Does the Music Industry Need Patrons?- Music NFTs and a New Dawn

Patronage has been a driving force behind musical creativity and innovation throughout history, ensuring that artists historically have been free to focus on their art and flourish. The question is, do we need this practice more than ever in the 21st century?

A brief history of patronage in music

In Medieval times and the Renaissance the Church and wealthy nobility were primary patrons, commissioning sacred music and supporting court musicians and composers. This system spurred the growth of liturgical music and the rise of renowned composers like Palestrina.

During the Baroque era, Patronage expanded to include secular courts and opera houses. Composers like Bach and Händel often held positions in royal courts or churches, receiving financial support and creative freedom in exchange for their services.

In the Classical and Romantic Eras, with the rise of public concerts and the growth of the middle class, composers began to rely more on ticket sales and music publishing. However, wealthy individuals continued to play a significant role, commissioning works and supporting musicians like Mozart and Beethoven. The latter could still be considered the first «indie artist» as he asserted his independence by leveraging his popularity to earn well on his publishing rights, and to «turn a deaf ear» to the instructions of his patrons.

In the 20th Century, we saw the rise of institutions and foundations: universities, foundations, and arts councils became major patrons, offering grants, residencies, and commissions to support contemporary music and emerging composers.

Wealthy individuals and corporations continued to support music through philanthropy and sponsorship of concerts, festivals, and educational programs.

1997 was the year when Crowdfunding emerged as an Internet-based patronage method when the British rock band Marillion successfully raised $60K from their fans to fund a US tour. The mid-2000s saw the rise of platforms like Kickstart and Indiegogo, and the pandemic saw a resurgence of crowdfunding initiatives.

21st Century Patronage: NFTs and Rights Management

For those yet familiar with the NFT hype in music, NFTs are Non-Fungible-Tokens. They are unique digital assets representing ownership of a specific item or piece of content, verified on a blockchain as a secure, transparent ledger. NFTs enable creators to monetize their digital creations, collectors to own unique digital assets, and businesses to offer new digital products and experiences.

Blockchain technology offering the possibility of creating immutable ledgers (data which «cannot» be altered) opened «the vault» for cryptocurrencies. And, today, tokens, smart contracts etc. are used across a vast range of industries. The potential for NFTs in the music industry remains, however, unreleased. 

NFTs could revolutionize rights management in the music industry and consequently generate substantial revenue for artists. NFTs allow musicians to monetize their work while bypassing traditional intermediaries like record labels and streaming platforms. They can sell unique digital assets, such as limited-edition tracks, albums, artwork, concert tickets, or even virtual experiences.

So, how does this connect to the tradition of patronage? NFTs enable fractional ownership of music rights, allowing fans to invest in their favorite artists and potentially earn royalties from future streams or sales, essentially becoming patrons of their favorite artists.

The first successful implementation of NFTs in music arguably was 3LAU’s Ultraviolet in 2021. The Ultraviolet collection in February 2021 was a landmark moment selling 33 NFTs for a total of $11.7 million, it marked a major turning point for NFTs in the music industry, demonstrating their potential for significant revenue generation.

Why NFTs are not driving the Music Industry

Unfortunately, many hurdles keep NFTs from taking off in the music industry. As with any groundbreaking technology, there’s a lack of regulations in place. Adaptation by the general public also takes time. Challenging the established music distribution models, especially with the streaming services’ stranglehold on consumption, is far from easy. Initial hype also creates a reputational issue. 

NFTs have been portrayed as a «get-rich-quick» scheme, which it certainly isn’t in the context of music rights. Instead of focusing on promises of a «jackpot» in the form of a substantial payout from fractal music rights ownership, the patronage aspect should be more emphasized. A small investment in your favorite music is a contribution to a sustainable music career, with a long-term earning potential as a bonus.

 7 Ways Web3 Can Facilitate Music NFTs

How can Web3 be instrumental in facilitating a widespread use of NFTs in the music industry? Decentralization is the keyword to Web3 and the NFTs as well. A new web infrastructure would be highly beneficial for an NFT-driven music industry.

Here are seven ways Web3 can alter the status of NFTs:

1. Micropayments and Revenue Sharing: Web3 allows for micropayments and automated revenue sharing, ensuring transparent compensation for artists and other rights holders.
2. A new revenue stream: Web3 opens up new revenue avenues beyond traditional sales and streaming. Artists can offer exclusive content, virtual merchandise, and unique experiences linked to NFTs.
3. Lower transaction costs and Sustainability: Web3 platforms built on more efficient and eco-friendly blockchains can address the high transaction costs and environmental concerns associated with current NFT platforms.
4. Smart Contracts and Automation: In a Web3 environment, smart contracts, self-executing contracts with terms directly written into lines of code are enabled. This automates royalty payments, licensing agreements, and other administrative processes.
5. Integration with Music Platforms: Web3 technologies can ensure seamless integration of NFT features into existing music streaming and distribution platforms.
6. Ownership and Authenticity: Web3’s blockchain infrastructure provides verifiable proof of ownership and authenticity for music NFTs. This protects artists’ intellectual property rights and allows fans to confidently collect and trade unique digital assets.
7. Boost Fan Engagement: Fans can participate in exclusive events, vote on creative decisions, and directly support their favorite artists in the more interactive environment that Web3 offers.

Ultimately, there’s no fast-track to a NFT-based distribution and consumption of music, and the current NFT success stories are all of artists who already had a huge fanbase. NFTs will have «arrived» on the scene when the majority of artists, who are not among the upper echelon, can benefit from the potential that the technology offers.