You’ve probably heard all about NFTs recently – the whole world is buzzing about them and there are plenty of stories about people making fortunes buying and selling them. But what is an NFT? And – most importantly – what’s the deal with NFTs in the music space?
In this post, we’ll go over everything you need to know about music NFTs, including a general discussion to introduce you to all the key concepts and the basic steps you can take to buy and sell music NFTs.
What Are NFTs?
Let’s start with a general discussion of what NFTs are and how they work. You might encounter some words you don’t know, but don’t get overwhelmed! We’re going to break everything down in the easiest, simplest, and clearest way possible.
For starters, NFT stands for non-fungible token. Let’s take a look at each part of that phrase:
- Non-fungible. This means that it can’t be traded and is totally unique.
- Token. This is just a fancy way of saying a certificate or record stored somewhere online.
We live in the digital age, when you can copy and paste just about everything. NFTs, on the other hand, are different – they are not fungible, meaning they can’t be exchanged. In other words, an NFT is basically a digital certificate of authenticity that is – by its very nature – 100% unique and stored on something called the blockchain (we’ll cover that in the section below).
It’s also important to understand that an NFT is a digital asset (also called crypto asset) that becomes valuable due to its scarcity and uniqueness. There’s only one, so that automatically makes it rare and desirable for certain consumers.
Additionally, all NFTs are:
- Indivisible. NFTs exist exclusively as whole or intact items.
- Indestructible. An NFT can never be destroyed, removed, or replicated.
- Verifiable. All metadata is stored on the blockchain, creating historical ownership data.
- Immutable. The metadata can not be altered by just anyone.
- Unique. By definition, there’s only one NFT, making each one extremely rare.
- Resellable. This makes NFTs a viable source of income for investors or speculators.
- Transferable. Their ownership can be transferred and each transfer is recorded on the blockchain.
Please note that, in this context, “transferable” is not the same thing as “exchangeable”. In the next section we’ll talk a little bit about how NFTs are not exchangeable even though they’re still transferable.
Fungible Vs. Non-Fungible
To make it easier to understand exactly what “non-fungible” means, let’s take a look at some real-world examples. A real-world equivalent to this scenario is the Mona Lisa, probably the most famous painting in the world. There’s only one original copy of the Mona Lisa, making it extremely valuable for collectors or art historians.
Of course, there can be duplicate prints made, but they are never as valuable as the original copy. That’s because they’re not unique and they’re not scarce. This is just a basic principle of economics: goods that are scarce become more valuable.
For an example of a fungible asset, we can just take a look at cold, hard cash. If someone hands you a hundred dollar bill, then that bill is always worth one hundred bucks. If you decide to exchange that bill with another hundred dollar bill, then you still have the same amount of value. Finally, you can also exchange that hundred dollar bill for five 20s and you’ll still have a hundred bucks.
This means that cash is fungible: it can be interchanged.
What Is The Blockchain?
We’ve established that NFTs are stored on something called the blockchain. However, that term may mean nothing to you, so let’s take a moment to learn a little more.
The blockchain is essentially a digital ledger or record of transactions that is duplicated and distributed across an entire network of computer systems, known individually as nodes.
When it comes to the transfer of digital assets, including things like cryptocurrency or NFTs, this means that the blockchain is decentralized. It’s not like a bank, where all information is stored in a single, central database. Instead, this sensitive information is spread across the entire internet.
While that may sound like it’s not a secure method for storing sensitive information, the blockchain is actually highly secure, especially when compared to conventional means of storing sensitive data.
First of all, it’s always totally encrypted. Second of all, each time a transaction occurs, a new block is created, forming a chain of blocks that can’t be tampered with and become more secure with each block added. These blocks store important information like time stamps of transactions as well as who or what has been exchanged.
If someone wanted to hack the entire blockchain to access this sensitive data, they would have to alter every single block on the chain, one by one. In fact, the longer the chain, the more secure each block becomes!
In other words, the crucial data is not locked in a vault somewhere, with limited access, but distributed across a network. Blockchain technology is most simply defined as a decentralized, distributed ledger that records the provenance of a digital asset.
Since NFTs are stored on the blockchain, they acquire some of the key characteristics we mentioned above: they’re verifiable, immutable, resellable, transferable, and indestructible. The blockchain gives us all the information about the NFT, allowing us to confirm that it is, in fact, 100% unique and non-fungible.
What Is A Music NFT?
Most NFTs are digital assets for intangible items like images, videos, or in-game items. However, there are also music NFTs. So what does that mean exactly?
The answer is pretty simple: A music NFT is any kind of NFT that has to do with music! This can take different forms, including:
- Digital merchandise
As you can see, there are a variety of different music NFTs that people like to buy and sell online, usually on NFT marketplaces. Fans will participate in auctions for these tokens, and the winning bidder will receive the NFT in their digital wallets in a secure and encrypted transaction.
In these transactions, the artists can raise quite a bit of money for the NFTs they sell, but the best part is that they get to keep all of it since they don’t have to share the profits with a record company. On the other hand, fans buy the music NFT to get a unique, one-of-a-kind token that they now “own”.
Finally, some musicians are also including personal experiences with the tokens that they’re minting, including the opportunity to meet or even collaborate with the artist in question. This is commonly referred to as adding utility, and it’s one of the main reasons why so many artists are minting and selling their NFTs.
Why Buy Music NFTs If I Can Hear The Music For Free?
That’s a good question! It all basically comes down to the uniqueness and scarcity of NFTs – people like to own exclusive goods.
Ultimately, people buy music NFTs for three primary reasons:
- They’re huge fans and want to own an ultra-exclusive piece of music history.
- They are collectors and want to add NFTs to their ongoing collections. In this case, they can even create collections that will appreciate in value, much like baseball card collectors.
- They’re investors who want to buy and sell NFTs to “flip” them for a profit.
Think of it this way: people will pay astronomical sums of money for vinyl releases of albums that you can easily listen to for free. Go on YouTube, type in “The Beatles”, and their whole discography is readily available.
But super fans, collectors, investors, and music historians will still pay top dollar to own a piece of music history. NFTs are basically the same thing, except in the purely digital space. Rather than a piece of physical media, you “own” the digital file – and this true ownership can never be falsified, since all the metadata is stored on the blockchain.
Ultimately, music NFTs are a form of collectible. In some cases, they can even be a form of social status – you earn bragging rights to say that you “own” the authenticated, one-of-a-kind, completely unique digital certificate to some piece of music history.
If I Buy A Music NFT Do I Own The Copyright?
Not necessarily, no. Ultimately, it all depends on how the musician or creator mints the NFT – if they want, they can include some form of licensing or copyright.
For instance, Grammy-winning producer Illmind released what he calls the “first ever NFT-backed sample loop/melody pack” with a collection of 10 melody compositions. The sale also came with a “royalty-free guarantee” and a contract that gives the NFT owner rights to use the audio files for their own purposes, however they saw fit.
However, in most cases, the NFT does not include the copyright. Think of it this way: if you bought a one-of-a-kind, signed copy of a Beatles record, that doesn’t mean you own the copyright to that piece of intellectual property. It just means that you own a one-of-a-kind, signed copy of that record, priceless as it may be!
On the other hand, if you mint an NFT that grants some level of copyright or licensing for the music, then there is an additional financial incentive for people to buy these NFTs. Of course, the NFT market shows no signs of slowing down, so some of these NFTs will continue to appreciate in value in the years to come.
Plus, some of them could also generate an income by giving the buyer royalties via the copyright they purchased as part of the NFT – it all depends on how the creator wants to mint the NFT. At the end of the day, buying and selling music NFTs on a marketplace like The Husl takes a lot of the power and profit from middlemen and corporations and gives it back to creators and fans. It’s a massive democratisation of the music business!
Why Are Music NFTs So Popular?
As we mentioned above, music NFTs are enjoying a real moment right now. Although most of the press is devoted to the really high-profile sales by prominent artists like Grimes, Eminem, Steve Aoki, and Kings of Leon, it is also possible for smaller creators and musicians to make good with this current NFT gold rush.
That being said, let’s take a look at some of the main benefits of music NFTs:
- They offer alternative revenue streams. The COVID-19 pandemic has wrecked the music and touring businesses, so artists are turning to NFTs to still make some money.
- The transfer of intellectual property (IP) can be easier. As we saw with the Illmind sample pack mentioned above, NFTs can potentially make it much easier and more secure to transfer music IPs between buyers and users.
- They can be used for ticketing. At this time, ticketing for live events is plagued by inefficiency, bots, scalping, hidden fees, and counterfeits. However, the blockchain is incredibly secure and may present a viable alternative to the older ticketing methods.
- They can bring artists and fans closer together. NFTs provide a creative method for musicians and artists to offer their creations to fans, especially if they include added utility in some of these NFTs.
- They take the power back from record labels and middlemen. When you buy an NFT that’s been minted by an artist, that goes entirely into their pocket, bypassing the more unsavory agents in the music business.
- They can be solid investments. If the buyer carefully chooses the NFT, either as part of a wider collection or just on its own, then it can appreciate in value and earn some decent coin.
It’s important to note that musicians are – by their very nature – creative and out-of-the-box thinkers, so there’s no telling what other interesting ideas they’ll come up with! Honestly, the sky’s the limit with NFTs!
How Can I Buy Music NFTs?
The process for buying music NFTs is pretty simple, so let’s break it down to these steps:
- Choose an NFT marketplace/platform like The Husl.
- Download a crypto wallet that can hold music NFTs and supports Ethereum (the current cryptocurrency standard for music NFTs) – MetaMask is your best choice.
- Fund the wallet – this just means that you have to exchange regular, conventional cash into cryptocurrency (in this case, Ethereum).
- Create an account at the NFT marketplace and connect your crypto wallet.
- Browse the marketplace, choose what you want, and then buy!
- The music NFT that you’ve purchased will be securely transferred to your crypto wallet upon purchase.
As you can see, it’s really simple! And it’s made even easier if you use marketplaces like The Husl.
How Do I Sell Music NFTs?
This process is similar to buying, except that you actually have to create (or mint) the NFT. Keep in mind that this can be any number of things having to do with music, including songs, albums, artwork, tickets, experiences, or digital merchandise.
That being said, let’s take a look at the basic steps for selling music NFTs:
- Choose a marketplace like The Husl.
- Download MetaMask as your crypto wallet for the Ethereum currency.
- If you want, you can fund your wallet by using a fiat-to-crypto currency exchange, but this isn’t 100% necessary.
- Create an account with The Husl and connect your MetaMask wallet.
- Choose an NFT Launchpad to mint your NFT such as Opensea.
- List the NFT on the marketplace and wait for the sale!
Of course, if you want to have the best chance at selling your music NFTs, you’ll probably have to build a bit of a reputation in the non-digital sphere first. This can be through conventional means, like uploading albums or songs to streaming services, selling merchandise online, or going on tour.
Once you have a real-world fanbase, it’s entirely likely that they’ll be interested in buying some of your music NFTs, so you’ll have to get the word out there!
Why Choose The Husl Marketplace For Music NFTs?
So you’ve decided to get in on the art and music NFT game – that’s great! Whether you’re a fan, collector, investor, or creator who wants to sell their own content, you’re going to need to find a NFT marketplace.
The Husl is the perfect choice! The music business is broken, but not permanently or irreparably. We’re the solution to the industry’s issues by using blockchain technologies to radically shift power to and prioritize the most important players: the creators and the fans.
A marketplace like The Husl will give a direct connection between the creators and fans, allowing limited works to reach their audience directly, with no record labels or middlemen taking a cut. Come check out our website to learn more about The Husl and all the services we offer.