Non-Fungible Tokens (NFT’s) have become a 2021 buzz-word amongst crypto—hodling gen-z, but the application of these pieces of digital art have the potential to upend the entire business model of the music industry in a way not seen since the early-days of the Internet. Non-Fungible Tokens (NFT’s) are pieces of digital art with ownership details stored on a blockchain, purchased using crypto currencies and entirely tradable by their owners. In the visual art world more recently we’ve seen notable NFT releases such as ‘Everydays: The First 5000 Days’ selling for just under $70m and CryptoPunk #3100 selling over over $7m.
In music, there are wide reaching possibilities. Artists currently have two options with regards to financing their projects; sign to a label who invests in their music and takes a substantial cut of future profits and works, or go the DIY route; self-financing recording, marketing, touring and promotion. The latter is very difficult and very cash intensive, especially for artists who do not come from a background of money.
NFT’s could give artists a third option. Create a body-of-work, issue a series of NFT’s that allow fans to own parts of that work and use the investment to fund future recording and promotion. Fans get the opportunity to invest in emerging artists in the same way they might invest in stocks and shares, buying portions of future royalties on early singles and EP’s that they can later sell or receive royalty payments from. In this scenario, fans become labels. This also means that the band have a core fanbase when they’re starting out who are incentivised to market their music, to attend shows and tell friends about the music they’ve invested in.
Whilst there have been some notable NFT drops in music (Muse and Kings Of Leon) most are being used a means of access for fans. Owners of an NFT will get early access to exclusive merchandise and ticketing. But the ability to actually own portions of future royalties on tracks means that people outside of the music industry could become professional A&R’s and investors. At present, it seems like there is a lack of understanding about the potential benefits of the technology in music outside of what is essentially the novelty of owning some digital art. And then there’s the environmental reputation of NFT’s. Early NFT’s were built on blockchains that were incredibly energy intensive but as the technology has moved along there now exists blockchains (such as Polygon) that carry roughly the same environmental impact of a fraction of a single post on twitter.
Here at Blood Records, we are currently exploring the possibility of issuing NFT’s in an environmentally friendly way with some of our emerging releases, meaning that our customers will then own portions of the music that they’re supporting the production of and be able to freely trade these rights. Stay tuned.