Do NFTs present a new way forward for the music industry?

The way we listen to music has come in many forms, from vinyl to cassettes to CDs, and now streaming. But some artists argue there’s a new alternative: NFTs. 

Matthew Chaim is one of those people. In 2021, disenchanted by the traditional music industry structure, the Montreal artist teamed up with 10 artists in a collective he dubbed Song Camp — a place, they said, where music and the “new internet” could crash into each other. 

The collective co-wrote three songs together and sold them for 10 Ethereum, or ETH, a cryptocurrency that, at the time, valued the sale at $43,000. It’s a highly volatile market, and today 10 ETH is valued at just over $17,000. 

“When we put the songs out, within the first 60 seconds, all three songs got bid on,” Chaim says. “A lot of the producers who are part of it are very used to making lots of music that never sees the light of day. And the music that does see the light of day, they don’t expect to make any money.” 

But why would anyone pay that much for a song? To make sense of it, we have to first look at the way NFTs could potentially shape the music business going forward. 

That begins with understanding Web 3.0, or Web3 as it’s commonly called. 

To simplify it, Web 1.0 began in the ’90s, when websites were mostly about accessing information. Web 2.0 started in the mid-2000s when companies like Facebook, Google and Twitter made networks that let us post whatever we wanted, almost effortlessly, but in return tracked our information. 

When people talk about Web3, they’re talking about a way of taking some of that power back by decentralizing the way we host content and make social networks. The idea is that no one entity owns Web3, in essence democratizing it. 

That’s where NFTs come in, or non-fungible tokens. They are Web3’s way to prove ownership of something digital, and they’ve grown widely popular in the visual art world, with musicians including Justin Bieber, Grimes and the Weekend all putting their names behind NFT art releases. 

Selling songs and albums as NFTs is a much newer concept, and artists like Chaim are bent on discovering the possibilities. Basically, Chaim or any musicians could sell the rights to their music at an online auction, and the winner would receive a certificate of ownership of that song in exchange for providing ETH. What they’re buying is the certificate of ownership of that digital asset, in this case a song. That certificate is unique, but anyone can still stream the song, in essence making it a way for fans to support artists while the songs themselves remain available to anyone who wants to listen. Depending on the agreement, the purchaser also earns some or all of the royalties for the song. On top of that, if the artist becomes more successful, the NFT becomes more valuable, doubling as an investment. 

Chaim, who says he’s bought NFTs from various artists, says he’s intrigued by not just the financial potential, but the idea that it creates a space with “artists supporting artists supporting artists, that’s an exciting future. This could almost shift the goal for musicians from trying to become a part of pop culture to creating … small, intimate groups of people who can almost act as patrons. I can kind of find my tribe.”

To learn more about NFTs and how they are potentially shaping the music industry, watch Building Blocks, above, hosted by Simon New. The video was commissioned by the CBC Creator Network.

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