The music industry is notorious for its centralized nature, with major record labels exerting control over every aspect of an artist’s career, including song selection and royalty distribution. Despite the rise of streaming platforms like SoundCloud and Spotify, which have made it easier for musicians to reach a wider audience, building a dedicated fanbase and generating enough revenue to sustain oneself remains a challenging task.
However, music NFTs offer a potential solution to this problem. For those involved in the blockchain space, nonfungible tokens provide an opportunity for fans to directly support their favorite artists, for musicians to foster stronger communities with their listeners, and for content creators to establish more substantial and sustainable income streams.
To delve deeper into this topic, Cointelegraph’s podcast The Agenda interviewed Adam Levy, the host of Mint, a podcast that explores the Web3 creator economy, and Jay Kila, a crypto-native rapper based in Mumbai who founded OTP India, a platform for Indian hip hop artists that focuses on digital collectibles and fan engagement.
So, what exactly are music NFTs? According to Levy, they can generally be categorized into two types. The first type is ownership-based NFTs, which are tied to intellectual property rights and royalties. By purchasing these NFTs, buyers become entitled to a share of the revenue generated from Web2 audio streaming platforms like Spotify and Apple Music.
The second type is patronage-based NFTs, which do not grant any ownership rights but are collected by fans to support an artist. Levy explains that the value of these NFTs is derived from appreciating secondary sales.
Jay Kila became interested in music NFTs in early 2020 when most of his performance opportunities disappeared due to the COVID-19 pandemic. He was inspired by the fact that this new technology offered artists an alternative way to earn a living outside of the traditional model. This led him to co-found OTP India with a friend.
Kila highlights the financial benefits of music NFTs, stating that selling an NFT for $300 can generate more income than a decade of streaming on Spotify for the average artist. It is incredibly difficult for artists to make a sustainable living solely from streaming, unless they receive millions of streams.
Spotify claims to have paid out $7 billion in royalties in 2021, the largest sum ever paid by a retailer to the music industry in a single year. However, the majority of this money goes to record labels and publishers, who take substantial percentages for themselves before distributing the remainder to artists. Additionally, Spotify reportedly pays only $0.003 to $0.005 per stream, with major record labels negotiating higher payouts than independent artists.
Both Levy and Jay Kila believe that music NFTs have the power to forge stronger connections between artists and fans. The Mint podcast practices what it preaches by issuing free NFTs to its fans as a way to reward their loyalty, expand its audience, and generate excitement. Levy notes that this gesture results in a ripple effect, attracting thousands of new subscribers and listeners, and fostering growth within the ecosystem.
OTP India, on the other hand, aims to build a Web3 community for the Indian hip hop scene through collectible digital trading cards. Kila emphasizes the importance of making this community accessible to everyone, pricing each artist card at $27 to ensure affordability. It is not solely about making money, but rather about creating a bond between fans and artists and cultivating a community.
To learn more about music NFTs and how Levy and Jay Kila are utilizing blockchain to foster communities and monetize content, listeners can tune into the full episode of The Agenda on Cointelegraph’s new podcast page, Spotify, Apple Podcasts, Google Podcasts, or TuneIn.
The Agenda is a podcast by Cointelegraph that explores the potential of crypto, blockchain, and Web3, and how individuals can enhance their lives with technology. Be sure to check out Cointelegraph’s other new shows by visiting the new Cointelegraph Podcast section.
Please note that the views, thoughts, and opinions expressed in this article and podcast are solely those of the participants and do not necessarily reflect the views and opinions of Cointelegraph.