NFTs are giving artists a way to connect with their fans more deeply
Photo by Hanny Naibaho on Unsplash
I'm sure most people reading have already formed some sort of understanding of what an NFT is — whether that be by choice or not. In case you need a refresher, with a purchasable token, you can represent ownership or stake in a song, a company, or a piece of property. Many people view NFTs as merely a fad; admittedly, I shared this belief before diving into how this technology relates to the music world. However, there might actually be some solid value in this technology — especially for musicians and artists with digital platforms.

In terms of music, there are many advancements being made in the digital world, and this is what I discussed with John Van Liere, Operations Manager at Afterparty. For one, John mentioned Royal, a company that foundationally changes how we currently understand music, as it pays both the artists and fans that buy their songs. Not only is this concept foundationally different in ownership, it entirely restructures artist-fan relationships. With Royal, artists and fans essentially co-own music together.

Artists are given the opportunity to sell partial ownership in their songs (in the form of NFTs), for collectors to then buy. Eventually, this 'ownership' bought by fans turns into real royalties that they earn for the songs they have bought.
This platform brings in the idea of fractionalizing ownership online within the music. Now, this has been attempted by many other sites but has remained generally unsuccessful and untrustworthy. Royal, however, created NFTs that are SEC compliant, which allows actual money flow to be regulated and authorized within the site. The company allows users to purchase digital assets (NFTs) that artists create with "embedded ownership in the master recording, earning royalties from income-producing activities such as streaming," according to the company. It might seem a bit confusing, so I'll outline it directly as stated on the site.

  1. Artists choose what % of the song's royalties to put up for sale. They can also bundle fan experiences, special tracks, digital art, etc.

  2. You can purchase these streaming royalties in the form of 'tokens', directly from the artist. These tokens vary in tiers; the higher the tier, the larger the royalty payout.

  3. Once you've bought a token, you can claim royalties for the song after they've accrued. The time to payout will vary depending on the artist.

  4. If you'd like, you can put your token up for sale on an NFT exchange. When someone else buys this token, they'll get all the royalties and additional benefits that come with it.

"We're making it possible for artists to share ownership in their music directly with fans and earn royalties alongside each other, sidestepping traditional middlemen," shares JD Ross, co-founder of Royal, on Twitter.
This system seems to bring in many fundamental questions regarding music ownership, especially in terms of copyright. If a fan is able to buy partial ownership of a song, does this make them a true co-owner of that work? Are they able to use and license the work legally as a true co-owner would? These were questions that came to my head, and I'm sure others felt the same when learning about this new royalty system. Once again, Royal attempts to alleviate these potential confusions by outlining the details on their website.

Each token on Royal represents a percentage of the royalties from streaming services, determined by which tier you purchase; a license for non-commercial use of the digital art associated with the token; and any additional perks that the artist chooses to include.

"It creates a structure where they now have skin in the game, they're keener on supporting and promoting you. Because in theory, the more people that know about that artist, the more your NFT is worth," John shared about NFT music investors.

So, in reality, NFTs in this sense can work similarly to buying stock in a company. While there is no technical ownership shift, Royal allows NFT to act as a license to utilize an artist's work and earn royalties through it. Regardless, fans are now able to watch their favorite artists takeoff and earn real money alongside them, which is something this industry has not seen before. While Royal represents a successful model within the NFT music world, there are many that have not quite measured up.

On one hand, platforms might use this new technology to profit off of work that is not theirs to begin with. Hitpiece is a perfect example of where NFTs can go wrong. This site, now scrubbed of its content, was once an NFT buying and trading platform that essentially created NFTs from popular songs from artists on Spotify. The problem? The artists in question had no idea this was going on, and they were not getting paid for any of the profits made from these sales.

Of course, situations like this premise valid concerns for artists new to the NFT world. However, there are many profitable ways artists can engage in this technology — without the fear of giving away rights or royalties to their music. John described in our interview how a great way for smaller artists to get involved in the NFT world is by "releasing small drops that are tied to a bigger release," such as an album or a music video in the form of an NFT. One artist that is capitalizing on this model is The Weeknd. He recently released several trading cards of tracks in the form of NFTs, which were each signed by him and sold on OpenSea, the current largest NFT marketplace.
"As the technology becomes more mainstream, these more sophisticated ways of leveraging this technology are going to become more and more normal and accepted."
Many artists might still want to pass on creating and selling their work in the form of NFTs, and I understand their concerns. However, by not partaking in the NFT world at all, artists could be missing out on a more intimate and direct relationship with their fanbase — not to mention a highly profitable opportunity. For example, John mentioned the idea that an artist could have a million monthly listeners on Spotify, yet not know a single listener's name. Basically, the current digital model in which we ingest music allows for fans to pay companies, rather than paying the artist directly. As John put it in our interview, this leads to a "hyper capitalistic ingestion of the arts."

When someone buys your NFT, however, a direct connection to their digital blockchain profile, or 'wallet' is formed - and artists are given a way to connect much more directly with their fans. Not to mention, their payment is going directly into the artists' pocket — showing they are serious about investing in the work and have faith in that artist's direct success.

Another way these tokens can be utilized is in accessing certain experiences. And as John described, this is particularly successful when you "gate access to something that you can't recreate." For one, someone could buy an NFT of a particular song, and be the 'only person' to hear it. However, there is always the possibility that they could screen record or otherwise duplicate this sound recording - making it replicable and otherwise less valuable. To combat this, Afterparty aims to gate access to real-life experiences with NFTs — such as hosting the first-ever NFT musical festival where the ticket itself is in the form of an NFT.
"My main hope with this technology is that the spirit of truly supporting an artist prevails over simply paying for a subscription on Spotify."
In total, it is safe to say that this technology truly has the potential to shift the entire digital world — especially in music. While many questions still remain about logistics regarding copyright and ownership, artist and fan relationships are almost certainly going to experience a shift in the coming years. Whether it be album cover artwork or full-blown music festivals, NFTs hold the key to unlocking new opportunities for artists and music lovers alike. "Our goal is to give artists and fans new ways to engage and to create meaningful connections and lifelong memories," John shared.
Anna Kuelling is a Composium Ambassador who is currently expanding her knowledge of film music by studying Music Supervision at UCLA.
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