I was wrong.
It’s time to admit it.
You see, in early 2021 I wrote an article called “5 Reasons Why NFTs Don’t Matter (Yet) for Indie Musicians.”
These were my five concerns:
- NFTs don’t invent demand
- The problem for most musicians is obscurity, not scarcity
- Competition is fierce
- You’ll have to work hard to educate fans about crypto
- There are easier ways to create exclusivity
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My worry was that DIY musicians were getting distracted by a gold-rush narrative around NFTs.
I felt our limited time and budgets would be better spent building audiences in more proven ways, with wider reach, zero crypto tutorials, and a familiar fiat onramp (PayPal, Venmo, Stripe, cash, etc.) for both artist and fan.
A year later, I’m willing to change my tune on NFTs.
I think all five of my concerns are still valid, mind you. But today I see them as things to consider before launching an NFT project; they shouldn’t prevent you from exploring NFTs (or other Web3 concepts such as social tokens) entirely.
So let’s explore. With a little help from SNL…
The Musician’s Guide to NFTs
In our Music Predictions for 2022, we guessed that NFTs would be everywhere this year. That proved to be an understatement. From Super Bowl commercials about crypto, to giant artists minting their own NFTs, to the Biebs and Paris Hilton and Madonna flaunting their Bored Apes, NFTs are a media obsession.
But what even is an NFT? Or tokens? Or minting?
Before we explore how NFTs can actually help grow your music career, let’s define some terminology and demystify a few concepts for the non-crypto-natives.
What is an NFT?
“NFT” stands for “non-fungible token,” a limited-edition or singular crypto asset.
“Fungible” is an obscure word meaning that something can be replaced with an identical, interchangeable unit. Think of a dollar bill; it spends the same as any other dollar bill, right?
A dollar bill is fungible.
Until that dollar gets put in a frame behind the cash register at a local café, or is autographed by LeBron James. Suddenly that bill is unique, limited, NON-fungible. It can’t be replaced.
An NFT is a unit of data that lives on a blockchain, similar to a fungible cryptocurrency such as ETH or BTC. It can be held, bought, or sold in a similar way. However, the non-fungible aspect of the “token” is what makes an NFT a verifiably-limited digital item.
Think of it like a tradable receipt on a public ledger that anyone can view; and this receipt proves… something.
What that something IS can differ depending on the NFT.
An NFT can signify:
- Ownership or stake
- Community membership
- Access to a particular work
- Support for an artist or cause
- Proof of participation
- And much more
An NFT could represent:
- The deed to your house
- Your health records
- Proof that you were once a customer of a 5-star restaurant on its opening night
- A sword you earned in WoW but want to use in the next Legend of Zelda reboot
- Your profile pic or avatar
- Your Ethereum Name Service address
- A backstage pass or ticket
- Entrance to a gated social club
- Bullet-points in your future job resume, held in your crypto wallet
Possibilities for music-related NFTs include:
- A single or album
- Video content
- Community membership
- And more
The #1 thing people get wrong about music NFTs
We have century-long tradition of thinking about music economies in terms of direct ownership of tangible items. Sheet music, vinyl records, CDs. Even a download on your hard drive is YOURS, in a way. You control the thing that either IS or replicates the music.
For our conversation though, it’s important to clarify that a music-related NFT is NOT the music file or image itself. WAVs, JPGs, and so forth — they don’t live directly ON a blockchain. They often live on your own website, or on Bandcamp, or on a blockchain-adjacent storage service like IPFS or Arweave.
So an NFT is essentially a transaction record that points to a work or project, and says something about how that art is made, shared, controlled, or otherwise contextualized. It says something about the relationship between the NFT holder and its creator.
This is one of the most commonly misunderstood things about NFTs: You’re not buying the music. You’re not buying the file. You’re buying an indicator.
Scratching your head yet? Let’s dig deeper. I think it’ll make more sense soon.
A glossary of NFT terms
Airdrop: Much like the airdrop function in Apple’s iOS world where you magically send someone a file, airdropping in the crypto space means to send a token to someone’s crypto wallet. Many NFT creators airdrop clients additional tokens (other NFTs, social tokens, etc.) as a way to thank them for playing their part in the community. The recipient can either accept or deny the airdrop.
Blockchain: This is an “immutable” database for cryptocurrency; a ledger of digital transactions. Blockchain’s advantage is that it’s extremely secure. The ledger must be stored on multiple computers/nodes across the world, and transactions are validated by consensus, meaning it’s difficult for hackers to crack and steal the cryptocurrency stored on a blockchain. And remember, NFTs are non-interchangeable tokens that live on a blockchain.
Cryptocurrency: Often shortened to crypto. This is the currency exchanged on blockchains — so it’s also what you’d use to buy an NFT. There are many types of cryptocurrencies (BTC, ETH, AVAX, SOL, MATIC, etc.) just like there are many types of currencies in the world (dollars, euros, yuan). You might’ve even heard of some cryptocurrencies named after cute little doggies. And just like physical currency, each type of cryptocurrency has its own value that fluctuates daily. Unlike physical currency, new types of cryptocurrency are created with much more frequency. In fact, some artists, labels, and music scenes are even creating their own crypto – which is something we’ll discuss later.
Drop: To release an NFT. This is used in the same way it is for a music release. An artist has “dropped” a new single.
Floor price: The cheapest NFT in a creator’s collection. It’s the least amount of money someone would have to spend to start collecting from that creator’s project. Think of it like merch. A sticker or pin is a lot less expensive than a shirt. So if someone wants to buy some merch from you but doesn’t have much money, they’ll start there. Same with NFTs. A prospective buyer who doesn’t want to invest too much yet will buy at the floor price to start their collection.
Gas fee: The fee incurred for a blockchain transaction. Remember, even though a crypto transaction is entirely virtual, it does require real-world computational effort and energy to process, which has caused some to raise environmental concerns. There is an active and nuanced debate around these concerns, of course, and many blockchains are developing consensus mechanisms that limit energy expenditure.
Genesis drop: The first NFT you’ve ever dropped. This is your entry into the NFT space.
Mint: To create an NFT on a blockchain so it can be listed for purchase. Think of this like printing a shirt or pressing a CD.
One-of-One: When you create an NFT, you also set its scarcity. An NFT that is one-of-one is entirely unique: there is only one! Similarly, one-of-five or one-of-100 are indicators of an NFT’s rarity. Scarcity can influence demand, but it doesn’t guarantee it. Assuming there is demand, smaller supply means there aren’t as many for investors to buy; price goes up.
Secondary market: If someone no longer wants to hold your NFT, they can re-sell it. One of the coolest features of NFTs though, is you can set a percentage of all future transactions that get paid to the original creator – in perpetuity. That means the revenue you earn whenever the NFT trades hands can increase as your career and stature grow as an artist. This is also a revenue opportunity that didn’t exist in the world of physical music media. When one of your albums is dumped at the local record store, and sold from the used CD bin, you are locked out of both those transactions. Not so with NFTs.
Utility: This refers to the usage-based value an NFT has beyond merely possessing the token. Some NFTs unlock benefits for their holders, such as access to an exclusive club. Musicians can use NFTs to offer their owners access to backstage passes at shows or exclusive merch only available to those who bought the NFT.
Wallet: A digital storage for cryptocurrency, NFTs and tokens. Or perhaps more accurately, a digital way to access and transfer the tokens you own.
What is Web3?
This buzzword points to the next possible evolution of the Internet.
Web1 saw technically-proficient people publishing static content to the web, while the rest of us mere mortals would find it and read it. That was the end of the interaction.
Web2 is the phase of internet usage where anyone could become a content creator with relative ease, posting comments, sharing photos, publishing videos. This was thanks to platforms that simplified the whole process for average users (abstracting away all the technical layers). In return, we let them own all our associated content and data. You know the rest of the story.
But let’s wax philosophical about the future…
The promise of Web3 — a decentralized and “permissionless” web based on blockchain technology — is that you can directly capture the value of the content you create.
You set the asking price for your art, not based on market-wide pressures (“listening to my song is only worth fractions of a penny because 60k other songs came out today and Drake and Billie Eillish have billions of fans”), but based on how you’ve incentivized your own smaller economy. Do you have 1000 fans? Will 100 of them pay you .05 ETH for an NFT? Then who cares how many other songs came out today. NFTs and Web3 potentially give you a way to decouple your “worth” from the forces of a global music marketplace. I’m hopeful that Web3 helps us independent musicians embrace our potential as cottage industries.
The other promise of Web3? You can’t be censored. Depending on your viewpoint (and perhaps where you live), that either looks good or bad. The same tech that protects someone vile from deplatforming also helps people who are trying to resist or escape authoritarian oppression. What does any of this have to do with music NFTs? Well, it’s all part of the same revolution, so I thought it was at least worth mentioning these things. Especially because, if you can’t be censored…
You control your relationship with fans directly. One of the goals of Web3 is to shift power away from large companies and countries, and towards individuals and communities. If you don’t want to play by the rules of a particular platform anymore, you have direct connection to your fans via the NFTs and tokens in their wallets.
Jump ship, go elsewhere, or build your own meeting place. “Fork” a new solution. You can still reach your fans, and ask them to continue the journey in new ways.
It’s important to remember a decentralized web is a technology as much as an ideology. I’ve seen ardent libertarians and avid socialists both embracing Web3 as a tool for their aims. How will YOU use it?
10 benefits of NFTs
Here are some of the things I find exciting about NFTs:
- They’re “immutable.” Meaning forever. Isn’t that nice? NFTs (potentially) offer a solution to platform impermanence.
- Their value is set by YOU. Well, kind of. You set the initial terms, but price is tested against your audience’s willingness to pay. This shifts your objective away from driving a volume of casual engagement and towards the power of your community.
- Less is more. If you can focus on your community rather than driving vanity metrics that will never compete with major artists anyways, you might realize some mental health benefits as well.
- Share fractional royalties. This one is tricky, because to sell the rights to your work with the promise of future earnings gets you into regulatory territory, but still, a cool use case all the same.
- Digital collectibles. We’ve finally found a way to introduce ownership and scarcity in a world of infinitely copied media. The best thing about NFTs is that scarcity and abundance (of the same artwork) can exist at once!
- Resale revenue. Earn a cut every time your NFT changes hands.
- Pay-splits in crypto. The “smart contract” nature of NFTs (essentially programmable money) means you also have a fascinating way to control rights and manage accounting in a fast and efficient manner.
- Bragging rights. Platforms like Twitter (and possibly Instagram someday) let you display your image-based NFTs as profile pics. This shows you’re part of a particular club or community, the same way wearing a Sex Pistols t-shirts says you probably need a shower.
- Extra utility. Want to access a band’s private Discord server, or get backstage? Holding the NFT to their last album might be the thing that unlocks such an experience.
- They’re fun Yes, crypto is a pain in the ass to adopt. Steep learning curve! But once you make it past the first few hurdles, there’s a lot of interesting stuff happening in Web3. NFTs can be one inspiring component of that journey.
The artist RAC did a fantastic rant on Twitter about why NFTs have been so valuable to his artistry and career. Instead of trying to sum it up, I’ll embed it here:
ok so you hate NFTs.
cool, let’s talk about it.
i’m not gonna convince you, but at least i can offer the perspective of an artist who has been involved in the space since 2017 before any of you heard about it.
— rac.eth (@RAC) February 6, 2022
10 problems with NFTs
Okay, now that we’ve covered the possible upside of NFTs, let’s remember the downsides:
- NFTs don’t invent demand. Just because my neighbor makes a one-of-a-kind voice memo of his dog barking at 2am doesn’t mean I want to buy it. Another way of saying this is: Scarcity isn’t your problem. Obscurity is. Your time might be better spent finding fans.
- You will have to hustle. It’s a fiercely competitive world, and takes a lot of work to drum up interest in your NFT projects. I mean, you have to hustle elsewhere too, but this is adding a whole new hustle to the mix.
- Your fans will need a lot of help. Many of them are likely NOT web3 natives, which leaves you with a TON of work to onboard and educate them, build trust, and give them the skills to navigate Web3.
- Crypto is CONFUSING! It’s not like inviting someone to join a new social network with the click of a few buttons.
- Crypto is volatile. Yeah, okay, preach to me all you want about the US dollar facing crazy inflation. It doesn’t have the wild swings that Bitcoin does hour to hour.
- You need good narrative skills. To the uninitiated, it’s difficult to see how an NFT is different from crowdfunding and IRL merchandising. You MIGHT have an easier time asking for PayPal or Patreon payments. You have to explain the story of the art and the story of the NFT format in a catchy way. Good luck.
- Fractional royalty ownership. There’s the possibility of NFTs causing securities problems. I don’t know about you, but I didn’t start writing songs so I could grow up to violate SEC rules.
- Environmental concerns. Again, this is a nuanced debate, but at the very least, it’s a concern you will have to help your audience overcome to be successful with NFTs. And that means less airtime for the story of your art.
- Web3 is full of shady characters. Scams abound. Sharks lie in wait. Hackers drain your wallet. There’s also a negative side.
- Your success may depend on your genre. At this particular moment in the development of the technology, the scene is heavy into electronic-based music genres: EDM, ambient, hip-hop, pop, etc. Which makes sense; tech-forward music fits with crypto culture. But that means Web3 is NOT yet a proven ground for folk, jazz, classical, etc.
Should I create an NFT for my music?
Before we discuss HOW to create an NFT for your music, there’s a big question you need to ask yourself: should you even create an NFT? Here are some things to consider first to see if creating an NFT is the right move at this stage in your music career:
What do you have to offer?
Is it a new single or album? Or a generative synthesized bagpipe improv? Maybe behind the scenes access, like a video making-of for your next album? Is it backstage passes to any show for the rest of eternity? Think about what you can offer and if it works in a digital space.
Is there a hook that would make people want to buy your NFT?
Does the song or video have a story behind it that would entice someone to buy it as an NFT? Despite what some digital stores that proclaim themselves as NFT marketplaces claim, an NFT is different from a simple download, so it should be treated differently — as its own unique format.
Is your NFT exciting enough that fans will overcome crypto hurdles?
They’ll need a crypto wallet, cryptocurrency, and the knowledge to use them. That might be a steep hurdle for some. Does your NFT inspire them enough to rise to the challenge?
Are you ready to spend a lot of time educating your audience about NFTs?
You may have to quell their fears over environmental concerns. Or hold their hands through the process of setting up a wallet. You might have to explain literally everything in this article in order to get your audience to care. Is that effort realistic for you? Will it be worth it?
Can you ensure the NFT’s “permanence”?
Art and music NFTs generally point to a file or webpage, like an exclusive link to a music video only owners of that NFT can access. But if it points to your website, you can change the content. You might stop paying hosting fees and suddenly the NFT points to an error page or advertisements. Storing the contents on something like IPFS or Arweave provides some security to anyone who buys your NFT that the material referenced won’t change.
Is this NFT a one-off or part of a collection?
In the case of a song, is the track part of a collection (like an album) or just one standalone NFT release? A collection might entice repeat buyers who can buy each song you release from your collection to complete the set. Creating a whole collection on something like OpenSea can also save you money on gas fees, so you can add more NFTs to your collection without paying more in transactions.
Is the content exclusive to NFT holders, or will it be widely available?
It’s your choice, and there’s no correct answer. NFTs present options to your fans: They can collect the rare NFT, they can stream the song for free on Spotify, or both! But sometimes you might want to release a song ONLY as an NFT. That’s okay too, and create an extra sense of urgency around the launch.
As Vladislav Ginzburg says, “the traditional principles that govern the value of collectibles still apply—quality, authorship, uniqueness, scarcity, provenance, and cultural relevance.”
How to create and sell an NFT?
Here are the main things you’ll need to do in order to drop an NFT:
1. Create great content based on a great concept
Obvious? Great, let’s assume you’ve got this done. Then you’ll need to…
2. Get a “wallet”
This is the online tool you’ll use to access your crypto, NFTs, etc.
A “wallet” is a digital place to store your cryptocurrency while also storing private data used to validate transactions. Some wallets are used for specific currencies, such as Bitcoin, while others allow for multiple cryptocurrencies.
With something like MetaMask (available on mobile and as a Chrome extension) you have a secure way to access Blockchain-based applications. More to the point, this is the way you’ll get paid for your NFT sales!
Just be sure to do your research on which wallet is best for you. Also be sure to download it from the correct official source — because there are some scams that trick people into going through a fraudulent signup flow.
3. Get some cryptocurrency
You’ll need some to cover the gas fees that it takes to mint your NFT. Which type of crypto you need depends on the blockchain you choose to launch your NFT on. Speaking of…
4. Select a blockchain
Yes, there are some cross-chain or omni-chain NFTs that can be acquired and transferred across multiple blockchains, but most NFTs live on ONE blockchain. Do some research. Consider gas fees, ease of use, and find what’s best for you and your audience. You’ll also want to…
5. Choose an NFT marketplace
You’ll need to choose where to list your NFT. Just like cryptocurrency, there are lots of options, so do research. Marketplaces are often affiliated with particular blockchains, so again, make sure the one you pick is right for you.
6. Set the quantity/rarity of your NFT
Now you choose how many of this particular NFT item you want to make available. Remember that limited is the name of the game. One-of-a-kind is always an option too. After you set the quantity…
7. List the buying price
If your NFTs don’t sell at the asking price on a platform like Open Sea, someone can enter a bid at a lower price. It’s up to you whether you want to say yes or no. You can also choose to do sales as auctions where customers outbid one another.
You should also know that the cost to “mint” these tokens is paid (by you) in crypto when the NFT actually sells.
8. Promote your NFTs
I wouldn’t expect a pod of whales (cyrpto-rich-people) to come calling just because you use an NFT hashtag on Twitter. You’re gonna have to do legwork. Tell your audience why this project is important to you, get them excited, and teach them how to buy your NFT.
Additional NFT resources for musicians
Hopefully this article gives you a decent foundational understanding of NFTs.
If you’re curious to explore further, I encourage you to listen and learn before you launch.
Participate in community discussions on Twitter Spaces, Discord, or Reddit.
Also check out Water & Music’s $Stream Report, a thorough curriculum for musicians interested in Web3 tech, culture, and more.
It might be that after reading all this stuff, you decide it’s easier (and potentially more profitable) to just offer your fans an autographed vinyl IRL. That’s totally fine. We’re still VERY far away from a world where fans EXPECT you to sell NFTs.
Experiment in Web3 if you want. Ignore it if you prefer. The decision is in your hands. As it should be.
For more info about NFTs, watch or listen to the DIY Musician Podcast episode below: