For Brooklyn-based rapper and art curator ARTZ, non-fungible tokens (NFTs) have been transformative. He recently became the first in his field as an artist and music producer to facilitate the sale of an NFT that he had created at a major art auction house. Since this initial success, he has only continued to embrace the power of music NFTs.
The aforementioned collection, “I See Future,” brought together modern art icons such as Andy Warhol, Jeff Koons and Banksy. For lesser-known ARTZ, the NFT sale was a way for listeners to “buy stock” in him as an artist and “get in on the ground floor.”
With a resume that now includes six NFT collections and over 60 collaborations, ARTZ has showcased “how artists can create with one another through different mediums.” His NFTs often include his original music and visual art from collaborators. For example, one NFT, titled EARTH Q Woke, combined ARTZ’s song “The Purple Suit” with a painting of Frederick Douglass by J.J. Weinberg. To continue supporting other creators, ARTZ curates Free Real Estate, an online gallery for NFTs.
ARTZ is far from the only musician to stumble into music NFTs; musicians Kings of Leon, Shawn Mendes, and Grimes have all minted their own. Tory Lanez released a tokenized album, and it became the first to reach platinum status while on the blockchain. As Solo Music founder and CEO Barron Solomon puts it, “There is an immediate opportunity for everyone in this new space.”
So just what is this opportunity regarding music NFTs?
You Say You Want an Evolution?
Think back to the best concert you ever attended. The roar of the crowd, the rush of seeing an artist looking directly at you. Now think back to purchasing their latest album or a t-shirt unique to that event and wishing there was more you could do to support the artist. NFTs allow fans a chance to do just that, while also allowing savvy investors means to profit.
The rise of non-fungible tokens has created a marketplace in which artists have the opportunity — and incentive — to create digitized assets. And while many still roll their eyes at the buzzy NFT space, there’s reason now to change your perspective. As Blockchain Coinvestors Managing Partner Matthew Le Merle argues, NFTs would be better named “digital ownership certificates for assets which are scarce.”
Just like traditional vinyl records, digital collectibles allow individuals to assign value to an artist and their associated content. Do you want to be a collector and hold onto something for life? Or do you want to strategically buy NFTs from artists poised to grow in popularity? Both paths forward exist in this emerging reality.
While this makes clear the appeal for investors, what do artists get out of the NFT equation?
The short answer it seems is power. The longer answer revolves around the specific ways in which artists choose to participate in blockchain-based music.
The two core components of music NFTs are original audio recordings and original artwork. Emmersive Entertainment, a subsidiary of Vinco Ventures (NASDAQ:BBIG), recently announced the “charitable drop” of an NFT titled Music4ClimateJustice, an asset that features an original song recorded by artists Steven Van Zandt, Bootsy Collins and Chew Fu, as well as an exclusive cover designed by Gilbert Driver. The majority of the proceeds will benefit non-profit organization Music4Climate Impact.
In early 2021, alternative rock band Kings of Leon became the first artist to release an entire album as an NFT when their album When You See Yourself was released through YellowHeart. Priced at $50, the tokenized assets included enhanced media which Rolling Stone described as “kind of like an alternate, moving album cover” — along with a digital download of the music and limited-edition vinyl record.
Both core components are well represented in ARTZ’s work. “These things play [hand in hand] with each other,” he noted, reflecting on the concept of digital versus physical assets. The artist and investor argues that adding physical assets to an NFT enhances its value.
Music NFTs Give Artists Back the Power
According to Pastel Network co-founder Anthony Georgiades, one of the biggest perks of releasing exclusive audio on the blockchain is the removal of middle men. Artists like Lanez who release an album on the blockchain can avoid a reliance on record companies for the sale and distribution of their records. This means they can mint and sell as many or as few copies as they choose. “NFTs can decentralize the music industry to put the power back in the hands of the artists and creators,” Georgiades told InvestorPlace.
Aside from the power dynamic shift outlined by Georgiades, there are two other primary benefits. The first centers around artists connecting with fans. Never has the connection between the two been more direct than in the age of NFT.
“The idea of being able to use an NFT to create a direct relationship with a fan is just a whole entirely new way for artists to connect with their fanbase,” Moonwalk co-founder Greg Consiglio said. “It’s really just another tool for an artist to go out and give their best fans, or any fan for that matter, a new way to interact with the artists, and to feel closer to the artist, which is always a part of what every artist is trying to do.”
The other primary benefit for artists surrounds matters of authentication in music and merchandise sales. CNBC reports that more than 5 million counterfeit concert tickets are sold each year. This highlights a clear need for further verification as tickets are issued digitally, one that can likely be streamlined through NFTs as their presence grows throughout mainstream music circuits.
ARTZ also emphasized the importance of NFTs as a tool for artists as the industry evolves. Because of the exposure he has received through his NFTs, the rapper has been able to lift up less-recognized artists.
“I think hand in hand, that’s how music and this tech is going to work with one another,” ARTZ said. “It’s tech, it’s our music, it’s all things in one but ultimately, it’s just another tool for people to express themselves and a new business model for artists to get direct to the consumer.”
Entering the Mainstream
As NFTs continue to move from the obscure and into the mainstream, more artists and investors will continue to get on board. TikTok recently made waves when it announced an NFT collection. And although some artists have spoken out against digitized assets, largely focusing on environmental concerns, it seems the market is only going to grow.
This comes, importantly, at a time when investors in general are betting on an increasingly digital economy. Covid-19 accelerated trends like cashless payments and electronic signatures. Consumer interest in NFTs is at an all-time high. Decentralized finance has become one of the hottest trends.
More simply put, it is not just what we value that is changing, but how we go about valuing it.
The surge in popularity of music NFTs in particular also indicates something else. For artists and fans, one key component was lost during the streaming boom that has engulfed the last decade. While platforms like Spotify (NYSE:SPOT) have become household names, fans no longer feel “special.”
“Streaming music has created a market in which you are just another listener — another person who downloaded a song,” Georgiades said. “There is really nothing special anymore about finding and listening to music. Music NFTs and the resurgence of vinyl bring back that one-of-a-kind quality to the industry.”
Therefore, it makes sense that investors in the NFT world are driven in part by emotion, not just financial incentive. This exists outside of just music NFTs, too. Nostalgic YouTube videos have been tokenized, as well as feel-good food merchandise and early memes.
Victor Zhang, the founder and CEO of Smart Token Labs, believes the emotional component of music is primarily what has driven vinyl sales as well as music-based NFTs.
“Fundamentally, music is about emotion and experience,” Zhang said, citing the feeling of opening a record and placing it on a turntable. “You touch the record, interacting with it physically before experiencing it emotionally as sound.”
As Zhang also noted, it is for the same reason that the popularity of NFTs is rising. “There’s a pride of ownership that extends across music, and that can take a variety of forms — including the ownership felt over a band when you are one of the first to discover an emerging artist that eventually becomes widely known.”
The Road Ahead for Music NFTs
For all the ways in which the NFT marketplace has evolved, it is clear that it is here to stay and that its influence will transcend all artistic fields.
Some financial experts have raised concerns regarding the speculative nature of NFTs. No market is immune to volatility, though, and through it all, interest in NFTs has only continued to rise.
It’s natural to wonder what this new trend will mean for investment choices. While there’s no question that the rise of music NFTs is threatening to disrupt entire industries, it should be seen as a new way for investors to expand their portfolios while, as ARTZ noted, helping artists rise and further their careers.
Music NFTs have a clear appeal for investors with a distinct appreciation for pop-culture who have the foresight to recognize this trend for what it is – an opportunity to turn a profit while helping the artists they love.
Any investors who remain unconvinced should remember how much money The Beatles collectibles currently sell for. If NFTs had existed in 1969, those who purchased an exclusive, digitized version of Abbey Road would likely be holding something incredibly valuable today.
This may be a crazy train, but investors shouldn’t be afraid to board it.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.