You may be familiar with digital artworks that have been turned into non-fungible tokens (NFTs) and sold to collectors. Now NFT music, or music NFTs, are emerging as the hot new crypto collectible.
What does NFT mean, and why have these virtual products taken the world by storm? An NFT is basically a piece of intellectual property that has been minted into a non-reproducible digital asset that is logged on a blockchain.
NFTs, and NFT music, are also part of a broader technological shift toward digital products and lifestyles that reflect the emergence of Web 3.0, also known as Web3, a blockchain based evolution of Web 2.0.
We’ll explain what music NFTs are, how they work, and more, below.
What Are Music NFTs?
Music NFTs are digital assets that grant holders the ownership rights to music clips. Like other NFTs, which grant their holders ownership to images or digital artwork, NFT music does so with audio recordings. By minting music NFTs (read more if you’re asking yourself “what is NFT minting?”), musicians and artists are able to provide original digital assets to interested investors, while adding to their own revenue streams.
This is critical given that the music industry has been undergoing a massive transformation since the days of Napster, with streaming services and copyright issues compromising legacy systems. Artists have sought to find ways to leverage technology for their own benefit. And NFTs, based on blockchain technology, have emerged as a promising income source.
NFTs have gained popularity in recent years in large part due to the pandemic. Many artists generate revenue through touring — by selling merchandise, and getting a cut of ticket sales. But when the pandemic struck, all of that revenue dried up. As such, some turned to music NFTs as a way to incorporate a new revenue stream.
How Do Music NFTs Work?
Music NFTs work more or less the same way that other NFTs work in that they grant ownership to a unique piece of property to the holder. They use the same underlying cryptocurrency technology, blockchain, that cryptos such as Bitcoin are built on. Music NFTs, then, take the form of digital tokens, which their owners keep safely in digital crypto wallets.
Web 3.0 technology is growing as well, and because it’s also decentralized and permissionless, like many forms of crypto, it supports the widespread use of NFTs.
Music NFTs are minted, and then ownership details are grafted into a blockchain network, and when they are transacted, the details of those ownership changes are likewise recorded on the blockchain — similar to various other types of cryptocurrency transactions.
The big difference between NFT music and, say, purchasing a song or album on Amazon or another retailer, is that the NFT owner becomes the actual owner of the song itself. They own the asset, whereas purchasing a digital music track from a retailer only grants you the right to listen to the song. In effect, it’s licensing.
How Music NFTs Are Created
The creation of music NFTs is also the same process as creating image-based NFTs. That process, which is called “minting,” can only begin after there’s an underlying asset to mint. In this case, that would be a song or audio recording of some kind.
Let’s say a musician wants to mint a new song into an NFT and sell it. They would first need to select the necessary tools and platforms, such as which digital wallet they’d want to use for storing their assets, and which platform they’d like to use to execute the transactions (OpenSea is a popular choice, for example, as is Rarible and Mintable).
The musician would also need crypto to pay for minting fees and other transactions, as many platforms only accept crypto.
Using a platform like OpenSea, the minting process involves a few steps, but it’s fairly straightforward. It mostly involves selecting the audio track the musician wishes to mint, adding a title and some cover art, a description, and adding a few additional details.
Finally, the musician would choose a blockchain network to mint onto (usually Ethereum), and then hit the big red button to mint the song into an NFT.
From there, it can be sold to an investor.
Where Music NFTs Are Bought and Sold
The next logical question: Where can you sell or buy music NFTs? Or, how to buy and sell NFTs in general? The answer: An NFT marketplace. And again, there are many out there. OpenSea is one of the more prevalent, but a few simple Google searches will yield many more. It’s up to you to choose one.
In terms of the actual process of buying and selling music NFTs, it’s important to keep in mind that NFTs usually trade for ETH or native blockchain tokens, so you may not be able to fork over cold, hard USD cash in exchange for one.
How NFT Music Is Valued
Music NFTs have value for the same reason that any other digital asset, including other types of NFTs, have value: They’re scarce, and people are willing to pay for them. So, when they go up for sale, their value is ultimately determined by what an investor or music fan is willing to pay for them.
When it comes to music NFTs in particular, artists are creating digital assets — one-of-a-kind assets, at that — that are likely to catch the attention of many would-be NFT owners and investors.
Pros and Cons of NFT Music
NFTs are unique digital assets tied to blockchain technology and various crypto platforms. As such, they have their pros and cons:
|Provide unique investment opportunities for music fans.||Blockchain platforms may be vulnerable to hacks or even collapse.|
|Easily purchased and sold with a digital wallet.||The NFT market is highly speculative, with a risk of volatility.|
|Popular artists are creating NFTs, validating the space.||Unclear what the future of NFTs might be.|
Notable NFT Music
One reason that music NFTs have become so popular is that some big-name artists are getting in on the action. Here’s a handful of recent examples that are notable for their success:
• Kings of Leon: The rock band released an entire album, “When You See Yourself,” as an NFT in March 2021, generating millions of dollars.
• Grimes: The singer sold a package of songs and digital art in early March 2021, likewise making millions of dollars.
• 3LAU: The electronic musician released a collection of NFTs in February 2021.
• Haleek Maul: In 2021, the rapper sold four songs as NFTs, earning hundreds of thousands of dollars.
• Mike Shinoda: Shinoda, a former member of the rock band Linkin Park, has also taken to NFTs, releasing a mixtape last year in the form of NFTs.
The Future of NFT Music
It’s hard to say what the future holds for music NFTs, but it’s hard to ignore the sales number. In 2018, for example, NFT sales overall totaled about $40.7 million. But in 2021 sales reached more than $44 billion — and shows no signs of slowing. Indeed, the prevalence and popularity of many digital assets is likely to grow, given the adoption of Web 3.0 technology.
For musicians, the ability to sell their music as NFTs offers some clear benefits, and possibly could allow them to make more money than they would under a traditional recording contract.
With that in mind, it’s easy to see why many people think music NFTs are here to stay.
Music NFTs are the music industry’s take on non-fungible tokens, blockchain-based digital assets that allow artists and musicians to sell audio content in a new format. As mentioned, they’ve taken off over the past couple of years largely due to the pandemic, and offer musicians a new way to derive additional revenue from their work.
While NFTs are not necessarily everyone’s investment of choice, they do offer up some interesting potential assets to interested investors, and a way for artists to connect more directly with their fans. To get into the NFT space, you need to have crypto — and that’s just a couple of steps away when you open an Active Invest account with SoFi Invest. You can buy and sell dozens of different types of crypto starting with as little as $10, and you can trade 24/7 from SoFi’s secure app.
What is NFT music?
Music NFTs are similar to other types of NFTs, except that they comprise audio files rather than digital artwork or pictures.
How can you buy NFT music?
You can purchase music NFTs from an exchange, of which there are many. There are some that are designed specifically for the music industry.
How is NFT music used?
Music NFTs can be used as investments (you hold onto them and hope they gain value so you can earn a return), or for personal enjoyment.
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