Why artists should be excited about NFTs
Why artists should be excited about NFTs
What is an NFT?
NFTs (non-fungible tokens) are an exchange of ownership using blockchain, which makes them verifiable, decentralised and totally secure. NFTs in their simplest form can be digital files, which are bought, sold and traded - but there are far more creative applications of the technology coming into play.
Creators of NFTs can also embed a royalty smart contract, ensuring that with every resale the original creator will get a kick back (usually 10-20%). This means that the artist will continue to be rewarded as the value of their work increases over time - a unique and incredibly important shift in the power dynamic of the artist economy.
Examples of NFTs in the music industry
NFTs in the music industry come in many forms. This year the BRITs launched an NFT collection through eco-friendly platform Serenade, launching 250 editions released for each winner of the Awards, offering collectors a chance to win a pair of tickets to the 2023 BRIT Awards if they collected all thirteen NFTs; Grimes sold one-off videos set to original songs on Nifty Gateway last year; and independent artist Imogen Heap recently sold a set of recordings from live online jam sessions as NFTs paired with visualisations and gave 5% of sales to Nori, a startup that pays farmers to reduce carbon emissions.
All of these NFTs have given these artists or music organisations the ability to monetise their fanbase in brand new ways and in some cases, even help raise money for causes that they are passionate about. NFTs have allowed them to create a more new and meaningful online experience for fans and, most importantly, have offered artists more agency in creating revenue.
Why would you or your fans want an NFT?
Like many new developments in the music industry, NFTs can seem daunting to many artists, but we don’t see NFTs going away anytime soon. That’s also why we’re here to help.
An easy way to think about NFTs, are like collectibles. Fans already collect vinyl, merch and ticket stubs, so NFTs don’t need to be any different. Which fans wouldn’t want exclusive collectors items? They also allow artists to directly invest in the music they believe in.
It’s always a good idea to get a feel from fans what they’d love to see, and to see whether they’d be responsive to NFTs. You might be surprised! Let’s look at some of the pros and cons of NFTs to get more of an understanding.
Cons of NFTs
Understanding: A lack of understanding of the NFT world can deter artists from diving in, which is understandable. There are numerous platforms, blockchains, types etc. There’s a lot of terminology as well to decipher like minting, gas fees, blockchain etc. If you’re new to the space it can be tricky to manoeuvre without support or a lot of time spent researching.
Over-hyped: Many artists will view NFTs as a passing phase that will fade out quickly - but didn’t we say this about cryptocurrencies? Now look where we’re at. There’s also been a lot of hype going around about the huge fees being paid for NFTs from the likes of Grimes, 3LAU and Beeple. This doesn’t accurately reflect the overall market and also can make other smaller artists feel like it’s only a space for bigger celebrity artists. We feel like this is already starting to fizzle out though, and NFTs are landing at their real value.
Laws: Given the new technology, the laws around NFTs are still very much being established. Things like copyright and intellectual property laws are particularly important, for obvious reasons, so whatever laws are brought in will play a big part in the evolution of the space. Right now it’s still a bit like the wild west.
Pros of NFTs
Revenue: NFTs offer a new potential form of revenue for artists. The technology is decentralised, cutting out any middle man, meaning that profits go directly to the artist. This is hugely impactful for so many artists who are reliant on streaming and touring fees to stay afloat. It also means that fans are able to invest directly with the artists they love.
Royalties: When minting an NFT the artist can decide what level of royalty they would like. This means that with every re-sale they’ll get a portion of the sale as a kickback. As a career progresses and as the NFT ideally increases in value, the artist will for the first time be able to reap the benefits of that.
Community: NFTs are all about community. They provide another medium to connect with your fans and bond with them in a long lasting way. They’re the definition of win/win. As long as you’re being authentic and focused on providing something of value for your fans, then NFTs are a great place to connect with fans and provide a creative extension of community building.
Make sure you check back into our blog for the second part in this three-part blog series on NFTs very soon.
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