How does music play an important role in NFTs

By Gaurav Dagaonkar

By this time almost everyone would have heard of NFTs. They are a class of crypto-assets with unique identification and metadata, signifying ownership and originality. The nature of NFTs means that they can potentially be useful in solving existing problems and also serve as vehicles for innovation without involving too much complexity. This fundamental nature also lends itself to certain solutions in the music industry.

Before we try to understand how NFTs play an important role in music, let us understand some of the issues that exist now –

• It is difficult for newcomers to make an impression.
  • Most up-and-coming musicians do not have the capital to promote their music or finance future projects.
• Difficult for non-touring artists to earn sustainable income from just traditional streaming platforms.
  • Most streaming platforms only pay around $0.003 per stream on average, and making a decent income from streaming requires millions of streams, which is not practical for many indie musicians.
• Illegal downloading of music aka piracy
  • Globally, music piracy costs the industry billions of dollars. And in India, the piracy rate is 67%, which is double the global average rate.
• Cancellation of tours/concerts due to the pandemic
  • Touring is the number one income generating business for many artists, and when it stopped in 2020, many musicians were hit hard by the same.

Now that we’ve understood what NFTs are and some of the issues musicians and artists face in the music industry, let’s take a look at some of the ways NFTs can make an impact and help solve said issues.

There are several ways that NFTs benefit the music industry, both for artists and companies. Some of these are:

• Music NFTs – This can be a song, album, cover art or even a music video. Artists can distribute and monetize their NFTs through platforms like Opensea. Fans can support their favorite artists by purchasing such NFTs, and in exchange they get access to one-on-one conversations, exclusive previews of unreleased music, etc. When the NFT is traded after the initial sale, it also a cut to the original artist/creator of that NFT in the form of royalties.
• In addition to selling music as such, fans today can also “invest” in the artist’s music – this way it helps the artist raise money while also allowing fans to profit from the royalties generated from the project in question. Royal is such a platform.
• Since each NFT has a unique identity recorded with the blockchain, replicating a song/album artwork becomes much more difficult and combats the age-old problem of music piracy.
• Ticket NFTs – The ticket business is an industry where a lot of fraudulent activity occurs, and this is a problem that NFT can solve in a big way. For example, tickets can be resold and the income shared between several rights holders. In this way, the tickets can potentially generate more income compared to the one-off payment that occurs with traditional ticket sales. The use of NFTs as tickets also helps the organizers to track.

All in all, NFTs can play a pivotal role in giving artists a mechanism to track things and also increase their revenue streams. With the use of newer technologies, artists can not only monetize their music but also connect with their fans on a deeper level, which was not easy in the past. And it’s not just the artists who benefit, but also companies involved in ticketing, streaming, etc. At a basic level, NFTs will pave the way for more transparency and accountability, thereby opening up new channels for growth and also contributing to reduce piracy and other malicious activities that currently exist.

The author is co-founder, CEO, Hooper

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