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When people think of non-fungible tokens (NFT), they usually think of the most popular collectibles such as CryptoPunks, Bored Ape Yacht Club, and Decentraland. Beeple’s sale of millions of dollars of digital artwork is likely to be a wake-up call, and recently, The game appears with Metaverse Usher in an altcoin season.
However, a special type of irreplaceable token that has received little attention is Music NFT. With sales of other categories of NFT reaching billions of dollars in 2021, music NFT seems to have fallen behind.
According to a recent report by Cointelegraph Research, over time, global awareness of NFTs has continued to increase. It turns out that the term “NFT” continues to show an upward trend in Google search volume.
However, the two surveys discussed in the report show that many people still don’t know anything about these tokens. More importantly, many people who used cryptocurrencies for transactions before have no previous experience with NFTs. In one of the surveys, 57% of respondents said they had never used NFT before, while only 3% of respondents used NFT every day. These data illustrate the renaissance of the market.
Music NFT and streaming services
Like NFT artwork, music NFT is touted as a revolutionary way for artists to connect with fans and monetize their work. They embrace the concept of ownership, which has proven to be crucial for building a loyal fan base. Tokenizing the work of artists also makes them tradable, providing them and their fans with another way to make money.King Leon is The first band to release an NFT album, Which generated approximately US$2 million in revenue, marking one of the more successful music NFT projects.
Music NFT also provides artists with a more cost-effective alternative. For example, Music NFT allows fans to directly access the artist’s music without the need for streaming media giants and record companies, which are known to cut revenues drastically. However, for most music lovers, especially those who are not in the cryptocurrency space, the $9.99 price offered by streaming services is still obvious, especially considering the Ethereum gas fee. In the field of music streaming, Spotify is the dominant force, with 32% of streaming media subscribers worldwide choosing its platform. Apple Music ranked second with a 16% share.
Download the full report here, including charts and infographics
For artists who still rely on these platforms, NFT is a supplementary income, and some artists have created considerable sales figures through their NFT collections. An example is 3lau, whose “ultraviolet series” sales are $11.6 million. On the basis of each Spotify listener, 3lau’s NFT is the most reliable. There are 2.5 million listeners on Spotify, and total sales are equivalent to approximately $4.64 per fan. On the other hand, A$AP Rocky’s “Rocky Gateway” did not see the same success, with sales of only $200,000. A$AP Rocky’s 17 million subscribers on Spotify means that NFT sales only translate to $0.01 per fan.
Although the above data shows the success of the artist’s NFT collection relative to their Spotify fan base, it does not reveal how far behind music NFT sales actually are. Just looking at the top 10 music NFTs on OpenSea, there are only about 223 Ether (Ethereum) ($835,000 at the time of writing) sales were generated from November 14th to December 13th and accounted for only 0.03% of OpenSea’s 30-day sales. Bored Ape Yacht Club’s sales in one month were much better, reaching 42,956 ETH (US$161 million)-while the historical sales of the top 10 music category collections were 6,396 ETH (US$24 million).
Royalty model
Insignificant sales on OpenSea can mean one of two things: Either this use case has not been successful, or NFT is not a suitable medium for music. However, a platform that provides royalties to fans can help Music NFT gain more appeal. 3rd floor Announcing a new blockchain-based music platform, Royal, come back in August. The platform has attracted $16 million in seed funding from investors such as Paradigm and Peter Thiel. Royal will allow partial music ownership through its NFT version, enabling fans to be part of the success of their favorite artists.
The introduction of a royalty sharing model coincides with most users’ interest in NFT. According to the survey reviewed in the Cointelegraph Research report, many users buy NFTs for financial reasons. This is similar to the way the gaming revenue model has brought significant growth to the gaming industry, where games like Axie Infinity have flourished. In addition to monetary incentives, Royal can also pave the way for the emergence of other models, in which fans can provide all funds for the artist’s new album.
In early December, Saxo Bank made bold predictions about the future revenue of streaming media services. The Danish investment bank has a particularly bleak outlook for Spotify in 2022 because it believes that NFT-based platforms will lead to a paradigm shift in the music industry. Although revenue may fall, considering that the company continues to accumulate more revenue, it may be unimaginable at present.
However, one thing is certain: artists will go to the most economically meaningful places. Whether they find NFTs or elsewhere, transactions that maximize their returns will eventually prevail.
Cointelegraph’s Market Insights Newsletter shared our understanding of the fundamentals driving the development of the digital asset market. The newsletter delves into the latest data on social media sentiment, on-chain indicators and derivatives.
We also reviewed the most important news in the industry, including mergers and acquisitions, changes in the regulatory environment, and enterprise blockchain integration. Register now to be the first to receive these insights. All past versions of Market Insights can also be found on Cointelegraph.com.
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