March 11, 2022
Spotify Who? For smaller acts, NFTs offer financial gains once elusive in a music business dominated by streaming — at least for now.
Image above is Singer-songwriter Iman Europe who has made 22.2 Ether selling five singles and a music video as NFTs since November.
A savvy cadre of recording artists has been using the new, blockchain-based digital frontier sometimes known as web3 to do what they’ve always dreamed of: Making money by making music.
The revenue they’re earning from selling their songs and music as nonfungible tokens, or NFTs, is significantly larger than the pennies they pull in from streaming services such as Spotify. At the same time, they are providing a tangible use case for elements of web3, the preferred nomenclature of venture capitalists who invest in online services built using blockchain technology, where control isn’t concentrated in a single business entity.
“I had one person buy my song for the amount it would have taken a million streams to get,” says Iman Europe, a singer-songwriter who has made 22.2 Ether (now worth almost $60,000), selling five singles and a music video as NFTs since November. That compares with the roughly $300 a month she was earning from streaming, despite having garnered some 4 million listens across platforms. Nearly 40% of her NFT revenue was made on secondary sales, where she received a 10% cut of each resale.
Musicians like Europe took in $83 million in primary sales through NFTs last year, according to Water & Music, an organization that researches digital music innovation. Independent artists accounted for 70% of that revenue, the group found. It’s a trend that is attracting the attention of larger investors, including 12-time Grammy Award winner John Legend. With a group of entrepreneurs and venture capitalists, he announced earlier this month that he’ll be launching a platform for artists to monetize their work using the technology.
Popularity with independent artists can partly be explained by the fact that the world of NFTs is much more accessible than landing a lucrative, corporate record deal. To release an NFT, artists attach their media — such as a song or video — to a verifiable digital token and then auction it off on an online marketplace such as Nifty Gateway or OpenSea. These operate on blockchain technology, which offers an online record of the transaction history.
There is no guarantee that independent artists’ success with NFTs will continue. Last year was a bumper year for NFTs. With buy-in from celebrities, politicians and even socialites such as Paris Hilton, the market for these digital collectibles surpassed $17 billion. Yet with many cryptocurrencies down this year — most NFTs rely on the native token of Ethereum — some wonder if the model for musicians is sustainable.
Christian Kaczmarczyk, a principal at venture-capital firm Third Prime, owns more than 20 NFTs of songs from various artists.
“If this thing doesn’t get more popular anytime soon or doesn’t give incentives for people to get involved, then this will go away,” Kaczmarczyk, the music NFT collector, said.