Over the past few weeks, big-name musicians have made millions selling non-fungible tokens, blockchain-based certificates of authenticity that can be linked to individual digital artworks. Grimes sold almost $6 million in NFTs in just 20 minutes; Steve Aoki sold a collection for upwards of $4.25 million; and Kings of Leon sold a batch for roughly $2 million.
The meteoric rise of the market for NFTs has been great for artists who are already well-known, already successful, and already rich. But so far, it's hard to find examples of it offering a windfall to those who could actually use the money: small and midsize independent musicians.
NFT proselytizers claim the tokens have ushered in a "revolution" in the music industry, a "paradigm shift" that will "empower artists around the world to stop being poor." According to several music and technology experts who spoke with VICE, that's not actually happening. Instead, the rich are getting richer while music's working class struggles to make ends meet, especially with live music on hold during the pandemic. For lesser-known artists, selling NFTs is likely a less lucrative proposition than it's made out to be—if they're able to sell them at all.
"It's easier to sell anything when you already have a mass audience," Bill Werde, the director of Syracuse University's Bandier Program in Recording and Entertainment Industries and the former editorial director of Billboard, told VICE. "If you're entering this new space right now and you've already got 50 million fans, you've got that many more people that you can market your high-end proposition to than someone with 1,000 fans. There's a huge advantage to artists with a lot of clout."
"The killer advantage is having friends in crypto with lots of money."
Mat Dryhurst, a musician, researcher, and lecturer at New York University's Clive Davis Institute of Recorded Music, says there's another reason why smaller acts might not be able to cash in. It's not just about the number of fans they have—it's about who those fans are, and where they sit on the socioeconomic spectrum.
"Maybe people with smaller audiences don't have that kind of an audience that's in a position, midway through a pandemic, to throw money around on some speculative asset," Dryhurst told VICE. "They're disadvantaged right now."
Fans who are willing to spend thousands, if not millions, on a musician's NFT tend to already be familiar with cryptocurrency—and have lots of it to blow, Dryhurst said. The EDM artist 3LAU recently sold 33 NFTs for a total of $11.6 million. As it turns out, 3LAU has longstanding connections in the cryptocurrency world, including a friendship with investors Tyler and Cameron Winklevoss, who now own the NFT marketplace NiftyGateway.
"The people who appear to be winning, and selling things for ridiculous amounts, appear to be the ones who are already somewhat entrenched in the space," Dryhurst said. "The killer advantage is having friends in crypto with lots of money."
The market for NFTs is, to a large degree, speculative. Many buyers flip their digital goods for vastly larger sums than they originally paid for them. Partly because of that, some of the people buying musicians' NFTs may not even be fans, according to Shara Senderoff, the president of Raised in Space, a music and tech investment group. Instead, these buyers may see a musician's NFT as more of an asset, something to be held onto for a time and then sold at a profit.
"A lot of these numbers—the Aoki numbers, the Grimes numbers—these numbers are pushed up by a small number of whales," Senderoff told VICE. "These aren't music fans that are buying these NFTs. These are collectors that have been in the crypto NFT space before this recent boom. If you really dig into what's behind these numbers, it's the same group of 30 people."
Instead of shrinking the gap between music's haves and have-nots, NFTs appear to be widening it—for the most part, at least. A handful of small, independent artists have made some money selling NFTs. At the time of publication, about 20 had done so on Catalog, a marketplace where, by invitation only, musicians can put NFTs that represent their songs up for auction, "sell" them without giving up ownership of their master or publishing rights, and retain the ability to share those songs however they please. Like all NFTs, those sold on Catalog can be coded so that each time they're resold on a secondary marketplace, the artist who created them gets a cut.
Latashá Alcindor, an independent R&B and hip-hop artist based in L.A., recently sold a song on Catalog for about $3,000 in cryptocurrency. She's made roughly $7,000 from NFTs in total, she told VICE. While that pales in comparison to what an artist like Grimes has earned, for Alcindor, that money has been a "game-changer."
"This is allowing me to live well," she said. "Being a woman of color creative that didn't come up with a lot of money or privilege to create, this is allowing that space for me."
Before she started selling NFTs, Alcindor mostly relied on commercial work and sync licensing to make a living—writing songs for brands, and placing her music in ads, TV shows, and movies. She sold merch and encouraged her fans to buy her music on BandCamp. She used to earn money playing shows, but the pandemic has made that impossible. And streaming revenues haven't helped much: Every six months, she said, she receives a check for about $40 to $120 in royalties.
Not too long ago, Alcindor said, she was "scrambling" just to pay her bills. Then she sold her first NFT. In an instant, she had $3,000 at her disposal. That money wasn't just a help financially, she said; it made her feel like someone valued her work just as much as she does.
"It's a big F.U. to all the times that labels or people have told me that I wasn't worth what I'm worth," Alcindor said. "I know people are like, 'It's just a cash grab.' But beyond that, to me, it's like I get to see my soul's worth. My work's worth."
Success stories like Alcindor's might seem to vindicate the claim that NFTs will transform the music industry into a place where lesser-known artists can thrive. But unlike Alcindor, most of those artists weren't invited to sell their work on Catalog. Most of them have never sold an NFT. While all of them technically could, it remains to be seen if the practice will be widely adopted.
Still, on a broader level, the blockchain—the technological framework NFTs are built on—may offer some promising solutions. And some people are already building them.
"What we're going to see is probably 10,000 different ways of monetizing an artist's practice.”
Imagine a streaming service that isn’t owned by a for-profit company, but instead by the artists who share their music there and the fans who listen to it. Imagine if each of those artists could choose exactly how they want to monetize their music, instead of being forced to accept a one-size-fits-all model that sees them earning fractions of a penny per stream. Imagine if, instead of having to pay a distributor to upload their music for them, they could do it themselves, for free.
While it’s still in its early stages, that streaming service exists. It’s called Audius, and it was built on the blockchain. So far, 100,000 artists have uploaded their songs to the platform, and more than 4 million people use it to listen to music every month, according to Audius' co-founder and CEO, Roneil Rumburg.
Within a year, artists on Audius will be able to handcraft how they make money from their music, Rumburg told VICE. Maybe an artist wants to charge one cent per stream. Maybe they want to charge their fans $2 a month for access to their entire catalog. Maybe they want to offer both options, and a third in which $5 a month gets you access to all of their music, plus exclusive opportunities to interact with them directly. The monetization system on Audius is infinitely customizable, thanks in part to the flexibility of blockchain technology.
"Audius allows you, the artist, to gate access to your content in any way that you choose," Rumburg said. "We think it should be possible to earn a living if you have, like, 1,000, or 2,000, or 3,000 fans that truly care about your content. If each of those fans is giving you like two or three bucks a month, that's all it takes."
Audius won't take a cut of that money; instead, artists transact with their fans directly. And fans don't have to pay Audius for access to the platform. Anyone can create an account, or even browse Audius without one, for free. That allows them to see what's on offer and stream all the music that artists don't charge fans to listen to, with no advertisements and no cap on the number of tracks they can stream.
You may be wondering how Audius, the company, makes money. It doesn't.
"We don't ever foresee ourselves making money," Rumburg said. "There's effectively an end date for the work that we do. We exist, basically, to create this thing, to steward it through its early growth and mid-stage growth. And then, at some point, the company will run out of resources to continue to do that."
When that day comes, Audius, the platform, will be able to run itself through the blockchain. "The way that this is set up," Rumburg said, "we could go away tomorrow, and all of this would just keep working." Explaining exactly how that's possible would require, at a minimum, a separate article; you can read more about the specific technology at play in Audius' white paper. But you don't have to understand those mechanics to see how a platform like Audius could help independent artists. If they can convince their fans to use Audius, they can then upload their songs there for free, customize the system in accordance with their financial goals, and keep 100 percent of that money for themselves.
There are "thousands" of other potential applications of blockchain technology that could be just as helpful for lesser-known artists, according to Dryhurst. One involves a forum, like a Discord room, that requires anyone who wants to enter to pay a certain amount of cryptocurrency to a communal kitty. The members of the forum could then deliberate on what the money in that kitty should be used for—like, for instance, providing the funds their favorite musician needs to make an album. In return, that musician could issue each member of the forum a unique cryptocurrency token that grants them a financial stake in the album, allowing them to communally reap whatever money it generates. Communities are already experimenting with that kind of arrangement through a blockchain-based platform called Collab.Land.
"It's like a label agreement, but with, like, thousands of people that like you on Twitter versus one central authority," Dryhurst said.
It's applications of the blockchain like this, Dryhurst said, that could legitimately enable independent musicians to make a living from their work. And according to Dryhurst, who has studied the blockchain for nearly a decade, the possibilities are virtually limitless. To him, it's a shame that NFTs have gotten so much attention, while the blockchain's broader ability to reshape the creative economy has gone largely unexplored.
"It's not surprising that million-dollar GIFs are what brings in public attention to the stuff," Dryhurst said. "What we're going to see is probably 10,000 different ways of monetizing an artist's practice. And it just so happens that the first one that's captured the public attention is this kind of vulgar, in [many] cases, display of wealth and status."
Before the blockchain can truly reshape the music industry, cryptocurrency will have to be more widely adopted by the general public; as of now, just 6 percent of Americans use it, according to a survey conducted by Statista. And for artists to benefit from the blockchain, they'll have to learn how it functions, developing at least a working knowledge of the technology. Many may not have the time, or even the desire, to do that.
"Contrary to the popular narrative, most artists don't want to become experts in the blockchain," Werde said. "Most artists want to be really good at writing songs and performing them."
Like every hyped technological innovation, the blockchain is a tool, not a cure-all. Platforms like Catalog, Audius, and Collab.Land may not work for every musician, and it's hard to say if any one of those platforms has the potential to revolutionize the music industry. But it's encouraging to know that the system we have now isn't the only one out there. For years, artists have had no choice but to accept a broken, stratified status quo. At least now they have options.
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