‘There’s a panic-stricken gold rush at the moment’: What do NFTs mean for the music making industry?
Time to pick a side: are you fungible, or non-fungible?
The last year has forced all of us to learn new terms: furlough, R-rate and now, if you’re interested in the music business, non-fungible tokens. Or, to make them sound a little less like some sort of digital mushroom, NFTs.
NFTs have been around in the art world for a few years, but only in the last couple of months has the music industry been forced to get its head around the concept. So what actually are they?
Essentially, they’re unique digital assets that can involve artwork or audio, the digital equivalent of collectible merch or rare vinyl (although some do include real world benefits such as concert tickets). Artists can ‘mint’ NFTs and sell them via blockchain marketplaces such as OpenSea and Nifty Gateway. The artist retains the rights so buyers can’t reproduce them, but they can sell them on for a profit (although the original artist usually also benefits from such sales).
And if you’re thinking that sounds suspiciously like a load of made-up music biz bullshit, well, the money involved is real enough (although most platforms only take cryptocurrencies, most notably Ethereum). Leading EDM producer Justin Blau, aka 3LAU, recently sold a 33-item NFT collection for a staggering $11.6 million (£8.5m), including one – which included the opportunity for the buyer to record a song with him – for a mind-boggling $3.6m (£2.6m).
Such figures are not a one-off. Grimes recently sold $5.8m (£4.2) of art NFTs, while DJ Steve Aoki grossed $4.25m (£3.1m). And where cutting-edge electronic artists lead, others are sure to follow. Indeed, last week, Kings Of Leon decided to release their new album, When You See Yourself (Columbia), in NFT form as well as via more traditional platforms.
Now when the ‘Sex On Fire’ dudes get involved in a music-tech trend, you know it’s either gone mainstream, or it’s pretty much all over.
“There is a panic-stricken gold rush at the moment,” sighs 3LAU manager and YMU GM Andrew Goldstone, speaking to Audio Media International from Las Vegas shortly after his client’s blockbusting NFT drop. “The amount of frenzied phone calls I’ve got this week from people desperate to figure out what they should do, is unlike anything I’ve ever experienced before. That’s concerning. If everybody’s trying to do something in a panic, that’s not the kind of approach that is helpful to the growth of the space…”
You see, somewhat ironically given that most NFTs don’t actually exist in tangible, physical form, authenticity is crucial in this space. 3LAU has been an NFT aficionado for years, while Goldstone notes that Aoki – also a YMU client – “put in the time to show people in the NFT community that he was serious – and they’ve responded in kind”.
That may well be why others’ involvement has made a less seismic impact. Kings Of Leon’s sale, which targeted regular fans with lower-cost items as well as monied collectors, did gross over $1.4m (£1m), which is a lot of money to most sane individuals, but relative chickenfeed to the NFT cognoscenti (albeit a sum that their album is unlikely to gross on DSPs for a long time). And it only got there after the sale was extended, after some of their ‘Golden Ticket’ items, which included a lifetime concert pass, failed to reach their reserve price.
Will such experiences put off anyone who’s just looking to cash in on the trend?
“Will artists who are like, ‘I just think I can make some money’, really make some money?” ponders Goldstone. “Maybe. But is it going to be what they think they’re going to make? Probably not. Obviously, if it was just about being the most popular artist in the world, Justin would not have made $11.6m. But that is such a small component of what happened.”
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Of course, many artists – stricken by a year without live shows and restricted by a streaming landscape that provides few with a living wage – are desperate for any alternative payday right now. And an NFT can certainly help an artist maximise the value of their songs at a time when the market rate for a track is being driven ever-closer to zero. It’s attractive to think that, while legacy artists are selling their songwriting catalogues in droves, NFTs could help the younger generations avoid doing the same.
But, while no one wants to put the ‘non-fun’ into ‘non-fungible’ just yet, claims by some that it could revolutionise the music biz, or even destroy the label model, seem a long way off at this point.
For a start, it’s so complicated Avril Lavigne is probably dropping an NFT about it right now. The system relies on two concepts – cryptocurrency and blockchain tech – that the industry still hasn’t properly got its head around, despite sitting through endless music biz conference panels about both over the years. And such is the specialist nature of the NFT industry, that even major acts might struggle for access to the leading platforms, while fans have to grabble with cryptowallets, browser extensions and Ethereum conversion rates, rather than just firing up Amazon to show their appreciation. Meanwhile, the environmental cost of all that cryptocurrency’s computing power is little short of destructive.
Also, unlike the changes demanded by the #FixStreaming and #BrokenRecord campaigns, the NFT world ultimately relies on the most ardent fans shelling out more to fix the artist’s revenue problem, rather than putting responsibility on the industry itself. In that sense, it doesn’t seem to be any more of a long-term fix than Spotify’s tip button or those meet-and-greets that see hardcore fans shelling out hundreds of pounds for a Polaroid and a brief, awkward conversation with their heroes.
More fundamentally, while many music NFT drops to date have been held by independent artists that own their own rights, that’s not the case for many with the clout to make the concept work. There are already protests out there about artwork being used in NFTs without the creator’s permission. And it surely won’t be long before the extended industry value chain – songwriters, publishers and record labels – start asking where their share is.
“The question is, are the labels willing to take a back seat?” asks Goldstone. “And I doubt that, because they’re not good at taking a back seat…”
Nonetheless, Goldstone is convinced that – even if the NFT boom looks like a classic tech bubble from the outside – the commitment of the insiders means ‘non-fungible’ will be a buzzword for a long time yet.
“There may be a market correction but I don’t think from a technology standpoint that this is going away,” he says. “This will remain a super-interesting and trend-setting area as people better understand the technology and what’s possible. The opportunities will only continue to grow.”
For now, you can certainly expect more big names to get involved in the move from non-fungible to fully functional. But your favourite musician will need to still be minting – and getting minted – in a year’s time if the NFT party is going to really get started.
