NFTs exploded in popularity this year, from business and media moguls such as Mark Cuban and Jay-Z expressing their support for the new medium of entertainment. But independent artists may benefit the most from it.
NFTs could change the music industry, especially for independent artists, and offer them a higher chance of earning an income, while also connecting with fans.
The NFT market is appealing for musicians for several reasons, such as the financial side of it. Steve Aoki and Kings of Leon have sold NFTs at very high prices. Artists that still haven’t reached the A-lister status, like Vérité or Zack Fox have also made tens of thousands of dollars through this very practice. Young and Sick only had about 27,000 Instagram followers when he sold an NFT for $865,000.
These numbers are big on their own, but even bigger when we compare them to the payout rate of steaming platforms.
Streaming platforms are the way musicians make money in the digital age, especially as a result of the COVID-19 pandemic. Unfortunately, streaming platforms offer very little pay. For example, Spotify pays about $0.003 to $0.005 per stream. If you register one million streams, this means you earn around $3,000 to $5,000. Those numbers don’t represent a problem for established artists like Madonna or Lil Nas X, but independent artists have a hard time reaching them.
Last year, only 13,400 artists have managed to generate over $50,000, which represents the median wage for US workers of yearly revenue on Spotify.
This really shows why NFTs could represent a way for artists, especially struggling artists, to make money. You can sell only one song and make more money with it as an NFT than you would make with your entire catalog on Spotify. Furthermore, NFTs can be coded so that every time the token is sold, the creator receives between 2.5% to 10% of the sale.