Music NFTs: It was supposed to be fairer for the artists and their fans, but in fact, the opposite has happened. Here’s the fix, according to Obie Fernandez, CEO of RCRDSHP.
Blockchain lured in creators, musicians, and fans with the promise of a more democratic, decentralized future for the music industry. On Web2 platforms like Spotify and YouTube, artists are paid fractions of a cent per stream, with little to no control over how their music is used or monetized. At the same time, industry people profit off the backs of working artists, often with little to no transparency.
Some music blockchain startups want to use the technology to let artists cut out middlemen, connect directly with fans, and receive a greater share of the revenue generated from their music. NFTs (non-fungible tokens) hold a particular promise of giving artists vastly enhanced control over how their music is used, distributed, and monetized. NFTs could be a game-changer for the music industry, making it more fair and sustainable for artists, but nothing has changed quite yet.
Music NFTs haven’t fulfilled the promise of democratization
Music NFTs have thus far largely benefited a small number of wealthy artists and investors while excluding the majority of music fans and creators.
The most successful music NFTs tend to be unaffordable to mainstream music fans, especially those from developing nations. Last year, the somewhat famous EDM artist 3LAU managed to sell $11.6 million worth of NFTs to kickstart the music NFT phenomenon, but the prices of the items he sold put them out of reach for all but the wealthiest collectors. Kings of Leon generated over $2 million from the sale of an NFT collection featuring items priced at $95 to $2,500 apiece.
Clearly, we are early in the NFT adoption cycle. Whether their concerns are justified or not, legions of fans are repelled by the idea of mixing crypto with music in the first place. So it shouldn’t be surprising that the vast majority of professional musicians are not yet generating any revenue from NFTs. A recent report by Vice found that the NFT economy is just as unequal as the traditional music industry and its pop stars, with a tiny number of artists and investors benefiting disproportionately.
Some might point out that around three-quarters of all music NFTs sell for less than $15, but absurdly high gas prices on the Ethereum blockchain make it difficult for smaller creators and their fans to participate. Despite recent advances, it’s safe to say that most successful music NFTs are bought and sold by a small number of wealthy crypto speculators that have little to no connection to the music industry.
Exacerbating existing inequalities
Iris Nevins, an entrepreneur supporting black NFT artists explains, “a lot of wealth inequality exists along gender and racial and ethnic lines.”
Nevins is referring to the fact that the music industry has always been unequal, with women and people of color disproportionately excluded from opportunities and compensation. This inequality is now being replicated in the NFT economy. For example, some reports show that as much as 77% of NFTs are sold by men.
Even the artwork depicted in NFTs themselves has begun to stratify along racial and gender lines, with some digital assets becoming suspiciously more valuable than others. The potential issue was highlighted in a recent Bloomberg article, which reviewed the prices of CryptoPunks – one of the earliest and most popular NFTs. The article found that, on average, lighter-skinned CryptoPunks were selling for more than darker-skinned ones. Similarly, male CryptoPunks were selling for more than female ones.
There are a number of possible explanations for these price discrepancies. It could be that buyers are buying CryptoPunks that look most like them, or that they perceive to be most valuable. But whatever the reason, it’s clear that, just like the real world, the digital world is not immune to racism and sexism. And as NFTs become more popular, it’s likely that these disparities could become more pronounced.
Thinking bigger, the metaverse – a digital world where people can create and inhabit avatars – is already starting to take shape. If these same biases persist in this new world, they could have far-reaching consequences. Rather than creating a level playing field, the metaverse could simply replicate and amplify existing inequalities.
It’s important to address these issues now, before they become further entrenched. Otherwise, the metaverse could end up becoming yet another place where the rich get richer and the poor get left behind.
When it comes to music specifically, entrepreneurs in the space should find ways to further eliminate barriers between artists and fans. This is while keeping an eye on creating a more inclusive NFT economy that benefits all stakeholders, not just wealthy and popular ones.
Music NFTs: Truly democratizing music
NFT marketplaces that are accessible and inclusive for all music fans and creators are possible. For example, RCRDSHP is a new music NFT marketplace that is specifically designed to benefit working musicians and their collective millions of fans outside of the crypto space.
Affordability is core to RCRDSHP’s mission. The vast majority of NFT-backed digital collectibles on the platform are priced at $1-$50 and can be purchased with a credit card, making them accessible to a wide range of fans around the world. Fans can stake their collectibles to earn passive income for their favorite artists, even with just a few items in their collection. Artists encourage staking by airdropping new collectibles, music, live event tickets, and other kinds of favors to their stakeholders, creating positive feedback loops.
In contrast to most NFT marketplaces, RCRDSHP players get to do much more than just gamble on the value of their holdings. Features include burning, massing, mixing, and staking, actions that are fun and accessible to most players regardless of their economic status. Burning NFTs drives scarcity to a collection and secures revenue for the holder. Massing allows holders to merge similar assets to create rarer NFTs, and, ultimately, stake them to generate more significant yield for their artist.
A new model
The RCRDSHP game model looks to align artist and player interests in novel ways that go beyond hype-fueled speculation and greed. The team credits their roots in rave culture, and their embrace of P.L.U.R. (Peace Love Unity Respect) as a guiding principle for the project. The emphasis at RCRDSHP is unironically focused on the spiritual power of music to make us all better humans, making it a weird and distant outlier in the world of blockchain-related startups.
Still, by creating a more inclusive and accessible NFT marketplace that has its heart authentically in the right place, RCRDSHP hopes to drive positive changes in the music industry. Our dream is an industry that is fairer and more sustainable for artists and their fans.
About the author
Obie Fernandez is a published author and serial entrepreneur. He’s the Founder and CEO of RCRDSHP, a music NFT platform built by, and for, music artists, including himself as an electronic music producer and DJ. Prior to launching RCRDSHP, Obie served as CTO of Andela, the largest VC-backed startup in Africa.