Cointelegraph Consulting: Is NFT Music an Untapped Opportunity?

When people think of non-fungible tokens (NFTs), the most popular collectibles such as CryptoPunks, Bored Ape Yacht Club, and Decentraland usually come to mind. One may well recall Beeple selling multimillion-dollar digital artwork, and games and the Metaverse recently had knockoff season together.

However, there is one particular type of non-fungible token that has received little attention, and that is music NFTs. In 2021, NFT sales in other fields will reach billions of dollars, and music NFT seems to be lagging behind.

According to a recent report by Cointelegraph Research, global awareness of NFTs has increased over time. This is evidenced by the fact that Google searches for the term "NFT" continue to trend upwards.

However, two surveys studied in the report show that many people are still in the dark about these tokens. What's more, many people who transact in cryptocurrencies have no previous experience with NFTs. In one of the surveys, 57% of respondents said they had never used NFTs before, while only 3% used NFTs on a daily basis. These figures suggest that the market is in its infancy.

Music NFTs vs. Streaming Services

Like NFT artwork, music NFTs are considered a revolutionary way for artists to connect with fans and monetize their work. They embrace the concept of ownership, which has proven key to building a loyal fan base. Tokenizing an artist's work also makes it tradable, giving them and their fans another way to make money. Kings of Leon was the first band to release an NFT music album, which generated approximately $2 million in revenue and is one of the more successful music NFT projects.

Music NFTs also offer a more cost-effective option for artists. Music NFTs, for example, allow fans to directly access an artist’s music without the need for streaming giants and record labels, which have been known to take a huge cut of artists’ earnings. However, for most music lovers, especially those who are not in the cryptocurrency space, the $9.99 price offered by the streaming service is still a very understandable price, especially considering the gas cost of Ethereum. hour. In the music streaming space, Spotify is the dominant force, with 32% of streaming users worldwide choosing its platform. Apple Music came in second with a 16 percent share.

For those artists who still rely on these platforms, NFTs can serve as supplemental income, and some artists have generated considerable sales through their NFT collections. One such example is 3lau, whose "Ultraviolet Collection" garnered $11.6 million in sales. 3lau’s NFT is the most profitable per Spotify listener. Spotify has 2.5 million listeners and total sales equate to $4.64 per follower. A$AP Rocky's "Rocky Gateway," on the other hand, didn't have the same success, selling just $200,000. A$AP Rocky has 17 million subscribers on Spotify, which means the sale of this NFT is equivalent to only $0.01 per fan.

While the data above shows the success of the singer's NFT collection relative to its Spotify fan base, it doesn't show how low sales of music NFTs actually are. Looking at the top ten music NFTs on OpenSea, from November 14th to December 13th, sales were only 223 ETH (about $835,000 at the time of writing), accounting for only 0.03% of OpenSea’s 30-day sales. The total sales of the top 10 series in the music category was 6,396 ETH ($24 million), compared to Bored Ape Yacht Club’s much better one-month sales of 42,956 ETH ($161 million).

royalty model

Negligible sales on OpenSea could mean one of two things: either this use case has not been successful, or NFTs are not a suitable medium for music. However, a platform that offers royalties to fans could help music NFTs gain more traction. Back in August, 3lau announced Royal, a new blockchain-based music platform. The platform has already attracted $16 million in seed funding from investors including Paradigm and Peter Thiel. Royal will allow for fragmented music ownership through its NFT releases, enabling fans to be a part of their favorite artists' success.

Introducing a royalty sharing model is in line with most users' interest in NFT. According to surveys reviewed in Cointelegraph Research’s report, the reason many users purchase NFTs is financially motivated. This is similar to how the play-and-earn model has brought significant growth to the gaming industry, where games like Axie Infinity have thrived. Beyond monetary incentives, Royal could also pave the way for other models where fans can fully pay for an artist's new album.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.