Music NFTs could be the next breakthrough application in crypto

James Gardin, a musician for over 15 years, is used to changing with the tides. First, there was the likes of Spotify, which blew up in the early 2010s, then came Apple Music. These days, he’s busy minting his songs on music NFT marketplaces that ostensibly give more equity to musicians compared to more traditional platforms.

Earlier this month, the US-based musician won a live vote song battle to tokenize his latest track, “Parade,” as an NFT on Catalog. The NFT was sold four days later, on April 5, for 0.5 ether (US$1,635).

The musician eventually took home 0.3 ether – around US$900 – after paying gas fees of about US$80 and sharing a 15% cut to Phlote, the decentralized autonomous organization that conducted the weekly live vote song show. As a sweetener, he also stands to receive a cut of its reselling price – 20%, though it can vary between 0% to 100% – the next time the NFT is resold.

Gardin is one of many music artists that have turned to blockchain platforms to explore new sources of revenue in the age of streaming. Spotify is the most prominent player within this burgeoning sector, having set a record last year for the highest ever payout by a retailer to the music industry, which stood at US$7 billion.

Yet artists, including superstar rapper Kanye West, say that streaming platforms do not compensate them fairly for the cost and effort it takes to create songs. To be specific, an artist streaming on Spotify has to reach 250 listeners to make US$1, based on the average taking of US$0.004 per song after royalties are shared with record labels, distributors, and other third parties.

Amid that backdrop, music blockchain platforms like Catalog and Sound.xyz are positioning themselves as an attractive option for independent artists to share their songs, build a community, tokenize their music, and get paid in cryptocurrencies instantly. An artist’s take-home earnings are less of gas fees and, depending on the platform, commissions. Spotify, too, is experimenting with digital tokens linked to artist drops.

More from the @Spotify survey on NFTs and social tokens.#NewSpotify #CreatorEconomy pic.twitter.com/iBpXCVG4uh

— ˗ˏˋ Chris Messina ˎˊ˗ (@chrismessina) April 19, 2022

Some platforms, like Opulous, go a step further. The firm says that it is the only music platform offering fractional shares in copyright NFTs that are compliant to the Securities and Exchange Commission in the US.

Depending on the deal between the artist and Opulous, NFTs could contain master royalties of a song, publishing royalties, or both. This provides an avenue for ardent music fans to back their favorite artists while earning passive income in secondary sales, should the tokens increase in value as the artist’s career progresses.

Opulous is also working on a feature that would allow artists to take out cryptocurrency loans from the firm that are based on projected earnings from their NFTs. When launched, artists will be able to borrow loans in stablecoins such as USDC and exchange it for cash via their preferred crypto exchanges. Opulous’ token, OPUL, is listed on 11 exchanges and is trading at US$0.70 at the time of writing.

Music publishing meets play-to-earn gaming

The P2E advantage

A long waiting list