The NFT market, akin to its cryptocurrency counterpart, is currently navigating through turbulent waters. The industry’s reputation has been marred by a surge in scams, leading to price volatility, a decrease in trading volume, and a market crash in 2022. However, despite these setbacks, the NFT market’s revenue is projected to reach US$1,601.00m in 2023, with an expected annual growth rate (CAGR 2023-2027) of 18.55%, culminating in a projected total of US$3,162.00m by 2027. The average revenue per user in the NFT market is estimated to be US$114.80 in 2023. One of the most promising trends to watch in 2023 is NFT gaming, where games integrate NFTs, allowing players to own and trade digital assets such as in-game items, characters, and land.
Amidst this backdrop, a new player has entered the arena – crypto music. This innovative concept refers to any song or record that can be purchased with cryptocurrency or distributed on a blockchain network. This novel approach to creating and distributing music could potentially benefit everyone in the industry, including musicians, producers, and managers, provided they understand the potential of crypto music.
But let’s check how things work exactly because not everyone is convinced.
The Symphony of Crypto Music
Crypto music operates on the backbone of blockchain technology. Musicians and labels can now distribute and promote their music on decentralized networks, maintaining control over ownership, finances, and data. They also receive immediate payment for each stream, eliminating the long wait for compensation. This is somewhat reminiscent of the revenue stream offered by platforms like Bandcamp.
The primary advantage of these decentralized systems for music distribution is that they allow artists and labels to sell directly to fans, eliminating intermediaries such as Apple and Spotify.
When you share your favorite song on the blockchain, it’s entered into a ledger, or record book. This ledger can be used to identify who originally composed the song and its origins, which will be useful when musicians need to market their work or apply for copyrights. The blockchain can also provide copyright protection by adding new digital rights management (DRM) layers over existing ones without affecting anything else.
Fans can purchase music or albums using apps like Musicoin and exchange cryptocurrency for them. They can also resell their copy of the song or album. In return for cryptocurrency tokens that are traded on the blockchain, musicians can sell their songs. These transactions are recorded in an unchangeable public ledger that anyone can access and independently verify.
Getting Started with Crypto Music
When you’ve got your wallet ready, it’s time to mint your NFT music on the marketplace. Minting refers to uploading and validating your digital creation (or document, ticket, etc). The minting process is quite simple; you just have to click on a few prompts like “Mint Your NFT” and confirm the transaction.
There is usually a fee for the transaction known as a gas fee. The NFT platform itself doesn’t charge gas fees; they are fees for the blockchain transaction. Gas fees are often very high on the Ethereum network, so many artists have begun experimenting with alternative blockchains to avoid the high gas fees.
Once you have minted your NFT, you are ready to list it and sell it! Again, the steps are usually straightforward but differ slightly on each marketplace. Make sure to read the platform’s guide if you are confused.
There are also three different ways to list your NFT for sale; fixed-price listings, declining-price listings, and highest-bid auctions. With a fixed-price listing, you can choose a fixed price option and the expiration date of the listing. In a declining-price listing, you can choose a start price, end price, and how long the time should be between the start and end price. This helps creators sell their music NFTs above market price. The highest-bid auction option allows you to set the auction duration and to sell to the highest bidder in the time frame.
Keep in mind that platforms charge anywhere between 2.5% to 5% on sales. A free ride doesn’t exist remember.
However, just like with other platforms, without traction you will sell close to nothing.
Which are the best platforms to sell music NFTs?
OpenSea is the leading NFT marketplace with over 80 million listed NFTs. As of January 2023, this marketplace has crossed its one million user transaction. The vast customer base also inspired OpenSea to list its Music NFTs. Next to that you have Nifty Gateway which one of the biggest players in NFT music sales. There are a whole bunch of others such as Sound, Digimarc, Mediachain, Royal, Open Music Initiative, Musicoin Foundation, OneOf, Async Art, Mycelia, and so on.
Turnover is not as big as many artists make you believe
But what about the turnover? Is it worth the work you put into it? Fact is that the turnover of music NFTs has been declining since 2021. In December of that year, the monthly revenue from music NFTs peaked at $5 million. However, by June 2022, monthly revenue had fallen to less than $2 million. As of November 2022, monthly revenue was only $300,000. Peanuts that is.
This decline in turnover can be attributed to a number of factors, including:
- The hype around music NFTs has died down.
- There are a limited number of high-profile artists who have released music NFTs.
- The prices of music NFTs have been too high for many fans.
- There is still a lack of understanding about how music NFTs work.
- The average price of a music NFT has also fallen since 2021. In December of that year, the average price was $18.8K. By December 2022, the average price had fallen to $10.2K.
Despite the decline in turnover, there are still some artists who are successfully selling music NFTs. For example, Kings of Leon’s album “When You See Yourself” generated $1.45 million in revenue from NFT sales.
It is too early to say whether music NFTs will become a mainstream way to distribute and monetize music. However, the technology has the potential to revolutionize the music industry. By giving artists more control over their music and allowing fans to interact with artists in new ways, music NFTs could create a more sustainable and equitable music industry. ‘Could’, not ‘will’, and that sums it up.