After the year that cut off all live gigs, a major source of income for artists, the idea of selling your art to your fanbase as collectibles seems especially appealing. This is where NFTs, digital tokens traded on blockchain, come in. With them, buyers can purchase ownership of anything digital (an image, song, video, etc.), as well as the right to receive a physical item (such as a vinyl record) or an experience (such as concert tickets and livestreams) later on.
The process: A buyer bids on a token during a usually 24–hour auction and can re-sell the token after the purchase, each further transaction usually bringing the artist a percentage of the sale.
Each NFT or non-fungible token is unique and can't be easily substituted for another one, because it holds a one-of-a-kind value (unlike bitcoins or one-dollar bills, which are interchangeable). You'll hear the example of Mona Lisa – you can buy a poster of it, google it and save an image, print it, but the original still draws massive crowds of selfie-stick equipped tourists to the Louvre every day (at least, it did before Covid), all because of that special value of the original.
NFTs are applying the same logic to digital art with the help of blockchain. You only have to know the basics. Here, we'll cover them for you.
NFTs (and artists making good fortunes selling them) have been making waves in the music industry. If you've been sleeping on blockchain technology until now, this is a great opportunity to explore its potential for musicians.
This is the most straightforward option for musicians. 3LAU, an Electronic artist, sold his album “Ultraviolet” as an NFT for its 3rd anniversary, setting the record for the highest price paid for a single NFT ($3.6M) at the time. In total, he sold 33 tokens at various prices, but the highest tier included a custom song with the winner’s creative direction, unreleased music unlockable on 3LAU's website, the 11 songs on "Ultraviolet", and a vinyl edition of the album. 3LAU gamified the final minutes of the auction (each new bid prolonged the auction), and that’s when prices really started to soar – to $11.7M combined.
3LAU was interested in blockchain long before NFTs were a mainstream idea. Among other things, he organized a blockchain-powered festival that allowed festivalgoers to use crypto to buy tickets, merch, food, beverages, etc. Faced with the year that stopped all his touring revenue, he jumped on the opportunity and boy, was it a success.
And these are just a few of the artists who’ve ventured into the NFT market.
The notion is that buyers can only buy digital art, but the same technology can also be used to connect the digital and the “real” world.
These two concepts were tested for the first time by UMEK, Techno DJ, producer and Viberate co-founder, who tokenized his live gig and livestream.
The idea of using NFTs to book artists for a livestream gig could also bring this concept closer to smaller artists who can’t possibly generate the same amount of buzz as headliners. With the live gig drought continuing, it can also ease the financial burden for artists and present a gradual transition to the new normal.
Eventually, this could open doors to a whole new way of booking artists with no talent agency backing – and the future of NFTs that include a real-life experience.
Tickets are another good way of connecting the intangible to the tangible. Kings of Leon were the first band to release their album as an NFT, but more interesting, they cooperated with their ticketing partner YellowHeart to bundle it with concert tickets. They created three editions of tokens. One gave the buyer a digital download plus a vinyl edition of the album, the second came with a unique piece of art, and the third included four front row tickets for future tours.
NFTs have real potential for mass application in ticketing – you can monitor every transaction, so it’s easy to check whether a ticket is counterfeit, and the creators could get their share of profit every time the ticket is re-sold.
Grimes and her digital avatar War Nymph were ready for this. Her first collection of NFTs included ten sets of tokens. Some works came in thousands of copies, like the “Earth” and “Mars” animations of cherubs holding a weapon over the planet, set to her original music. The most expensive token was the one-of-kind one-minute video “Death of the Old” – featuring (you guessed it) flying cherubs.
The common denominator here (as well as the previous categories) is futuristic, trippy imagery.
Typically, the buyer owns the asset, but the artist can still keep both copyrights and reproduction rights. How copyrights are transferred to the buyer of a token, however, depends on each smart contract. An artist can also sell full or fractional publishing copyrights of a track or an album. This means that the buyer would own a part of the artist's catalog and collect the royalties along with the artist. Just imagine the buyer of a particular track being a publishing house.
This is a new area, so many of the processes (like distributing the royalties to different parties) still have ways to go.
An example of an artist selling publishing rights to a song is Jacques Greene for “Promise” upon its release, but he's reserving the rights for approval.
Of course, it all depends on what you're selling.
A track, video, digital art, livestream, performance, etc. We’ve covered the possibilities above, but do think out of the box. No matter the content, think about the accompanying artwork, as most NFTs have appealing visuals.
There are many marketplaces to choose from. Some platforms let anyone create an NFT (such as Rarible, Mintable and OpenSea, which is the largest one) and some are curated, such as the following:
The process of paying a creator fee to artists each time a token is traded is entirely automatic, but note that not every platform enables it. Original owners of EulerBeats Originals earn an 8% royalty every time the NFT is sold. With OpenSea, Zora and Nifty Gateway, you select the royalty percentage you’d like to receive for each sale.
There is a caveat – if a token is traded on the secondary market on another platform (e.g., bought on Zora and flipped on OpenSea), the artist doesn’t always get a royalty. SuperRare and Foundation, however, also provide royalties for secondary sales on OpenSea (10%).
Do some research and choose the one that suits you best.
You can release multiple tokens for each piece you’re selling (typically they’re numbered, which is where their unique value comes from) or a single one – depending on how much scarcity you’d like to create. You can also create multiple editions of similar tokens and each can have a unique, custom offer – check the examples above.
The general rule: the more exclusive a token is, the more valuable and expensive it is. Even though we hear a lot about million-dollar deals, this is only the tip of the iceberg. If one edition has multiple identical tokens, the price is normally lower and more accessible to fans, not just crypto investors. The price can also be fixed.
The general rule: the more exclusive a token is, the more valuable and expensive it is.
NFTs live on the Etherium blockchain, with Ether as its cryptocurrency. You don’t need to know the details, but this is where the blockchain part becomes relevant.
You’ll have to confirm and pay a transaction cost called a gas fee to create an NFT. For this, you’ll need a crypto wallet like Metamask. The gas fee is the cost of interacting with the Etherium network (the energy needed to process and validate transactions on blockchain). It fluctuates depending on the time of day and network congestion: the higher the number of people transacting value over the network at a certain moment, the higher the gas fee. Usually, it's cheaper on weekends.
It usually costs the Ether equivalent of around $70-100 to create an NFT. If the price is too high, you can wait until the gas fee drops. Take into account that your NFT will have to sell for a higher price than that if you want to make money.
➡️ Now you’ve got your NFT. Think about the tokens as a digital certificate of authenticity. Every NFT contains information about the token, the content (name, description, URL), the owner, and its history:
Steve bought XY from Jessie for $2,500 on 31 March 2021.
You can see a list of every past owner, and every transaction is recorded in a ledger that can’t be tampered with (which is one of the benefits of blockchain technology).
Getting the word out is the crucial part.
Concern: Not all NFT platforms verify that the person selling a digital art piece is actually the creator.
Solution: Many, however, do. As we stated above, some platforms work on an invite-only basis or have a strict vetting process. This issue can also be solved through an authentication party – Viberate can play this part because our database works on a one artist = one page rule, plus an artist can only claim their page after our team verifies their authenticity.
Concern: The buyer owns the original digital art piece, but you can't stop others from replicating it online.
Solution: As explained at the beginning of this article, NFTs are based on the unique value of owning the original. This breaks away from the traditional mindset, but lots of people are still ok with it. Additionally, NFTs can be combined with tangible elements and experiences, which only the owner of the token can claim.
In short, selling your tracks and artwork as NFTs probably won't pay all your bills if you're an emerging artist, but this technology still has a lot of potential even for smaller artists. Some really good news:
So, what do you think – will NFTs changed the music industry?