Music Blockchain

Traditionally, large record labels and streaming services have dominated the music industry. Sadly, musical artists receive only a tiny part of the revenues from their talent in most cases. Profits go to pay a large number of intermediaries (producers, promoters, etc.) besides the salaries for musicians.

However, blockchain technology has the potential to revolutionize this industry through non-fungible tokens (NFTs). With this technology, musicians can opt to monetize their creations on the blockchain without paying any intermediaries. Will the NFT music industry become mainstream in the coming years? Let us discuss it in detail.

What Is Crypto Music?

Crypto music is a recent term that refers to using NFTs in the music industry. Non-fungible tokens are cryptographic tokens that record digital content ownership on a blockchain. Some NFTs also tokenize real-world items. So, music NFTs could define ownership of an album, song, album artwork, or a piece of merchandise (t-shirt, sticker, etc.). One can regard crypto music as a genre and media format in a broader context.

How Do Audio NFTs Work?

Audio NFTs allow musicians to capture value for their work as never before. NFTs use automated smart contracts to authenticate audio and track its provenance and value as it changes hands. A smart contract is a program on a blockchain that automatically executes when predefined conditions are met.

Thanks to this technology, musicians can retain between 80% and 90% of the sales of their original works. What’s more, they can earn royalties from subsequent sales. Smart contracts execute this process automatically without the need for costly intermediaries. Musicians can create NFTs and then auction them off to fans. In most cases, the purchase is settled using cryptocurrency.

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How Audio NFTs Are Changing the Music Industry

Besides the use cases described above, NFTs are changing the music industry in various ways. Let us review the most important ones.

1. No More Control by Biggest Labels

The music industry is worth $11 billion. However, because of the control of the three biggest labels (Sony, Warner, and Universal), musicians get only a tiny portion of total revenues from disc sales. The rest is divided between many intermediaries, including producers, distributors, promoters, etc. Musicians can get royalties, but it usually takes a long time. As a result, many artists have looked for alternative revenue sources like live performances.

Tours represent up to 75% of some musicians’ income. However, revenue from tours plummeted because of cancellations due to the Covid-19 pandemic. So, NFTs can give musicians more control of their revenue. They can sell their creations directly to their fans without paying salaries to myriad intermediaries.

2.  Effective Way to Stop Piracy and Misappropriation

Since NFTs establish ownership, stealing music through piracy and other methods will be much more difficult. Also, because of the authenticity ensured by NFTs, misappropriation of music will not occur between musicians.

3. Fairer Royalties

With an NFT, musicians can earn royalties following an initial sale. Also, the tokenization of songs allows for a fairer royalty scheme on audio streaming platforms like Spotify. Such platforms have been quite controversial concerning royalty payments. However, using tokenization, a smart contract can be programmed to pay royalties each time a song is streamed online.

4. Closer Connection between Musicians and Their Fans

Musicians can sell their NFTs directly to their fans without intermediaries. This peer-to-peer (P2P) interaction creates closer connections between musicians and music lovers. Artists can also create rare and collectible NFTs and auction them to their most devoted fans. These interactions will forge unique relationships between musicians and their superfans.

Problems with Crypto Music

Proponents of blockchain and NFTs in the music industry argue that these technologies will make music more democratic and accessible to anyone. Theoretically, any musician should be able to create NFTs with their music and sell them for profit. In reality, most artists that have made a foray into crypto music are big names. They already make big record sales and are not struggling to get income.

Likewise, anyone should access unique musical creations and collectibles through NFTs. However, only wealthy fans seem to buy tokenized audio and merchandise. Hence, the trend is in the opposite direction, toward an elitist music industry, farther from the ideal democratization of music.

Another concern with crypto music is the environmental damage caused by the minting of NFTs. Ethereum, the primary platform for creating NFTs, consumes enormous amounts of electricity for its operation. Although the shift from proof-of-work (PoW) to proof-of-stake (PoS) consensus mechanism has reduced energy consumption, other cryptocurrencies like Bitcoin continue to be highly energy-demanding. Bitcoin and other coins are routinely used to buy NFTs.

Conclusion

The use of NFTs in the music industry could be disruptive. This new technology can open novel business models for musicians to regain control over their income. At the same time, fans will benefit from lower prices to access their favorite musicians' creations. Rarities and collectibles will also be easier to find. However, crypto music is still in its infancy. At this stage, it is still uncertain whether the music NFT phenomenon will stay for long and become a new frontier in the industry.

FAQ

Which Are the Most Popular Blockchain Music Streaming Projects?

Several projects leverage blockchain technology to improve the lives of musicians. For this sake, various projects are creating blockchain music streaming platforms with a fairer royalty payment scheme. The most important projects of this type are:

• MediaChain. This project has created a decentralized P2P database using smart contracts to ensure musicians get fair payment for the use of their artistic creations. MediaChain allows transferring relevant data across multiple applications and organizations to remedy intellectual property problems and enable more equitable royalty payments.
• Choon. This project has developed a blockchain music streaming and digital payment platform. Choon allows musicians to get royalty payments on time and in full. On this platform, artists can create a smart contract for each contributor to a song (writers, engineers, session musicians, etc.). In this way, royalty payments are automatically distributed.
• Musicoin. This project offers free blockchain music streaming services. It harnesses a universal basic income (UBI) pool model and a pay-per-play (PPP) structure. So, a smart contract ensures musicians are paid revenues immediately after their songs are played. This platform features its native token, MUSIC, which fans can use to tip musicians.

How to Create NFT Music?

Various online platforms specialize in minting NFTs from artworks and music. You have to create an account on one of those platforms first. After that, you must submit your file or files for minting your NFTs. In most cases, you must pay a fee before your NFT is minted. Remember, all payments are usually made with cryptocurrency.

The Antiquated Music Industry Model vs. NFT Marketplaces

Experts think that blockchain technology and NFTs can disrupt the music industry akin to the disruption of the old financial system by the so-called decentralized finance (DeFi). NFTs can give musicians the power over their income, which is currently controlled by major record labels. This centralized organization has prevented musicians from generating independent revenue. It all can change through a combination of music and blockchain technology. The emerging blockchain music industry will also address royalty payments, which are pretty unfair in the antiquated music industry.

Disclaimer

Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.

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