Are you confused about what these NFTs are? Are you wondering if you should use one for your next release? Let’s go over the concept in detail, discuss use cases, and see if you can use it as a musician.
NFT stands for Non-Fungible Token and is very different from the Fungible Token we all are used to.
Table of Contents
If a token is fungible it means you can exchange it for something else that has the same value. For example, people would happily swap a $100 bill with $30 and $70 bills with you as they would still have the same value.
A non-fungible token, on the other hand, is impossible to swap and get the same value for it, as the word itself suggests.
A non-fungible token has unique aspects to it, that no other token has. Let’s take houses for example. Houses are non-fungible because each of them is different from the other. Even if they look exactly the same, they are built in different locations, the ground on which may have different trees and different views from each of their windows.
NFTs can be created for anything you want, anything digital that is. These can be collectibles, music, art pieces, tweets, videos, gifs, etc. As long as it’s digital, you’re good to go.
You may be asking, couldn’t all of those be copied and used by anyone? Yes, they can! And that’s the beauty of it!
The more people use it, the more its value grows, and if you own the NFT for that particular digital item, you are the only one who has the unique version of the item.
Another way to look at it is this: everyone may have the CD of a song you like but if you own the NFT, it’d be like having the CD that’s signed by the musician.
The entire concept is based on blockchain technology, Ethereum being the most popular one to work with. To create an NFT, you’d have to make a transaction using “smart contracts”. This is a piece of code that eliminates the necessity of a third party and verifies your contract on the blockchain.
But before we get too technical, if you were to create an NFT for your music video and someone were to buy it, they would have to pay you in Ethereum (or a similar cryptocurrency). The buyer would own the only copy of your music video that’s backed by a smart contract which can prove that the original version is theirs.
Furthermore, when creating one, you can put any conditions you want in your smart contract, for instance, if the buyer decides to sell their NFT of your music video, you get dividends from it, which would be analogous to royalties.
NFTs are primarily for collectors or for people looking to buy unique items that will most probably increase in value over time. Let’s take Beeple for example. All the latest news outlets are talking about him as he sold NFTs worth millions of dollars, the biggest of which was sold at Christie’s auction for $69 million.
This sounds incredibly exciting but we urge you not to blindly jump into it, as most of the NFTs don’t even come close to making money for the creator. So there are a few pitfalls you should consider before using them for your music.
Yes, that’s true! There is a fee for creating NFTs and on the Ethereum blockchain, it’s called “gas”. The amount of gas you need to create each NFT can differ based on the price of Etherium, as all transactions are conducted on the Etherium blockchain. In the beginning, the gas for 1 NFT would cost you only ETH worth around $1, however, the price for ETH fluctuates, changing the gas fees with it. You could even end up paying over $100 to create your NFT.
So, before creating an NFT make sure the gas money isn’t going to cost more than the price of your music piece you’re selling.
If you were to check OpenSea.io you would find millions of images that creators are selling as NFTs. However, most of them aren’t really worth anything. Consider the price of an image that is set to 0.5 ETH, which is over $800 in today’s rates. However, the creator is virtually unknown and only just starting in his/her career. In this case, even if someone is willing to buy the art piece, there is no guarantee that the next owner will be able to sell it at a higher price later on.
On the other hand, if you have a large following, it will be easy for you to sell your music as NFTs. The more your audience grows, the more exposure you get and the price people are willing to pay for that particular NFT increases.
If it is all still confusing, you can look at NFTs as a digital auction to buy digital art pieces, music, and collectibles. When your piece becomes more popular the value goes up with it.
So if you are new to the business and you don’t have a following and fan base, this is probably just going to be waste of time and money for you. Instead, we recommend working on growing your audience. However, if you already have your fan base who may be willing to pay for the digital ownership of your music, you can go ahead and give them a shot!