January 26, 2022

What is an NFT?

An NFT is a non-fungible token that represents ownership of a digital asset, such as a song, photo, video clip, or digital artwork.

It means that people can now invest in songs, videos, and digital artwork in the same way they would invest in physical art. It opens up a whole new marketplace for fans and collectors, and a world of possibilities for artists.

Why should musicians care about NFTs?

So what does all this mean for the music industry? Above all else, NFTs have the power to change the relationship between artists and their fans. There’s now the option of a direct transaction between the people who make music and the people who listen to it—there’s no label, distributor, streaming platform, or social media platform involved.

If you’re an up-and-coming artist, you can give your fans an opportunity to tell you how much they believe in your future success. They can buy your NFT now with the hope that if you blow up, it will be worth much more in the future.

Is it a bit of a gamble at this point? Certainly. Could it potentially forever change how we monetize creative expression? Absolutely, but only time will tell.

YouTube CEO Susan Wojcicki hints about that possibility in her letter to creators.

Are NFTs coming to YouTube? It’s unclear how the video service would integrate NFTs. But Wojcicki says embracing the technology would be a way to “help creators capitalize on emerging technologies.” Wojcicki called Web3 technologies like blockchain tech a “source of inspiration.”

“The past year in the world of crypto, non-fungible tokens (NFTs), and even decentralized autonomous organizations (DAOs) has highlighted a previously unimaginable opportunity to grow the connection between creators and their fans,” the letter states.

Twitter has already embraced NFTs, adding support for the technology to its platform last week. Twitter Blue users can connect their Twitter accounts with OpenSea’s API to display verified NFTs from their personal collection. Instagram is also ‘actively exploring’ the potential integrate NFTs on its platform. The NFT marketplace continues to expand, despite a broader retraction in the crypto market.

In January, NFT marketplace OpenSea reported another record monthly volume of $3.5 billion in Ethereum. The marketplace also received a $13.3 billion valuation after its latest Series C funding round.

Social media platforms like Twitter, Instagram, and YouTube are embracing NFTs. But the question still remains, is this something that will stick around? Some NFT projects like the Kings of Leon ‘golden ticket’ NFT makes sense; it provides the owner with something of real-world value. But what about something like Ozzy’s CryptoBatz, which capitalize on scarcity for collectibles and little else?

A technology in its infancy

NFT records will likely never replace the streaming powerhouses and their ease of use. (Audius, a crypto streaming platform built in 2018, has about 7 million monthly active users, compared to Spotify’s 381 million.) The NFT music space has high barriers to entry for many: it prioritizes artists who are tech-savvy, extroverted, and able to be constantly online and releasing content.