Music NFT: what you need to know as an artist and fan

NFTs took over the art world over the past few years, where many artists converted their work into digital assets, deployed them into the blockchain as NFTs, and sold it (or, to say better, minted). This pushed the art collectors to speed up the process and the innovation that web3 brings with blockchain technology.

The music industry didn’t wait long to start seeing NFTs infiltrate it. It probably began with the first NFT album by Kings of Leon, “When You See Yourself.” They created a digital twin of their album and sold it as NFT to their fans. This NFT had some assets, along with the actual tracks, attached to it, and the fans that were lucky enough to put their hands on this NFT could have claimed a limited edition vinyl of the record and a dynamic cover for it.
To better understand the impact that NFTs can have on the music industry, it’s better to recap what an NFT is.

What is an NFT?

NFTs are digital assets. They’re so-called non-fungible tokens because each one is unique, unlike any other digital assets in web2 that can be replicated. Like cryptocurrencies, NFTs exist on a blockchain, a decentralized network that keeps track of transactions without needing a centralized authority. Anything inside a blockchain is public and visible to everyone; this makes it impossible to forge an NFT along with the ownership record.

NFTs can be many digitalized assets, from collectibles to digital twins (a digital copy of real assets, a t-shirt, for instance). This should lead the way to explore music NFT.

What music NFT is and its impact on the industry

Everyone in web3, from VC to multimedia artists, DJs, and independent labels, has argued that blockchain technology has the potential to save independent music and launch the music industry in a fully new universe.

But for all the endless talk about music NFT and how they can revolutionize the music world, not much more than a shy NFT ticket proposition has been done so far. With UCollec, we aim to fill that gap, giving ownership to artists and event organizers of their community. No intermediary, direct contact with your fan, and a reliable platform based on blockchain technology with intuitive UX/UI.

Let’s consider a near future where NFTs are fully integrated into the music industry. What does this mean for the music and artists looking to sustain their work?

Music NFT: what are the possibilities?

As an artist, there are multiple ways in which you can consider the NFTs your allies, for instance, selling rights of your songs and sharing it with your community, releasing memorabilia of your event, certifying participation in your events through POAP NFTs, reserving access to your concerts with NFT tickets, and create NFT membership to enhance loyalty in your community.

As a fan, instead, you will have more direct contact with your artist. You can own a piece of their music and get revenue from this. Also, you will be sure that what you own is real.

NFT tickets

There is no doubt about how much the ticket industry has changed through the last year and will certainly change in the future thanks to NFT tickets. Music ticketing is not an exception—using the NFT as tickets allow artists and organizers to tackle some of the recurring problem in the traditional ticketing system: fraud, scalping, and the secondary market. All issues cut off the revenue for all the actors involved during an event.

Being an NFT a unique asset allows more control over the fraud, making the tickets impossible to counterfeit thanks also to the proof of authenticity stored on the blockchain, impossible to copy.

Also, scalping with NFT tickets will be avoided thanks to the full control and transparency of the blockchain. Artists and event organizers can set priorly how many tickets a single wallet can purchase, reducing the possibility for scalpers to buy many tickets and resell them in the secondary (and often illegal) market.

The secondary market will flourish thanks to NFT ticketing because through a dedicated platform, every user can sell its NFTs safely, transferring ownership to the buyer. Also, the original artist or organizer can take a cut of resales value thanks to smart contracts embedded in the NFT ticket, in a percentage decided priorly to creating the NFT ticket. A report for CNBC stated that only in the US the ticket resale market is up to $5 billion, so it’s clear how NFTs can open a new revenue opportunity for everyone involved.

NFT music rights

Nowadays, artists are looking for new ways to monetize their content, and NFTs are a perfect way to do that.
Artists see NFTs as a way to remove intermediaries and stop the spill-over fees of the record company and the loophole of royalties agreements. But how?

We already stated that NFTs are substantially smart contracts recorded in the blockchain with verifiable proof of ownership. From this, it is quite obvious that it can be a huge cut out of all the bureaucracy the music industry has with multiple actors that will cut out artists' fees.

Traditionally artists take home 10% of the revenue they generate with their work while other parties take the remaining 90%. With NFTs, artists can invert these percentages in their favor, cutting intermediaries from the transactions.

There is a huge opportunity for artists to retain a greater share of royalty rights and creative control of their music. As a plus, NFTs reside on the blockchain, with public access and transparent record that allow artists to track sales data and fan profiles on their own.
NFTs enable artists to go direct to consumers with a close connection with their fans.

NFT Digital Twin

For the music industry, a digital twin is a digital copy of real assets that can help artists and creators to capitalize on their work.

As common knowledge, ordinary artists can only partially support themselves from the revenue generated by their performances or from the streaming rights. In the music industry, artists only get to keep about 12% of the revenue from their work.

Creating an NFT digital twin of the album, songs, gadgets, and a multitude of other features (like could be a drink for your concert or downloadable content of the latest album) and sell it to the artist community will work as a support for you, moreover in this way artists will conduct business directly with their fans and will keep nearly all the revenue from the selling.

Finally, as per every NFT, you may choose to get royalties each time your NFT digital twin is sold to a new owner.

NFT membership

NFT memberships are unique loyalty programs reserved for the owner of a specific NFT.

Artists can use the fidelity program through NFT membership, allowing fans to get discounts for their events, new tracks release, or limited-edition albums created specifically for your close community.

This way, artists can maintain ownership of their community, and fans can access perks and benefits designed for them and feel more part of their preferred artists.

A plus of NFT membership is, like all the NFTs, the possibility of transferring its ownership to someone and reselling it through the secondary market. This transaction will generate revenue for artists and fans.

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We’re just starting to see how NFTs could shape the future of the music industry, but the changes that blockchain and its products like NFTs are bringing to life are real and tangible to everyone in the business.

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