PLP 064: NFTs, the Music Industry, and You

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NFTs have become wildly popular over the last couple of weeks in the art and music industry, especially with Beeple’s unprecedented NFT sale worth $69 million on March 11. This short episode is designed to help you understand the basics and then point you in the right direction to get started.  I’ll talk about what NFTs are, how they’re currently benefiting artists and how they may one day change the industry as a whole.

You’ll Learn

  • What an NFT is
  • What artists are doing with NFTs
  • The four steps to getting started with NFTs
  • Some of the concerns surrounding NFTs

Resources

Transcript

What’s up Heroes, NFTs have become all the rage in the last couple of weeks in the art and music industry so I thought I’d do a little research and summarize what I found.  Perhaps the biggest headline was when Beeple…. Yes the beloved visual artist who has for years given away free VJ loops we’ve probably all used…. Sold a piece of digital art called Everydays – for a record breaking $69 million as an NFT transaction brokered by famed auction house Christie’s.  

This short podcast episode is designed to help you understand the basics well enough to decide if you want to invest some time trying out NFTs, and then pointing you in the right direction to get started.  In this podcast I’ll talk about what NFTs are, how they’re currently benefiting artists and how they may one day change the industry as a whole. 

But first, cue the intro music. 

NFTs are “Non-Fungible Tokens.”  Fungible means how easy an item is to be replaced. Cash is very fungible. One dollar is as good as another.  The Mona Lisa, in contrast, is totally non-fungible: it is one of a kind. 

NFTs use a type of encrypted ledger…or log…. called a blockchain, to keep track of transactions. This encrypted ledger is distributed across many computers making it more robust… so a hacker or natural disaster can’t just take out some central server and bring the whole thing crashing down.

So what good is this encrypted ledger?   Well, it has all sorts of potential applications… and companies from Walmart to IBM are all leaning into the technology.   Think about any transaction in our society that requires trust… from banks to title companies. If we had a digital way to authenticate transactions with 100% certainty, we wouldn’t need as many middle-men… bringing costs down for everyone. 

Which brings us to the music industry. 

There are two big ways that NFTs can help musicians in my mind.

First, it may bring down the cost of musical trust-based transactions.  Rolling Stone ran an article a couple years ago highlighting the fact major label artists only average 12 cents on the dollar due to all of the middle men involved in the process of selling, marketing,and managing their music.  Obviously, many of those people provide tangible value… but a chunk of those trust related-transactions… like music rights for example, might be better handled with NFTs that track ownership of a digital asset.  

Second, by creating scarcity… unique digital art… it increases the value of the art.  It’s like a signed baseball hat, or a one-of-a kind sculpture. The uniqueness creates value… which is important because so much of the world doesn’t value digital music.   Most people think it should be free to stream any song that ever existed…. And artists only receive an average of about four tenths of a cent per stream on Spotify, even if that song changed someone’s life.  Musicians, prior to 2020, made most of their money touring because it wasn’t really about the music… it was  about the experience of going to a concert. 

So what are musicians doing right now with NFTs?  Many artists are selling short video clips with music, or songs with some added value or exclusive offer… think about the types of incentives offered in Patreon.  The difference is there is no Patreon middleman…and future transactions can be tracked as well creating a market for reselling these unique, collectible digital items.   Steve Aoki, Deadmau5, 3LAU, and Space Yacht have all sold millions of dollars worth of NFTs just  in the last month. 

So, if I decided to sell a unique short clip of me spinning my flowchucks in time to my music…. That piece of digital property now belongs to the owner.  As my career takes off and  I suddenly hit it big, that piece of digital property also increases in value and could be resold for a greater amount. My video clip becomes a unique, valuable, digital asset instead of a commodity that can be easily copied and distributed for free (at least among people willing to ignore copyright). 

I liked this quote from Mixmag.net

“NFTs could be revolutionary for musicians, giving them a lot more control over their output and its pricing, and offering a direct revenue stream between themselves and fans that’s not reliant on third parties such as streaming platforms and concert promoters. It’s probably no coincidence that they’re taking off in a pandemic, following a lot of artists becoming reliant on touring as a primary income in the wake of declining record sales.”

What is an NFT, and how could it help the music industry? A guide  

Ok, maybe you’re sold. How do you get started selling your one-of-a-kind digital art?

There are really just four steps, and it looks like this probably only takes a couple of hours if you’ve got the art ready to go.

  1. Set up a crypto wallet.  A crypto wallet holds a unique identifier for you which gives you access to your digital art.
  2. Purchase some Ether through an exchange, such Binance, Gemini, or Kraken, eToro, or Coinbase.  NFTs use the Ethereum blockchain, so Ether is the currency of choice.
  3. Transfer the Ether to your wallet. Now you’re ready.
  4. Last step: set up auction at a marketplace like Opensea.io or NiftyGateway.com

Note, there is an up front networking fee they call  “gas,” and different online markets have different fee structures… so read the fine print.  For musicians, OpenSea may make the best sense because you can create a multitude of cheaper NFTs using their Collection Manager for a one-time fee.

Conceptually that’s it… in practice it is a little more complicated … but I’ll have a link to a great walk-through in the show notes. 

Not everyone is equally excited about this. Memo Akten, a computational engineer, has written several highly detailed blog posts that estimate the exceedingly high energy costs of NFTs.  Other authors are questioning if this is really a form of a pyramid scheme that will collapse as soon as people stop dumping money into the NFT markets, as well as questioning the gas transactional costs. 

Am I going to jump into this?  Not yet.  Mostly because I don’t have time… I’m getting ready to move my studio back to Atlanta.   There’s also concerned about this being a bubble, as well as the environmental implications.  I am  fascinated by the technology, and if I do decide to start selling some of my art on NFTs I’ll make sure to do an update.

One more quick news item before we wrap up this week. Tiesto is holding a remix contest for The Business in conjunction with Loopcloud that closes April 7th.   You’ve probably heard this track… it’s been streamed half a billion times… The prizes on this contest are great, including release opportunities and $7,000 in prizes.    Even if you don’t come up with something awesome, it’s worth grabbing the free stems just so you can hear how Tiesto processed some of his sounds individually.  For example,  he’s sidechaining his vocals to his kicks but but only the chorus.  And then on the bass…. His sidechain is clicky, something I’d always been taught is a mistake, but at Tiesto’s level I’ve gotta assume he did it on purpose.  You do have to sign up for Loopcloud’s free trial if you’re not already a member, but again I think it’s well worth the money for reasons I explain back in episode 28.   I’ll have a link to the contest in the show notes. Good luck! 

If you enjoyed this podcast please leave a rating and review wherever your listening.  I’ll have lots of links for you in the show notes, just head over to ProducerLifePodcast.com, and look for episode 64

Until next week, this is the House Ninja reminding you to be somebody’s Hero today.

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