Many of us have heard a lot about of NFTs lately, but what are they? NFTs are a non-fungible token, or a form of cryptocurrency. NFTs are comparable to Bitcoin in which they are both virtual currencies that cannot be counterfeit, however, unlike other cryptocurrencies, NFTs are not fungible and cannot be as easily interchanged for monetary value.
NFTs work as a part of the Ethereum blockchain where the system of public and private keys ensures authenticity of the non-fungible token. The public key allows for the encryption of the NFT while the private key decrypts the code. These keys ensure that the NFTs cannot be duplicated, divisible or destructed, but most importantly they allow for the NFTs to be verifiable. NFT transactions can be traced back and authenticated through these keys, and for this reason, NFTs are marketed as unique and one of a kind. It is important to note that while the NFT itself cannot be duplicatable, the contents can be, so the importance comes from the proof of ownership of the original work.
While these perks excite those who are ready to jump into the emerging world of NFTs, others are still hesitant to do so. This doesn’t come as a surprise as cryptocurrency has had its fair share of problems in the past couple of years. One of the biggest being bitcoin mining and its impact on the environment. Bitcoin mining is the process in which a computer solves complex math problems in order to create or be “awarded” new bitcoin. The bitcoin algorithm ensures that the problems continue to get more complex the more problems the computer solves.
Bitcoin mining could once be done with an everyday computer, it now requires special computers that could withstand the processing power that it takes to get bitcoin today. The amount of energy used to power these mines continues to grow as bitcoin mining plants are being built in order to maximize profit of off the cryptocurrency. This causes issues as the carbon footprint of bitcoin continues to grow and the virtual currency is negatively affecting the environment. In recent years it was reported that Bitcoin’s energy consumption was equivalent to that of Argentina’s.
So why are NFTs such hot commodities at the moment? One reason being is that NFTs are unique and exclusive items, containing a variety of items ranging from pieces of artwork to music files. These items can be seen as digital collector’s items and that potentially over time will become more valuable. However, that is still to be determined as their popularity has just begun and there is no certainty that they aren’t just a temporary trend. This hasn’t stop musicians from jumping into the NFT world.
According to Music Business Worldwide, NFTs have grossed $25 million for the music industry. One of the first signed artists to release music through “an NFT auction” was Linkin Park’s Mike Shinoda who made over $30,000 with his newest single “Happy Endings”. Following suit was Grimes who released 10 digital artworks and animations via NFT, earning $5 million.
Due to the nature of the selling point for NFTs it is a great resource for musical artists looking to make the most money from their music. The artists are the ones directly selling and distributing their music, so there is no need to disperse the earnings with labels, publishers, streaming services and other factors, and they make 100% of the profit.
Kings of Leon released their newest album “When You See Yourself” as an NFT in partnership with Yellowheart. The release included some “golden ticket” experiences containing a lifetime pass to the band’s concerts along with four VIP front row tickets. The auction sale prices varied but one of the golden tickets was priced at $90,000. The overall NFT sale raked in roughly $1.4 million and the proceeds from the NFT collectible benefited Live Nation’s Crew Nation Fund.
As the pandemic still continues to affect the live music industry, artists and organizations have found ways to create financial aid through NFTs. One of the biggest being a “Golden Ticket” art fundraiser held in collaboration between Young & Sick and Goldflyer that raised over $200k for independent venues and NIVA (National Independent Venue Association). The fundraiser worked alongside 10 of the most iconic venues across the country and created a one-of-a-kind art piece based on the venue. Some of the notable artists that were involved with the fundraiser were Shawn Mendes, Tove Lo, and Disclosure.
Artists have also begun to expand their NFT sales to not only be an exclusive song but partially selling their music rights to their music. The first artists to do this was VÉRITÉ who sold the master recording rights of her new single “by now” and 2 VIP tickets to all of VÉRITÉ’s headline performances. While she sold the master recording rights, she retains the publishing and controlling rights of the master recording. Other artists to follow suit have included Taylor Bennett and Big Zuu who plan to sell 75% of the music rights to their upcoming projects. Although not everyone in the music industry is fond of NFTs with Nils Frahm stating they are “the most disgusting thing on the planet.”
Photo Credit: Owen Ela