It wasn’t too long ago, that you could only purchase music in physical form. Meaning you had to buy something physical like vinyl, tape, or a CD in order to experience it.
Then came the digital age where one song or album became a digital file that could be duplicated as much as needed (or wanted) without any cost. That led to the MP3 compressed file format and peer-to-peer file sharing and all this dramatically devalued the percieved worth of recorded music. Artists were left with getting “exposure” for their work but had to rely on other means of generating revenue i.e. touring, merch, brand sponsorships, etc.
Streaming services like Spotify have created a new market for recorded music but it still hasn’t come close to the profits that successful artists made in the age of the CD.
Well, there’s good news for the coming decades, with the onset of blockchain technology, music is becoming scarce again.
Gold is valuable because it’s scarce and you can’t just duplicate a gold nugget a million times over.
When an artist creates a piece of music and attaches it to a non-fungible token (NFT), the digital goods they’ve created are now verifiably scarce. They become collectibles like baseball cards.
Suddenly your infinitely duplicated music can now retain its scarcity just like any other physical good.
Scarcity is the key to value and now you can create provable digital scarcity.
This is why everyone is talking about NFTs.
It’s a chance for artists to get paid, and for fans and collectors to support and hold real value from an artist they love.
This image from Jack Butcher sums it up pretty well…
How Do I Create an NFT for My Music?
If you’re new to to the crypto world then you’ll need to wrap your head around how it works…
Bitcoin is like digital gold, and Ethereum is like a virtual computer that does what programmers tell it to do (programs that run on Ethereum are called smart contracts).
Right now most platforms that help you create and sell NFTs run on Ethereum, but some people believe that in the near future, smart contracts and NFTs will run as another layer on top of Bitcoin (the world’s most secure computer network). More on this later.
So here’s what you need to do.
- Get a wallet – most common is Metamask which is essentially a chrome extension that connects to websites that work with Ethereum.
- Choose a platform – You can mint NFTs in a few different places including Rarible & Open Sea.
- Connect your wallet to your platform and create an account.
- Follow the steps to create your NFT.
Now you’ll need to have some Ethereum in your wallet in order to pay for minting (called Gas fees), but that can be done by sending Ether from an exchange like Coinbase to your Metamask wallet. This is easy to do but be careful not to lose your coins by sending them to the wrong address!
NFT Royalties for Your Music
At the time of writing there are only a few platforms that allow you to receive a cut of all future sales, of your NFT.
Most prominently, Open Sea.
Open Sea allows you to set a “secondary sales fee” when you mint your tokens. This allows you to receive whatever percentage you set of all future sales of the tokens, if… the future transactions are made on Open Sea.
Now what if someone takes their token and sells it on another platform or just sends it to their buddy in exchange for fiat currency?
There’s no way for Open Sea to know about this transaction which means you won’t receive a royalty.
But there are people working to make cross platform NFT royalties a reality. Check out this Ethereum improvement proposal.
Diving Deeper into NFTs
Pyramind is focused on the cutting edge of technology because it drives innovation, and NFTs are already finding their way into our music business classes.
We highly recommend all of our students get familiar with this world so that they can get the early adopter’s advantage.
In order to better conceptualize how this world works let’s look at a few examples that are currently proving the NFT movement to be valid.
Pyramind Records' First NFT's!
Bass Drop is a four-track compilation of heavy hitting drum and bass tracks created by some fabulous alumni: B Wiley, Singe, WolfsOnbience, and Sidiousvibes.
After publishing the release we partnered with Digitalax, a digital fashion design lab who published the first-ever digital magazine on the blockchain called Digifizzy.xyz. They minted NFT’s of the track Filth Merchants by Singe and another release, Sol Potion by Solsage, as part of unlockable NFT bundles in Digifizzy.xyz. You can learn more about how this was done here. You can check out the audio NFT’s associated with the unlockable NFT bundles here!
Be sure to follow their magazine to stay up to date on this brave new frontier of publishing in the metaverse!
NBA Top Shot
As mentioned above, baseball cards hold value because they are scarce and they mean something to baseball fans.
Now imagine there was a game winning 3 point buzzer beater that sealed the championship for some team and it was broadcasted by NBA to millions around the world.
The video that the NBA captured of that shot being made, is now being minted as an NFT with a limited number available. Essentially a digital, video, basketball card that can never be duplicated.
Of course someone could screen record the NFT but if it’s not verified (kind of like the verification checkmark attated to the NFT in the tweet above), then no one will want to own it.
You can start your NBA Top Shot collection and start interacting with their NFT world here. Also, this platform is built on the Flow blockchain that is proving to have some huge brand partnerships including Dr. Seuss, UFC, and wait for it… Warner Music Group.
The Metaverse Worlds
Depending on who you are, you may or may not care about owning a verifiable piece of digital art, but imagine the future metaverse.
Currently there are a few different virtual worlds where people are hanging out, meeting people, playing games, playing shows, creating “homes,” and displaying and using their NFTs.
Remember in the movie Ready Player One where he makes a ton of coin (bitcoin) and then goes to the store to buy digital tools and weapons within the game?
He’s essentially buying NFTs in a virtual world that do something special in that world.
At the time of writing this, these are some of the most important worlds to get to know:
- Decentraland – Utilizing the native token MANA, Decentraland allows anyone with an Ethereum wallet to log in, and start establishing their digital identity.
DJs and artists are already playing music in this world and displaying their NFT collections.
- Sandbox – This one has more of a Minecraft feel. It’s a little cleaner and more refined than Decentraland. You can actually purchase what they call “land” as an NFT. Only so much land is created so there’s a limited quantity for users to purchase.
If you want to purchase $LAND then you can go to the NFT marketplace Open Sea discussed above and buy a chunk of land within the world.
- Enjin – This one isn’t a virtual world but rather an Ethereum token that is being adopted into major game environments like Minecraft.
All games will likely need NFT functionality so Enjin as a project is one to stay aware of.
Beeple is the moniker of the most prominent NFT digital artist on earth.
He has minted thousands of NFTs and has earned tens of millions of dollars from his work.
He sells his work on Nifty Gateway which only allows a curated list of Artists to mint and sell NFTs on their platform.
Check out his super interesting digital portfolio and look at those prices!
NFTs as Another Layer on Bitcoin
As mentioned above, most NFTs and smart contracts run on Ethereum, and Ethereum has it’s downsides.
Some believe that the proof of stake mechanism is inferior to proof of work like Bitcoin uses, because it makes concessions in the realm of decentralization, one of the core reasons Bitcoin was invented.
With the onset of the Lightning Network, people are beginning to realize that they can create applications that utilize, the security, and decentralization of Bitcoin without making any sacrifices.
Stacks is a second layer being built using the Bitcoin blockchain as a settlement layer for smart contracts and NFTs.
Stacks is currently in early development but learn about their NFT project This Is #1.
Obviously this can be some deep stuff. Delving into the metaverse with digital identities and scarce goods is a lot to wrap your head around.
But the sooner you understand it, the sooner you can make it work for you. We may be on the precipice of unlocking an entirely new economy for digital music and art.
We can’t wait to hear what you create.