NFTs are the new hype in the music industry. For once, Grimes just recently sold her art over NFTs. Now, Kings of Leon are going to be the first band to release a whole album over NFTs.
If you have never heard of NFTs don’t worry. We’ll get you there, sort of.
Firstly, NFTs are a kind of bitcoin. This means a cryptocurrency.
A cryptocurrency is a medium of exchange that is digital, encrypted and decentralized. Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet.
*source: Forbes
Ok let’s unpack this quote: ‘medium of exchange’ means a way of paying for something like an item. ‘Digital’ means that there are no physical counterparts of the currency like a gold reserve, for example.
‘Encrypted’ means that the digital way of paying for good is to: ‘conceal data in (something) by converting it into a code’.
This is indeed very clever, having an encrypted digital file means that it is hard to break into. If you using a digital file for a currency this is vital in order to secure the transfer.
What is more, cryptocurrencies are also decentralised. Thus, no one country is issuing the currency like the USA doing it with their Dollar, for example. Moreover, this enables the entire world population to use this way of paying for good independent from where they live.
Here’s the thing: in order to work, everyone who participates in bitcoins or cryptocurrency is a piece of the puzzle itself!
What do NFTs have to do with the music industry?
Important to realise, as lovely as many Spotify streams are. There are not going to pay your livelihood. In order to get some payout worthwhile out of Spotify, you really need to have tonnes of streams.
Musicians and the music industry have been on the lookout for alternatives to streaming for the longest time. And that is where NFTs come into play. NFTs stands for Non-Fungible Token.
“Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing.
*source: The Verge
This development in cryptocurrencies means that you can release your music over NFTs and are save that your fans can’t manipulate. Well, at least this is the idea.
It’s still the internet, meaning that you can always find a way to download a file or picture. However, the Non-Fungible Token can grant you ownership over the file.
Just as you might get an art poster from Picasso at the gallery but not the real Picasso painting.
Music streaming platforms are also for the lookout on NFTs. Certainly, this new form of digital payment can open many new revenue streams in order to profit off the music.
Spotify is exploring the digital asset and cryptocurrency space
Will NFTs change the music industry tomorrow? Well, most likely not. For once, other digital problems like a worldwide meta-data standard are still not solved. One could question if there is enough innovative force left within the music industry to make a major move any time soon.