The future of NFT’s in the music industry
It’s one of those terms that has been going around the internet for months now: NFT. Here’s an overview of what NFT’s are, some examples and of course what they can mean for the music industry.
So what’s an NFT?
NFT stands for Non-Fungible Token.
This needs some extra explanation. A Non Fungible Token basically means a digital file that is unique and which can’t be replaced with something similar.
Compare them to Bitcoins: Bitcoin is also a digital token but it can be replaced with another Bitcoin leaving you with the exact same thing.
That is where an NFT is different. An NFT contains owner ID, unique identifier, rich metadata, safe file links and other identifying information recorded in its smart contract. Information that makes the NFT unique and unexchangeable.
A good example of an NFT is Grimes’ digital alter ego War Nymph. War Nymph is a digital alter ego she created of herself. Grimes sold limited editions of digital artwork. The trade in these pieces of artwork is huge, some of these pieces have been re-sold for more than USD 2.5 million.
How does it work?
Most NFT’s are part of the Ethereum blockchain network. Ethereum is a cryptocurrency, like Bitcoin, and its blockchain also supports NFT’s. By storing extra information in an NFT, it works differently from ETH coins.
What types of content can be used as NFT?
NFT’s can be used for anything digital; music, drawings, videos, GIFs.
At the moment NFT’s are most known for being digital pieces of art, like the Beeple video, which sold for USD 69 million.
A video of Bleeple was sold for USD 69 million.
The first tweet by Twitter founder Jack Dorsey was made into an NFT and sold for almost USD 3 million. This of course opens up opportunities for the music industry as well: digital files, rich metadata and lot’s of content from musicians.
But if it is digital, can’t it be copied?….
Exactly, a digital file can be copied as many times as you want, so what is the value of an NFT in that case?
NFT’s are made to give something which can’t be copied: the ownership of the work (although the artist can still retain the copyright and reproduction rights like with physical artwork).
Compare it to a Van Gogh work of art: anyone can have a print on their wall but only one can have the original.
Ok, but there is a difference between digital art and real art, isn’t there?
Indeed, a copy of a Van Gogh painting is just a copy and the quality will never be the same, where a digital copy is literally as good as the original.
So why buy an NFT then?
For several reasons really, one of them of course is to support the artist.
The artist makes money on selling his piece as an NFT but in some cases also when the NFT is then sold again.
Another reason to buy an NFT has to do with showing off: being able to say you bought an NFT. As strange as it may sound it has a certain allure to it, spending a large amount of money on, well, digital files.
What about physical products?
We all remember Wu-Tang Clan’s very exclusive album, of which only one copy was made. But in fact, there are chances of using physical products as NFT.
Take Nike as an example. They have patented blockchain-based sneakers called CryptoKicks. The patent describes a system that uses blockchain technology to attach cryptographically secured digital assets to a physical product, in this case, a sneaker.
Can an NFT be stolen?
NFT’s are made with blockchain technology, meaning that every time a transaction takes place a record is stored. This makes it hard to steal them.
It doesn’t mean that they can’t be stolen, cryptocurrencies have been stolen before too.
There are concerns about artwork being sold as an NFT by someone other than the artist. Scams do occur; people who pretend to be a famous artist and who try to sell the artwork as NFT, as if it were their own.
So what can we say about the future of NFT’s?
The future of NFT’s depends on the way people treat them.
In a technical way, an NFT is a digital trading card.
Some people think of that as the future of art collecting, let’s say the group of rich- and famous.
But there are also people who treat them like Pokemon or Baseball cards, more accessible for large target groups.
The second way of using NFT’s could devalue the first way of use. Taken into account that a digital copy can be made from NFT’s, the value of NFT’s still can’t be predicted clearly.
It’s safe to say that the music industry has a large potential to enter the NFT market. High-quality digital content is available in abundance, ways to protect it are all around. Still, it is uncertain if NFTs will become exclusive items or, like Pokemon cards, products that can be traded for the right price. Deadmau5, well known for his music and of course his branding, has already made a huge amount of money selling Deadmau5 NFTs, a new way of music marketing.