Who We Are

Nvak Collective is a next-generation record label and artist advocacy collective that fully embraces web3 to uplift creators. We believe that the operating system of the music industry is broken, and our mission is to make the music industry more equitable, profitable, and diverse. Our small team has already discovered talent from remote regions around the globe and launched them to millions of streams and thousands of fans, all while providing artist-friendly deals and artist care. 

Purpose

Over the last decade, the rise of digital streaming platforms and decline of traditional revenue streams in music has caused significant financial challenges for the global music economy. These financial challenges have affected how major labels finance their artist development, resulting in a mainstream model that is both unsustainable and not artist-friendly. 

However, web3 and blockchain technology now present a unique opportunity for these stakeholders to create brand new revenue streams and transform the traditional relationship between artist and label. In this article, we’ll explore how blockchain technology can be utilized to create revenue neutral financing models that lead to a healthier, more sustainable and fair music economy that benefits the creators, labels, and fans.

The Traditional Major Label Financing Model

Historically, the financial relationship between an artist and label is debt-based. Labels advance large sums of money to artists for recording and promotion expenses, with the expectation that this funding will be recouped through the successful sales of the artist’s music. 

Artists are required to recoup these advances through a percentage of their future earnings, successful music or not. Labels understand that not every artist that they sign is going to be the next Taylor Swift, so in order for labels to see greater return on their investments, they sign a large roster in the hopes that the success of one artist recoups the costs of the others. As a result, we have a “spray and pray” artist development system, and many artists end up falling through the cracks. 

Not only does this cause significant financial strain, but perpetuates the power imbalance between artist and label, making it difficult for artists to negotiate fair deals and retain ownership of their work. Many sign long-term contracts in order to create enough runway to recoup their project advances, and are left in debt and with less creative control at the end of it all. 

How Most Artists Recoup Their Advances Today

The traditional major label has a narrow path to revenue today. Long gone are the days where consumers are purchasing full length albums or vinyl records from their favorite artists, or following them on tour across the country. Instead, in the modern TikTok and streaming era, music consumption has become passive. An artist can have one of the top streamed tracks in the world (now primarily marketed through TikTok), and still struggle to get users to listen to their full length album or fill a small venue.  

DSPs such as Spotify pay artists on average between $0.003 - $0.005 per stream. What’s more, the market is oversaturated* (over 100,000 songs are released per day)*, and most artists struggle to get their music discovered and streamed by new users. Artists are required to become content factories, churning out short form video content on TikTok several times per day, in order to drive streaming on DSPs, and ultimately try to gain enough streams for those pennies to add up. 

If you’re lucky, you’re able to tour. While touring does enable additional revenue streams through ticket and merch sales, it’s also costly. Without an engaged fanbase, touring often ends up costing more funding than it brings in once you take into account equipment, transportation, hotels, and more. 

Creating Revenue Neutral Financing Models through Web3

Instead of trying to reach the masses through TikTok or a lucky editorial playlist placement on DSPs, artists can focus on engaging a smaller community of “superfans” and diversify their revenue streams through NFTs.

Non-fungible tokens have allowed for artists/labels to better connect with their most engaged fans, build community, and create new revenue streams where they didn’t exist before. As a result, they’re able to make strides towards becoming revenue neutral in a shorter time frame. 

Below we’ll outline a few diverse use cases of NFTs to create new revenue streams for music artists:

• Music NFTs: 

  • Music NFTs have allowed for a new pathway for artists to monetize their music without relying on album sales or streaming royalties. Artists/Labels retain ownership of the pricing and quantity, allowing them to control and directly plan drops to recoup the recording and promotion costs of their records (and of course taking into account current market conditions for successful drops). 

• Ticket NFTs:

  • Selling NFT Tickets to concerts, meet and greets, and other IRL or virtual experiences timestamps the event, reduces the likelihood of ticketing scams, and allows fans to resell their ticket past that event date. For example, imagine fans were able to purchase NFT tickets to the first ever Harry Styles concert. That ticket timestamps on the blockchain that they were his earliest fans (to be rewarded later), attended the show, and they could then resell the ticket as Harry’s career grew and the NFT became more valuable.

• Fandom NFTs:

  • Artists can create NFT passes to their fan club. Owning these NFTs can come with exclusive fan perks, such as pre-sale access to experience tickets, voting rights on the artist’s next merch design, access to special meet and greets, and more. If they decide they no longer like that particular artist, they can resell their fan club NFT to allow space for a new user, and the artist and fan both benefit.

• Merchandise NFTs: 

  • Do you have merch that fans buy out at all of your shows? Create NFTs of your merch, which can be worn by fans’ avatars in virtual reality for them to showcase their love of your music in the metaverse. 

• Video NFTs:

  • Platforms such as glass.xyz allow artists to create video NFTs for music videos, vlogs, and other short-form video content that tell the artist’s narrative and compliment the music being released. Imagine if your viral TikTok or YouTube video was minted on the blockchain and available to collect by fans.  

• Podcast NFTs:

  • It’s predicted that there will be over half a billion podcast listeners worldwide by the end of 2023. And many artists, from Questlove to Alice Cooper, are using podcasts to connect with their fanbases. Mint your podcast on the blockchain and allow fans to collect.

Blockchain technology also ensures collaborators earn revenue in real time at point of sale. The time between releasing your content and seeing revenue is cut down from a 6-9 month wait period to being almost instant. 

Notes to Consider

It’s important to note that NFTs are not a get rich quick scheme. In order for NFT drops to be successful, and for an artist to have long-lasting, engaged relationships with their fans, artists and labels should take great care in planning their NFT drops. Just because a piece of content can be created or released as an NFT, doesn’t always mean it should be. Be sure to consider what makes sense for your fanbase, what best tells your story as an artist, and what you’d want to be minted on the blockchain forever. If you’re an artist who is interested in stepping into the world of web3 and don’t know where to start, see our article here on artist web3 strategy and best practices to keep in mind. 

Conclusion

NFTs are a powerful tool for music artists to diversify their revenue streams and gain greater independence and financial stability. When an artist has multiple ways to monetize their art, and no longer has to rely on royalties from over-saturated streaming services, they’re better able to recoup their advances, negotiate contracts in their favor, and maintain greater creative control. Labels in turn don’t have to rely on a “spray and pray” artist development model, and can begin to recoup project costs like they were never able to before. And beyond this more equitable financing model, fans benefit from investing in their favorite artists over the long-term.