A Starter Guide to Music NFTs
The world of music NFT’s is growing at an incredible rate. This presents a range of exciting new opportunities both for artists and fans, and could permanently change the music industry, as a whole. In this guide we’ll look at what music NFT’s are, how they work and some of the primary benefits and limitations.
What Are Music NFT’s?
Music NFTs are non-fungible tokens that represent ownership and proof of authenticity of a specific piece of music or related digital content. In contrast to fungible assets like cryptocurrencies or stocks, NFTs are completely unique digital assets that cannot be exchanged for an identical item.
In addition to music tracks, NFTs can also be used to represent ownership of other digital assets related to music, such as artwork, concert tickets, merchandise, and more.
Music NFTs allow for the sale purchase and trade of music and related digital content to fans and collectors as one-of-a-kind digital collectibles. The NFTs can range from single tracks to full albums. One well-known example is Snoop Dogg’s NFT collection, in conjunction with Gala Music, called “Snoop’s Stash Box” including music from the B.O.D.R. album, exclusive bonus tracks and surprise items. Another popular example is the “When You See Yourself,” album from Kings of Leon, released by YellowHeart as an NFT, with exclusive art, and live show extras.
The impact of NFTs on the music industry is potentially huge, influencing the way songs and albums are distributed and shared as well as leading to a shift in power giving artists control over their work. It enables them to sell directly to their fans, bypassing the record label entirely.
How Music NFT’s Work
Decentralized, blockchain networks use cryptography to authenticate transactions. Music NFT’s are kept on these networks, and are bought and sold use smart contracts, a transaction protocol for automatically verifying and executing the terms of an agreement.
Some of the most popular NFT platforms are Audius, a decentralized, blockchain-based protocol for streaming music launched in 2019; Gala Music, a market for music NFTs, where artists can sell music directly to fans and users can buy and sell music NFTs, stream and create playlists, and watch music videos; Sound.xyz, where artists can launch a listening party for new song releases with a series of limited edition NFTs, and OpenSea a decentralized marketplace for buying and selling all types of NFTs, built on the Ethereum blockchain.
The Benefits of Music NFTs
The use of NFTs in the music industry offers opportunities for artists to receive a greater share of revenue from the sale of their music and to retain control over their intellectual property and how it is used. They can set the price and choose the distribution method, without being dependent on record labels and streaming services.
Music NFT’s also enable artists to sell unique products in addition to their music, such as behind the scenes content and limited-edition releases. Meanwhile, fans enjoy more direct access to music and new ways to collect it. Buying a music NFT, they get to own an exclusive piece of musical content, while directly supporting their favorite artist.
The many advantages of music NFT’s include the chance they provide for an artist to authenticate ownership of their intellectual property and enjoy source of alternative income, through digital content that can be sold directly to their fans with no middlemen. NFT’s also offer a way for fans to own unique compositions and other exclusive music-related content.
The Limitations of Music NFTs
When it comes to monetizing music NFT’s, there are some challenges that need to be overcome. One of the biggest issues is the complexity of blockchain technology, which requires a level of technical skill from the artist and from the fan purchasing the digital asset, which could limit access. In addition, music NFT’s are still in their infancy, so another drawback is that it is hard to anticipate if the trend will take off or if adoption will remain at its current levels. It is also hard to predict the value of an NFT so profits can be inconsistent.
Despite these difficulties, music NFTs offer an exciting new direction for the music industry, providing artists with a way to retain control over their music and provide new digital avenues for engaging and interacting with fans.
Here at ArbiSmart, we are preparing to introduce our own NFT marketplace in H2, allowing for the secure purchase and sale of all types of non-fungible tokens, including music NFT’s. In addition, next quarter we will also be launching our own decentralized yield-farming protocol, with first-of their-kind gamification features that will enable stakers to increase their yield farming profits through the use of exclusive ArbiSmart NFT’s.
To learn more about a range of different blockchain technologies, digital assets and crypto investment opportunities, check out the ArbiSmart blog.