term »Music NFT» is WTF? or LOL! This introduction will hopefully clarify a few aspects of the concept.

The first music NFTs were released in the market in 2021 with major acts like Kings of Leon and electronica acts liks DJ-producer 3LAU as examples of NFT-pioneers. Now, four years on, despite some individual success stories, NFTs are far from being seen as an industry standard.

Let’s see if we can break through the noise and bring som harmony into the whole «song and dance» of Music NFTs. My argument is that this technology is a «sleeper hit» more than a «one hit wonder», and that the timing is right for more wide-spread adaptation.

Music Non-Fungible Tokens (NFTs) – Three Fundamentals

• Blockchain Technology: Music NFTs primarily exist on blockchain platforms like Ethereum, Solana, or Tezos. These networks maintain a permanent, transparent ledger that records all transactions and ownership transfers.
• Smart Contracts: These are self-executing contracts with the terms written into code. For music NFTs, smart contracts can automatically distribute royalties to creators whenever their NFT is resold, ensuring artists benefit from secondary market sales. Common practice is that the seller/artist retains a percentage of the rights when selling an NFT.
• Minting Process: Creating a music NFT involves “minting” – the process of converting digital music into a blockchain asset. During minting, the artist uploads their music file, sets parameters like quantity and royalty percentages, and pays a transaction fee to create the token.

New Kids on the Blockchain

The blockchain technology is applied in countless business verticals, but is most commonly associated with being the building block of crypto currencies. Blockchain’s basic premise of «immutable information», the fact that information about transactions etc. is on a chain, on separate servers, that cannot be manipulated (when configured to safety protocols) made the technology the facilitator of crypto.

As mentioned, smart contracts, another Blockchain feature, are central to Music NFTs and, if becoming an industry standard, could completely transform distribution and renumeration of music.

Music NFTs vs. traditional music ownership

At its very core, a NFT-based system for distribution, and rights management of music opens the door to individual ownership and artist control. The historical, and present model often entails signing away rights to master recordings and receiving royalties based on streams and physical sales.

Exchanging this long value chain with the Blockchain could allow artists to retain all rights and sell directly to fans. Furthermore, the artist can have complete say in how their work can be priced, distributed, redistributed and even repurposed (for instance allowing for sampling and other forms of reinterpretation).

Investing in Music NFTs

I have previously made the argument that it makes more sense to invest in an artist and project that the better approach is to see it as «artist patronage».That is, supporting an artist you like in exchange for a percentage of streaming royalties, exclusive content etc. rather than investing with the notion of making a substantial profit.

The NFT market has been very volatile and has cooled down, if not yet frozen solid. One could argue that the music NFT market has never really taken off, despite artists like Snoop Dogg, Eminem and others making a «serious dime» from various offering.

And, therein lies the rub, the success stories for Music NFTs are reserved for artists who already have a massive following. This doesn’t make for a sustainable revenue model. However, though I must admit, I’ve never seen the deal with «Bored Apes»  and the whole NFT art-market, Music NFTs, conceptually make perfect sense.

There are still a lot of «dots to connect» for NFTs to be a dominant technology in the music industry: regulatory measures, industry and user adaptation and more decentralized Web3 based Internet. Revolutions generally take much more time than what it looks like in hindsight.

How and Where to buy

If you feel inspired to become a music NFT investor, the process is fairly straight forward. You’ll need a crypto wallet on a chain that is compatible with the marketplace. For instance MetaMask is a wallet for Etherum (ETH), which is the most common currency for buying NFTs. Once you buy coins and transfer them to your wallet, you’re all set. The largest marketplace for music NFTs is OpenSea, and you can set up an account here, connecting your wallet.

What are the Types of Music NFTs?

One of the interesting aspects of the Non-Fungible-Token is the versatile use-cases. This is also reflected in the music space with three major NFT concepts:

1.1/1 NFTs: These are unique, one-of-a-kind NFTs.

2.Limited Edition NFTs are released in a limited quantity, creating scarcity (FOMO) and increasing their value.   

3.Open Edition NFTs: are available for a set period of time, allowing many people to purchase them.

Within various concepts, there are also numerous «break-downs» of the product. For

instance,  you can buy the rights to a whole song (with the songwriter usually retaining a percentage) or the whole album. And, the song can be broken down into stems (the various audio-files), and you can buy the right to use for remixing purposes.

NFTs can also be experience-based and include tickets to concerts or special events (like «meet the band). Rights to audiovisuals is another option, purchasing video rights including exclusive footage etc, or something created exclusively for the NFT format. Finally, merch can be added to the mix. 

For investment purposes, rights ownership is obviously the most interesting option, but, to repeat, I’d suggest investing in an artist that you are into and want to support, and be conscious of the fact that making a profit is no guarantee.

How to make your own

If you are a songwriter looking to engage fans and/or find a new revenue stream via NFTs; as mentioned Blockchain, Crypto, smart contracts and minting are concepts you need to familiarize yourself with.

First note to strike though, is «Purpose».  What do you want to achieve and who would invest in your expression? This should reflect who you are as an artist and if your sound is Hip-Hop or electronica, exclusive remixes or stems would be relevant for an NFT. If planning a tour, you can offer exclusive access to events, offline as well as online. 

Setting up your NFT offering note for note:

1. Prepare Your Digital Assets:

• Audio Files: Ensure high-quality audio files (WAV, FLAC). Consider creating exclusive remixes or alternate versions.
• Visuals: Create compelling digital artwork or animations to accompany your music.This could include album art, lyric videos, or abstract visuals.
• Metadata: Prepare detailed metadata for your NFTs, including artist name, song title, album title, track number, etc.  
  

2. Choose a Blockchain and NFT Marketplace:

We’ve mentioned Ethereum as most popular blockchain for NFTs, but can have high gas fees, so explore other options. This is also a fast-changing market, so keeping abreast of the pros and cons of the blockchains is a way to maximise your return on investment

NFT Marketplace: OpenSea mentioned is  large and popular marketplace for various NFTs, including a sizeable portfolio of music NFTs.  One marketplace that specializes in music NFTs is Sound.xyz.

3. Create and Mint Your NFTs:

• Connect Your Wallet: Set up a cryptocurrency wallet (e.g., MetaMask, Phantom) and connect it to your chosen marketplace.   
• Upload Your Assets: Upload your audio files, visuals, and metadata to the marketplace.
• Mint Your NFTs: Follow the marketplace’s instructions to mint your NFTs on the blockchain.Pay the necessary gas fees.

4. Promote & Engage:

Next step is letting the world know that you have an NFT release out there. Use your SoMe channels, create a landing page on your website linking to the marketplace, and collaborate with other artists and influencers to get the word out. Platforms like Discord are also an option for connecting with people who are interested in the NFT market

Finally, don’t forget to give some love to those that invest! Offer more exclusive content and experiences and/or create some real world or digital value for the NFT holders. Just as my argument for investing in music NFTs is for «patronage» not profit, the argument for creating NFTs is not profit either, but an opportunity to engage with fans.

Profit is like that hidden «bonus track» on an album, that may or may not hit the groove!