NFTs, or Non-Fungible Tokens, are something of an oddity in the modern world of cryptocurrency.
As the average prices of NFT sales have driven up exponentially over the past year, according to nonfungible.com, so has its appeal to musicians and producers. As the rate of NFT sales multiplies, it seems more likely that they will greatly affect the music industry for fans and artists alike.
As previously stated, NFT stands for ‘Non-Fungible Token.’ This means that the token is completely one-of-a-kind. It is unique and, therefore, cannot be copied or replicated in its entirety.
These NFTs are a unique cryptocurrency that are used to represent digital assets in a sale. In an attempt to clarify the concept behind the NFT, Caitlin Ostroff of the Wall Street Journal likened it to fine art.
She states in a video: “The idea behind NFTs is that you have this digital signature in the way that a great work of art might bear the signature of the person who created it so you can always go and look at the original and say, ‘Yes. This is the real one. This is authentic.’”
Discerning the value of an NFT is much trickier, however. As the assets they represent are all completely unique, they are impossible to be traded for another NFT of the exact same value.
As Investopedia eloquently puts it: “Each token contains a unique, non-transferable identity to distinguish it from other tokens.” These tokens are also sometimes used to represent real-world items, such as real estate and artwork.
Understanding how NFTs work requires knowing where they’re made to operate. These tokens, generally speaking, are part of the Ethereum blockchain, or database.
Although Ethereum is a different kind of cryptocurrency, the electronic database that supports it is also used by NFTs. This database is called a blockchain due to the method in which it stores and organizes information.
Where most databases store information on tables, blockchains file it away in chunks, or blocks. This allows anyone with access to the blockchain to find the history of the NFT and its previous owners in chronological order.
So far, some of the most famous sales of NFTs have included a GIF of an animated cat, a tweet by the co-founder and CEO of Twitter, and a 50-second long music video by Grimes.
Sales like these have caused a considerable amount of confusion to many, leaving people to wonder why someone would pay millions of dollars for something you could view, download, or listen to for free.
What seems to be the clearest answer to their question is in an article by The Verge, which simply states: “NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork). To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original.”
NFTs have been regarded as one of the most secure ways to sell and buy digital art, as it is almost impossible for someone to sell a copy and pass it off as the original.
A separate article by Investopedia that discusses the security of blockchains explains: “If they (a potential hacker) were to alter their own single copy, it would no longer align with everyone else’s copy.
When everyone else cross-references their copies against each other, they would see this one copy stand out and that hacker’s version of the chain would be cast away as illegitimate.”
So, how are NFTs affecting the music industry? According to an article by CoinTelegraph, several artists of different styles have already taken advantage of the opportunity sell their original music for a profit through these tokens.
One example of this was a $6,000 sale made by Grammy-winning producer Illmind for what was described as “the first ever NFT backed melody/sample loop pack.”
The sale of this pack is not limited to samples and bragging rights, however. As CoinTelegraph states: “It also comes with a “royalty-free guarantee” and a contract that gives the NFT owner rights to use the audio files for their own purpose.”
The fact that NFTs are now available for musicians and producers to utilize when sharing their music doesn’t just allow the artists to gain a profit off of their music that would otherwise be sent straight to record labels.
It also allows the artists to build a stronger relationship with their fans, as they now offer more than just the rights and ownership of their original recordings.
Later in the previously mentioned article, it’s stated that DJ 3LAU went as far as announcing that “The top bidder of his upcoming NFT auction will be offered the chance to collaborate with him on a new track.” Likely because of this added bonus to the top bidder, EDM.com shares that 3LAU successfully sold “a collection of limited edition NFTs for $3,666,666.”
This change is truly groundbreaking as the possibilities have been made almost endless for fans and artists alike. It creates an opportunity for producers to appeal to their fan base, while giving fans a chance to directly support and connect with their favorite artists.
Shara Senderoff, president of the music investment firm Raised In Space, added this point: “It’s the ability for a fan to purchase an asset that is scarce, that is limited, that is exclusive, and has potential offerings tied to that that make them as a loyal fan feel unique, feel rewarded.”
The growth of NFT-selling artists has risen to new highs as the outreach for collecting and attaining original music has become more appealing to their higher-paying fans.
Musicians such as Linkin Park vocalist Mike Shinoda, deadmau5, and Guy J have put their own NFTs on the market in just the past few months.
It seems for the time being that, as NFTs become more popular, they could very well revolutionize the way music enthusiasts buy and sell music throughout the future of the industry.