NFTs took the world by storm in 2021 with no signs of slowing down. In 2022, many experts believe this will very much be the breakout year for music NFTs. Quick stat to get your attention - thanks to my co-founder and brother from another mother Alejandro Navia:
Music is an art form everybody consumes in one way or another that has the power to change lives and uplift spirits, BUT the music industry is completely broken. Although we’ve seen a second golden age of music in the past decade with the rise of streaming, the model rewards the institutions (labels and streaming platforms), and exploits the artists who only make $0.003 to $0.005 per stream. According to numerous sources, Spotify, a $43B company, only has 7,500 artists that earn $100,000 or more per year on the platform.
Something needs to change, and NFTs will become one of the most impactful technological shifts in prosperity for musicians and fans in history.
In this article I break down why that is, what needs to happen in order to actualize this potential, and how artists and builders can engage in the space, and why I’ve decided to not only engage as a builder and educator, but also as an artist. It’s clearly broken down into the respective sections so feel free to choose your own adventure:
Allow me to reintroduce myself, my name is Sam Hysell.
I’m on a lifelong mission of driving social impact by channeling the influence of cultural innovators to make self-actualization a right, not a privilege. I’m also the co-founder and COO of nft now, a web3 digital media publication focused on NFT news, commentary and curation, as well as a DJ/Producer. We’re on a mission to empower the creators of culture and foster mainstream adoption around NFTs.
Prior to co-founding nft now, I co-founded NOX Media, where I remain a partner. NOX is a marketing agency focused on helping musicians and brands grow and convert communities online through content production and distribution. In 3 years, we bootstrapped our company to 15 employees and have helped numerous musicians, management companies and record labels launch platinum records and take underground acts to international headliners.
Pre-NOX, I was a Brand Strategist at VaynerTalent, an arm of Gary Vaynerchuk's VaynerX that applied the model Gary Vee used to build a thriving personal brand towards other leading entrepreneurs.
I also was a co-host of the Music Business Podcast, one of the leading music industry podcasts showcasing trends and tactics from over 100 of the best behind-the-scenes movers and shakers in the music industry.
All this to say, I’ve spent a lot of time helping musicians, entrepreneurs and brands, grow meaningful communities online in the past. Throughout it all, I’ve always been a fan first. And in recent years I’ve been able to express myself creatively through DJing and producing music, from shows at clubs, to festivals like Governor’s Ball.
For starters, I think creative expression is one of the best ways to lead a fulfilling life. Your creative canvas can be anything, and I don’t think you need to be confined to one lane. In that vein, one my biggest inspirations has always been the late Virgil Abloh, a true modern-day renaissance man. My creative outlets span across entrepreneurship, supporting artists, empowering others, DJing and making music. The joy I get in producing and performing is pure bliss.
At nft now, we get tons of exposure to what’s happening in the NFT space, who’s pushing the space forward, and who’s fostering meaningful change in the community. I learn a lot, and as a company, we strive to educate, inspire and create value for the community at scale. What we can share is confined by what we know, who/what we showcase and what we learn, and often the best way to really learn is by doing…
The amount I’ve learned in the past two weeks as I embarked on the process of preparing to release a song as an NFT has been amazing, and has better enabled me to identify meaningful problems to address and resources to create.
From the utility of the drop, to the platform to drop on, and the UX constraints that still prevent the NFT world from onboarding the mainstream market, these learnings are invaluable and inform our content and programming strategy at nft now.
Also, given the amount of projects I see in the space, I’m able to take an educated stab at what I feel are the best approaches for artists. An NFT drop will never be a black-and-white process and the blank space for artists to set new precedents is one of the beauties of the space. With that said, there is a growing base of best practices and optimal approaches and I want to help outline those through what I do. In the words of Gary Vee, “watch what I do, not what I say.”
Lastly, I couldn’t be more grateful to drop this project with my man, DJ duo partner and co-producer, JaronPaulJones (Instagram & Twitter). Jaron and I are both resident musicians for the NYC music & nightlife collective Caché. JaronPaulJones is a multifaceted musician whose influences range from A Tribe Called Quest to the Grateful Dead and Kerri Chandler. As an artist his goal is to always push creative limits and think outside of the box. Together we break open a lane at the intersection of soulful and afro house and are on a mission to unite people and bring more diversity back to house music.
For starters, if you’re not familiar with NFTs and want a primer, please check out NFT 101: Everything You Need to Know on nft now. Also right off top, I’d like to debunk a common misconception. From my perspective, if the primary use case you see for NFTs is an investment that you buy with the intention for it to appreciate financially and then sell it, then I think you’re overlooking the most disruptive pieces of the technology. NFTs create a new paradigm for creators and their communities to create new value, and share in the value they create.
There’s lots but lets focus on the most pressing :)
In the music industry, it’s often said that there’s no middle class. You’re either a top 1% artist accounting for the vast majority of all salaries and revenue in the music industry, or a starving artist who’s struggling to make ends meet. I’ll dive deeper into the underlying causes here shortly, but the vast majority of musicians do not earn a sustainable income from their art. According to Spotify & The Verge, just over 13,000 artists earned $50k+ off their music catalogs in 2020.
My friend, co-founder and NFT pioneer Matt Medved put it well:
It was great to see the music industry rebound after the preceding CD/vinyl model was disrupted by online music pirating and streaming, but the new system that has come to power fails to do justice to the actual creators of culture as musicians end up being paid less that $0.005 per stream. If you go a layer deeper, there are even issues beyond general royalty averages - even if you only pay $9.99 a month for Spotify and only listen to one artist, you may be paying royalties towards other artists you don’t even support.
Deezer (one of the top international streaming platforms although less relevant in the US) has taken a stab at solving this through their User Centric Payment System (UCPS).
Disclaimer*: As an artist, if you build leverage (aka a community/fanbase), you can command more favorable terms from record labels as you bring existing traction and fans to the table.
With that said, we’ve all heard plenty of horror stories. Beyond miniscule royalty rates that get even smaller after labels take a cut, there are two other issues commonly present in artist record label agreements
So, we know this is broken, and it needs to change. Lots of existing models in the music industry deserve to be disrupted.
Musicians are typically bound to 5 core revenue streams: streaming royalties, performances, sync/licensing deals, merchandise and brand deals/appearances.
Once again, going back to the premise of “no middle class in music”, most of those don’t create meaningful income unless you’ve already established solid traction. NFTs create a new revenue stream for artists and a new way for fans to support and collect the artists they believe in. You can see how certain artists have already done this in nft now’s year-end list of the Top 21 Music NFT Moments of 2021 with Coinbase and United Masters.
If you’re not familiar with Kevin Kelly’s philosophy on 1,000 true fans, get familiar. In a nutshell, it’s based on the premise that as a creator, you don’t need hundreds of thousands of fans to earn a meaningful income. Instead, you need 1,000 true fans that always pick up what you put down. They’re your ambassadors that listen to every song and go to every show when you’re in town, etc.
This sounds great in theory, but within the current financial model for musicians, it’s very hard to earn a sustainable income off 1,000 true fans. NFTs can change that as they create a new revenue stream for artists, but more importantly, give fans ownership, and in some ways, a share in the success of an artist that will grow overtime as the artist grows.
Whether NFTs are used to crowdfund a web3 version of an advance of sorts for music production and promotion, such as Ibn Inglor’s 20ETH crowdfund ($90k USD at the time) for his project Danger Zone, sell music as NFTs, or create a modern day fan club and unlock meaningful utility for fans to connect with and support their their favorite artists in new ways, the underlying NFT creates a better financial model for income to grow in tandem with community and artist prosperity.
Fans now have a new medium to support the artists they believe in, and grow with them. Everybody loves to be a long-time fan, see their favorite musicians grow and take pride in being an early fan before they blew up. Now imagine if you bought an early NFT of an artist you believed in, only for them to blow up - at which point your early NFT that you got when they were less popular has now appreciated significantly. This means fandom and cultural understanding can financially appreciate.
Beyond the financial side of that equation. Ownership creates deeper ambassadorship and loyalty. It’s different to own a t-shirt of your favorite artist than it is to just follow them on Instagram and stream their song. By way of that deeper support and ownership, you’re more likely to fuel word-of-mouth growth of the artists you believe in.
In my experience learning and preparing for my first drop, and generally being a student of the game, I’ve found the following key takeaways I’d like to share.
You can check out the NFT here on Rarible. We minted 15 NFTs at a set price of .1 ETH per NFT. Alternatively, you can stream the song across traditional streaming platforms here. (*Update: the NFT sold out in first 24 hours and generated the equivalent revenue of over 1 million streams on traditional streaming platforms)
In the spirit of experimentation and being a student and a teacher, I’ve tried to leverage a drop structure that hits on a couple core principles for my first drop:
All this to say, we’re at an incredible time for the music industry. There is a massive opportunity to bring power back to the creators and create a more equitable model for prosperity, although it’s not going to happen on its own. It’s up to us… The students, the teachers, the misfits and those willing to stick their neck out and try something new. It won’t be easy, but it’ll be worth it as we have the opportunity to play a part in empowering a new generation to prosper doing what they love.
✌🏼 & 💜