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 he created at a major art auction house. Since that initial success, he has continued to embrace the power of musical 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 some equity” in him as an artist and “get on the ground floor.”
With a resume that now includes six NFT collections and more than 60 collaborations, ARTZ has shown “how artists can create with each other across different mediums.” His NFTs often include his original music and the visual art of his collaborators. For example, an NFT, titled EARTH Q Woke, combined ARTZ’s song “The Purple Suit” with a painting of Frederick Douglass by JJ Weinberg. To continue supporting other creators, ARTZ is hosting Free Real Estate, an online gallery for NFTs.
ARTZ is far from the only musician to stumble upon musical NFTs; musicians Kings of Leon, Shawn Mendes and Grimes have all created their own. Tory Lanez released a tokenized album, and it became the first to achieve platinum status while on the blockchain. Like solo music Founder and CEO Barron Solomon says, “There is an immediate opportunity for everyone in this new space.
So what is this opportunity for music NFTs?
You say you want an evolution?
Think back to the best concert you’ve ever been to. The roar of the crowd, the rush to see an artist looking directly at you. Now consider buying their latest album or a unique t-shirt at this event and wishing you could do more to support the artist. NFTs allow fans to do just that, while allowing savvy investors to profit.
The rise of non-fungible tokens has created a market in which artists have the opportunity – and the incentive – to create digitized assets. And while many are still rolling their eyes at the bustling NFT space, now there’s a reason to change your perspective. Like Blockchain co-investors Managing Partner Matthew Le Merle argues that NFTs would be better named “digital certificates of ownership for assets that are scarce.”
Much like traditional vinyl records, digital collectibles allow individuals to assign value to an artist and their associated content. Want to be a collector and keep something for life? Or do you want to strategically buy NFTs from artists who are rising in popularity? Both paths exist in this emerging reality.
While this makes the appeal to investors clear, what do artists get out of the NFT equation?
The short answer, it seems, is power. The longer answer revolves around the specific ways artists choose to participate in blockchain-based music.
The two main components of musical NFTs are original audio recordings and original artwork. Emmersive Entertainment, a subsidiary of Vinco Ventures (NASDAQ:BIG), recently announced the “charity drop” of an NFT titled Music4ClimateJustice, an asset that includes 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 proceeds will go to non-profit organization Music4Climate Impact.
In early 2021, alternative rock band Kings of Leon became the first artist to release an entire album as NFT when their album When you see yourself was released by yellow heart. Priced at $50, the tokenized assets included enhanced media that rolling stone described as “a bit like an alternative, moving album cover” – with a digital download of the music and the limited edition vinyl record.
Both essential 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 assets versus physical assets. The artist and investor claims that adding physical assets to an NFT increases its value.
Music NFTs Empower Artists
According to pastel network co-founder Anthony Georgiades, one of the biggest benefits of delivering exclusive audio on the blockchain is the removal of the middleman. Artists like Lanez who release an album on the blockchain can avoid depending on record labels for the sale and distribution of their records. This means they can hit and sell as many or as few copies as they want. “NFTs can decentralize the music industry to put the power back in the hands of artists and creators,” Georgiades told InvestorPlace.
Besides the shift in power dynamics described by Georgiades, there are two other main benefits. The first is centered around artists connecting with fans. Never has the connection between the two been so direct as in the era of NFT.
“The idea of being able to use an NFT to create a direct relationship with a fan is just a whole new way for artists to connect with their fanbase,” moon walk said co-founder Greg Consiglio. “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 artists and feel closer to the artist, which is always part of what every artist tries to do.
The other main benefit for artists relates to authentication issues in the sale of music and merchandise. CNBC reports that more than 5 million counterfeit concert tickets are sold every year. This highlights a clear need for additional verification as tickets are issued digitally, verification that can likely be streamlined through NFTs as their presence grows in mainstream music circuits.
ARTZ also highlighted the importance of NFTs as a tool for artists as the industry evolves. Due to the exposure he received through his NFTs, the rapper was able to uplift lesser-recognized artists.
“I think hand in hand is how music and this technology are going to work together,” ARTZ said. “It’s technology, it’s our music, it’s all in one, but at the end of the day, it’s just another tool for people to express themselves and a new business model for artists to direct access to the consumer.
Enter the mainstream
As NFTs continue to transition from obscurity to mainstream, more and more artists and investors will continue to get on board. TikTok recently made waves by announcing an NFT collection. And while some artists have spoken out against digitized assets, largely focusing on environmental concerns, it looks like the market will only grow.
This comes, above all, at a time when investors in general are betting on an increasingly digital economy. Covid-19 has accelerated trends such as cashless payments and electronic signatures. Consumer interest in NFTs is at an all time high. Decentralized finance has become one of the hottest trends.
Put simply, it’s not just what we value that changes, but how we go about evaluating it.
The surge in popularity of musical NFTs in particular also indicates something else. For artists and fans, a key element has been lost in the streaming boom that has engulfed the past decade. While platforms like Spotify (NYSE:PLACE) have become household names, fans no longer feel “special”.
“Streaming music has created a market where you’re just another listener — another person who downloaded a song,” Georgiades said. “There’s really nothing special about finding and listening to music anymore. Musical NFTs and the resurgence of vinyl are bringing that unique quality back into the industry.
Therefore, it makes sense that investors in the NFT world are driven in part by emotion, not just financial incentives. This also exists outside of musical NFTs. Nostalgic YouTube videos were tokenized, along with wellness food products and early memes.
Victor Zhang, Founder and CEO of Smart Token Labsbelieves that the emotional component of music is primarily what has driven vinyl sales as well as music-based NFTs.
“Basically, music is about emotion and experience,” Zhang said, citing the feeling of opening up a record and placing it on a turntable. “You touch the record, interact with it physically before feeling it emotionally as sound.”
As Zhang also noted, it is for the same reason that NFTs are growing in popularity. “There is a pride of ownership that extends through music, and can take various forms – including the ownership felt over a band when you are one of the first to discover an emerging artist who eventually becomes widely known.”
The way forward for music NFTs
For all the ways the NFT market has evolved, it’s clear that it’s here to stay and its influence will transcend all artistic realms.
Some financial experts have expressed concerns about the speculative nature of NFTs. No market is immune to volatility, however, and through it all, interest in NFTs has only grown.
It is natural to wonder what this new trend will mean for investment choices. While there’s no doubt that the rise of music NFTs threatens to disrupt entire industries, it should be seen as a new way for investors to expand their portfolios while helping, as ARTZ noted, artists to progress and pursue their careers.
Music NFTs have obvious appeal for investors with a particular appreciation for pop culture who have the foresight to recognize this trend for what it is – an opportunity to make a profit while helping the artists they love.
Any unconvinced investors should remember how much Beatles collectibles are currently selling for. If NFTs had existed in 1969, those who purchased an exclusive digitized version of Abbey Road would probably hold something incredibly valuable today.
It may be a crazy train, but investors shouldn’t be afraid to jump on board.
At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.