nft

NFTs Are Changing the Music Industry Right Before Our Eyes

Audio NFTs, Tokenized Communities and The Unstoppable Power of web3

VINYL MOBILE
Michael Caloca / ONE37pm

Special thanks to Cooper Turley of Audius and Jeremy Stern of Catalog for feedback. 

An NFT by electronic musician Jacques Greene recently sold on Foundation for 13ETH — over $23,000 US. 

The audio-visual clip teases out a few seconds of an unreleased song of his called 'Promise’.

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Foundation

But this purchase is for more than just the artwork itself. As Jacques writes, “this NFT represents not only a 1of1 AV but the publishing rights to the song upon its release, in perpetuity.”

Now this, to me, is an incredibly exciting thing to see. And not only because Jacques and I are both musicians and both from Montreal.

But because this is one more early example that nudges us ever closer to the following hypothesis: That we are at the beginning of a massive overhaul of this thing we’ve collectively decided to call the “music industry”. And that every facet of said industry will feel the aftershocks of this tectonic shift.

Welcome to the Stone Age

I recently wrote a beginner’s guide to NFTs and spoke of how they are about to change pretty much everything. This article both zooms out of NFTs and into the wider edges of what we can call the web3 revolution, and it zooms in on where these changes meet music. 

To create a succinct story around what this future of music will look like would be a fool’s errand. We are just beginning to touch these new tools for the first time. It’s like we’re in the Early Stone Age, and we just accidentally made the first hammers ever. We’ve just picked them up, and we’re feeling their weight; we’re hitting them against things and seeing if something goes boom. 

So instead of speculating on exactly where this all goes, this article walks through five examples of people, projects, and platforms that are giving these brand new hammers a good smacking. 

This is in no way an exhaustive list. There are hundreds, maybe thousands of experiments underway. 

My hope is that these examples begin to outline for you the possibilities of what’s to come. I encourage you to use the infinite landscape of your imagination to color in the rest. 

Alright, back to Jacques Greene

In his tweet thread announcing the ‘Promise’ NFT drop, Jacques Greene said that he recently “got out of a long, pretty bad publishing deal.” Now that he’s an independent songwriter, he’s elected to sell the publishing rights to this song to whoever wins the auction. 

That could theoretically be anyone. It could be a fan, a friend, another publisher who feels they could do better with his music. Maybe a music supervisor who already has some placement ideas for ‘Promise’ and wants more skin in the game. 

By creating an NFT around these rights, they become not only verifiably ownable but also tradeable. Once the song is released, the demand for these rights may go up as the song grows in popularity. Maybe the NFT changes owners. Maybe it changes owners a hundred times. 

The NFT could also theoretically be fractionalized, meaning it could be cut up into smaller pieces and sold to multiple owners. Maybe a fungible token is created that represents fractional ownership of the NFT, enabling hundreds, thousands, millions of people to participate in the publishing rights of this one song.

Of course, these different scenarios might be discussed and decided upon in a separate agreement between Jacques Greene and the primary buyer. While the proof of ownership of this NFT will be stored on the Ethereum blockchain, the actual flow of rights and royalties is not baked into the smart contract.

But you can begin to see a future where they are baked in. What happens when agreements that were once paper contracts turn to code? Suddenly the flow of rights and royalties becomes way more agile, flexible, malleable. Suddenly the options a creator has with the ownership and therefore incentives tied to the success of their work approach near infinity.

A custom built NFT Shop by 3LAU

We just saw how your superfan could, in theory, become your publisher. Clearly, the roles and relationships between artist, core team, and fan are beginning to blur. 

Another artist is committed to the continual blurring of these lines in 3LAU. 

The electronic artist has been immersed in the crypto scene for many years and has been essentially carving the path for musicians into the realm of NFTs. 

After a number of successful NFT drops, 3LAU — along with the team at Original Protocol — has now built his own custom NFT auction and marketplace. On Thursday, February 25th, the bidding will open for 33 rare Vinyl NFTs that represent his best-selling album Ultraviolet

The winner of these NFTs will also receive access to unreleased music, limited edition physical vinyl, and the top bidder will win the opportunity to create a custom song with 3LAU himself. Talk about an intimate connection with the artist.

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3LUA

In a recent Clubhouse room announcing the project, 3LAU shared his vision of creating a long-term, close-knit relationship with his collectors. He plans for these NFTs to have ongoing utility, providing access to future exclusive content and closer access to him and his work. 

Because he’s built a custom marketplace, 3LAU truly gets to create whatever he wants. The art of the project extends past the actual music and into open questions like "how can I provide more value and access for fans, and how do I want to monetize that value?"

In a lot of ways, this release format gives the best of both worlds to creators and collectors. 

3LAU gets to own his platform and marketplace. But the actual NFTs live on the Ethereum blockchain, and therefore transcend the digital “walls” of his website. They can be moved about the wider Ethereum network — showed off in a VR gallery-like GeniusCorp’s Cryptovoxels vinyl shop, or bought and sold on Opensea or other marketplaces. 

It’s like owning a game skin, but the game’s environment is the entire (new) Internet. The use cases are truly endless.

Catalog: The Bandcamp for NFTs

Not everyone is going to build their own NFT shop. Catalog gets this. So they are building out the Bandcamp for audio NFTs. 

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Catalog

Set to launch within the next few weeks, Catalog allows artists to press 1-of-1 digital records as NFTs. These NFTs do not represent the rights or royalties associated with the song (like we saw with Jaques Greene’s) but act more like a canonical representation of an artist's work on the blockchain. As the team puts it, 

“Catalog records represent the true original version of your work online. These are unique, one-of-one records that exist on the internet forever, beyond the limits of our platform, and can be traded in open markets.”

This means that fans can now own the original pressing.

The future of collecting may be less in owning the thing that nobody else has, and more in owning the thing that everybody else has.

- McKenzie Wark

As we spoke about in the guide to NFTs, this is a bit of a mental jump for us. We’ve learned to think of digital content in a certain way, but the perception of stuff on the Internet as tactile, distinct goods will increase as we venture deeper into the web3 renaissance. And with that, the verifiably original pressing of “Hotline Bling” for instance will hold tons of value. 

The same way we learned last week that the Nyan Cat meme is worth 300ETH to someone.

Another inherent aspect of Catalog NFTs (as with all the NFTs we’ve discussed) is the artist or creator fee. This is a percentage that the artist sets at the time of minting, which is paid to the artist every time that NFT sells on the secondary market, in perpetuity. 

This is another huge shift for artists, allowing them to capture the increasing value of their work overtime. An artist on Catalog will be able to capture the cultural value of their art as it grows, over and above the traditional royalties earned. 

Catalog intends to become a community-owned project, which means its artists and collectors will eventually control the majority of the network and its decisions. They are also building on top of the Zora Protocol, which has created a type of NFT structure (called a zNFT) that bakes the actual market into the NFT itself. This means that Catalog doesn’t take any transaction fee, and as a zNFT moves about the Ethereum ecosystem, so too does its market. 

This is truly “platformless media”.

Audius: The web3 Steaming Model

Alright, so we’ve covered a bunch of NFT projects and technologies that are just bursting with potential. 

But what’s about streaming music? Does that fit into all of this? Or are we stuck with the same old “Spotify model” forever?

Streaming platform Audius intends to give that last question a resounding “no!”

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Audius

Audius is building a decentralized streaming platform. What this means is that the actual content uploaded to the site doesn’t exist on servers that are owned and operated by Audius itself. Instead, distributed “operators” are incentivized to run nodes that store the content and metadata on the platform. This allows for a whole lot of fun stuff, which we’ll get into shortly. 

The beauty of Audius is that, while all this is running under the hood, the average user has no idea. Using Audius feels like using any other streaming platform you’re accustomed to. You just...play music. Make playlists. Do the things. 

Because of its ability to abstract away all of the friction that usually comes along with a lot of early crypto tech, Audius has seen a huge wave of early adoption — with over 2.6 million monthly active users. Every user on Audius has a crypto wallet, and most don’t know it yet.

But the power of this decentralized library of content and code is immense. First, the content transcends the platforms. Much like the “platformless media'' of NFTs, this means that the music and its streaming data are not beholden to the continued existence of Audius itself. If the website disappears tomorrow, the content is still there so long as the nodes stay online. This content is also completely open and permissionless, meaning anyone can build anything that “hooks in” to it.

You and I can build another frontend website that takes all the same content as Audius, but ours is better because we really like the color pink, and our whole website is pink. (If you wanna do this, please DM me.)

Or, in a more impactful example, we can build out ways of monetizing this content in up-until-now completely unexplored ways. 

And this is exactly what Audius itself is attempting to build. With the rollout of their native token $AUDIO, artists, curators and fans alike will be able to play in the experimental sandbox of earning and trading coins on the platform. Audius’ vision is to have its platform and the eventual uses of $AUDIO be community-led. 

But make no mistake, if we, the artists, don’t like how things are going down on Audius, we can build our own new frontend. That’s the beauty of it! No siloed control means more freedom for artists and audiences alike. 

Right now, Audius is completely free, and artists are encouraged to upload content, build playlists, and establish their following. The longer-term vision is to roll out monetizing products that allow artists to get really creative with their rollouts. And because the idea is to be a community-led initiative, it is the artists themselves who get to ideate and vote on what gets built. 

How about an album that charges listeners a set amount once they’ve listened through the album twice? Or a song that changes endings when you tip the artist? How about a song where the first 100 listeners get a percentage of future earnings? Or, a favorite example of mine from a podcast with the Audius founders, what about a gated album that can only be streamed at a certain altitude? Mile high club just got a whole new meaning. 

Up until now, we’ve been given very few options in how to distribute and monetize music. Highly centralized and opaque systems like Spotify and Apple Music get to essentially dictate what a song is worth. But this is a rather flat and boring way of doing things. The world of music is diverse. An artist’s catalog itself is filled with all sorts of different flavors and sounds. Why can’t the distribution and monetization of that music be just as eclectic?

Tokenized Communities and $RAC

We’ve looked at a lot of the ways that content online is changing, and we’ve begun to outline how the distribution of this content can create stronger ties between artist and fan. 

Now let’s dig a bit deeper into how online communities are about to take on a whole new level of meaning in our lives. 

The grammy-award winning artist and remixer RAC has been dipping into the world of crypto for quite a while, leading highly successful initiatives with his audiovisual NFTs and redeemable token drop $TAPE.

In October of last year, he announced the creation of his own artist token $RAC. He included an initial distribution plan of $RAC to his most loyal audience — Patreon supporters, Twitch supporters, etc. 

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Zora

A social token like $RAC allows the artist to create strong ties with his community that transcend any one platform. Up until now, we’ve been building our Instagram followers and our YouTube subscribers and the like. But these relationships are truly owned by the platform itself and not the creators. 

A community token allows you to attribute value to your online family and allow that value to flow through that family in any number of ways. These are the building blocks for creators and communities to build their own online worlds. 

One growingly common use-case for a social token is to act as admission to a gated Discord community. To access certain locked Discord channels, you’d need a certain amount of $RAC. Another popular community doing this is Friends With Benefits, which currently requires you to hold 55 $FWB in your crypto wallet to gain access. 

But Discord entry is just the beginning. This provides a community with the power of its own economy. As the community grows, so too does the value of its economy and, therefore its token. This value can then be used to incentivize those within the community and those who want in — in any manner of direction. The ways a social token can be used are thus limited only by the creativity of that artist and community. 

The $RAC token is built on Zora’s protocol. Platforms like Mintgate and Seed Club are a few others playing in this social token space. 

We just covered a whoooole lot.

And yet, we’ve barely begun. We didn’t even touch on how this stuff leaks into live events and ticketing, PROs, data flow, and tons more. 

One could go through all of this and say, jeez, we are really on our way to turning the arts into this hyper-financialized space that’s all about money. 

That’s one perspective. But this is how I see where we are currently at... 

The arts are now entering the blockchain ecosystem, a space that has in a lot of ways been shaped by those who got here first. The DeFi (decentralized finance) space exploded in 2020 and laid the cultural groundwork within this new world. 

But now artists are coming. And the culture is shifting — the words we use are changing, the ways we design and build things are changing.

In a recent YouTube Live, Jon-Kyle of Mirror said, “it’s not ‘let’s make the world feel like we live in a bank’... it’s ‘let’s make the rest of the world feel broken’”.

As you dive deeper into these new technologies, the current online world does start to feel entirely broken. And boy, oh boy, does the music industry feel broken... 

In December 2020, I — like all artists on Spotify — received my 2020 Artist Wrapped analytics. The number that struck me most was that 170 listeners streamed my catalog more than any other artist on Spotify. I was blown away. Like, there are a lot of artists on Spotify. And you listened that much to Lil' ol’ me? 

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Spotify

Don’t get me wrong, I’m thankful for the discovery tools that Spotify has built for artists like me to find fans. But don’t you find it strange that I have no idea who those 170 people are? That I have no way of finding them, reaching them, telling them “thank you, I love you, let’s be best friends”? 

Doesn’t that feel broken?

We are still in the Early Stone Ages of the Internet. 

And we just made the first hammers ever. What will we build?

Bonus Round: EulerBeats

Getting into all this? Good. Here’s a little homework for ya if you want to go deeper…

Step 1 — Read this tweet:

Step 2 — Now read this tweet:

“DAO” stands for a Decentralized Autonomous Organization. We’ll get more into what those are in a future article. 

Step 3 — Visit eulerbeats.com, and good luck getting any other work done today.

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EulerBeats

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