Welcome to the fifth episode of the PYMNTS series about NFTs, the latest crypto craze.
For 12 days, we’ll examine every aspect of the non-fungible token craze sweeping the worlds of art, video games, social media, fashion and sports.
When finished, you’ll have a solid understanding of the basics of NFTs – what they are, how they work, what they’ll be used for, what their drawbacks are, what you should be aware of – and wary of – and why. people pay so much money for them.
See also: PYMNTS NFT Series: What Are NFTs and Why Are They Crypto’s New ‘Next Big Thing’?
PYMNTS NFT Series: NFT games don’t just have value, they have an economy
PYMNTS NFT Series: From Famous Artists to Forgers, the Art World is Embracing NFTs
So how does the music world engage with NFTs? Anyhow.
Rapper Nas jumped into the NFT world this week, announcing that on January 11 he will be selling a portion of streaming royalties from two of his hit songs to fans for as little as $50.
The tokenization of music royalties is a subset of one of the largest projected uses of NFTs from a business perspective: the sale of small chunks of large investments that small investors have never had access to before, such as real estate (a hotel has been symbolized). This is a topic we will cover in more depth in a separate article in this series.
But that’s just one way recording artists use NFTs. Songs and even albums can be hosted and sold on NFT tokens, with a variety of benefits for musicians. Notably, artists are cutting out the middleman, ranging from record labels to streaming services. But the move is also a way to connect with fans, offer special perks, and even sell merchandise that can be used by fan avatars in the metaverse.
By selling 50% of the rights to “Ultra Black,” his 2020 Grammy-winning album “King’s Disease,” and “Rare,” from 2021’s “King’s Disease II,” Nas jumped on a bandwagon. crypto that is rapidly gaining momentum in the music world.
In this case, Nas is selling 400 “rare” tokens in three tiers: 700 gold-level NFTs at $99 for 0.0133% share, 400 platinum-level NFTs at $499 for 0.0658%, and access to exclusive merchandise , and 10 Diamond Tokens for $9,999 for 1.5789% plus two VIP concert tickets, an exclusive signed vinyl album, and a streaming chat with producer Hit-Boy. “Ultra Black” tokens range from $49 to $4,999.
It is also not limited to top artists. Crypto fan and Coinbase investor Nas creates and sells NFTs via Royal, a company founded by Justin Blau. Also known by his stage name DJ 3LAU, in March 2021 Blau auctioned off 33 NFTs tied to his album “Ultraviolet” which included items ranging from new versions of songs on the album to access to previously unreleased tracks. to illustrations. The $11.7 million he raised was the largest NFT sale ever at the time.
“Having Nas be the first artist to sell royalty rights through Royal is an incredible affirmation of our mission,” Blau said. says Forbes. It’s proof that artists of all genres are keen to democratize ownership of their music and want to be connected to their listeners on a deeper level.
NFT tokenization isn’t something entirely new – David Bowie sold 10-year “Bowies Bonds” backed by his catalog and other revenue streams for $55 million.
It’s also a new way for artists smaller than Nas to make money in the age of streaming. About 90% of all streaming royalties go to the top 1% of musicians, with artists like Daniel Allen earning just a few hundred dollars from millions of annual streams, he Recount TIME in December. And with the tour canceled by COVID-19, he turned to NFTs, selling 50% of future royalties to fans – far more than he gets from traditional labels. He also sells songs on the NFT music site catalog. In total, NFTs account for 85% of its revenue.
The goal, Allen says, is not to get rich. NFTs, combined with strong social media fan interaction, “creating a musical middle class” that hasn’t existed for some time, he says.
That doesn’t mean it’s guaranteed. Kings of Leon released NFT versions for their ‘When You See Yourself’ album release in March 2021 – the first major group to do so. But the response has been mediocre, despite additional freebies like concert ticket art.
Beyond the music
All of this isn’t to say that big labels don’t see the value in NFTs. Warner Music Group announced in April 2021 a partnership with Genies to create avatars and wearable NFT products for its artists. The goal, Warner said in a statement, is to “facilitate fan reach across immersive platforms and metaverses.”
Universal announced in November the creation of a new supergroup called KINGSHIP, made up of four avatars of the Bored Ape Yacht Club who will develop and release “new music, NFTs, community products, activations and experiences in the metaverse, and launch a new generation. of artist, fan and community engagement,” he said in a statement.
Genies has also worked with Justin Bieber, Rihanna, and Cardi B, among others, and offers a 3D avatar and NFT production kit that allows musicians (and others) to make NFT clothing, accessories, tattoos and other limited edition merchandise for fan avatars.
Mick Jagger and Dave Grohl released NFT artwork in April tied to their single ‘Easy Sleazy’ which was auctioned off for charity, and musician Grimes – who has a son with crypto-favorite Elon Musk – auctioned a series of NFT artworks for $TKTK last year.
Even music legend Quincy Jones has jumped on the NFT bandwagon. In November, he partnered with The Recording Academy and NFT Marketplace OneOf to produce a series of NFT collections that will commemorate the 64th, 65th and 66th Annual Grammy Awards.
“I’ve been an advocate for artists throughout my career, so any technology that helps musicians earn a living is something I fully support,” Jones said in the November 202 statement. “It excites me to know that OneOf is working to bring more money into the ecosystem, and at the same time I’ve been with the Grammys/The Recording Academy since its inception. So that makes smile my soul to see OneOf partner with this wonderful organization, and I can’t wait to see the good they will do for artists.