Although many people identify non-fungible tokens (NFTs) with digital photographs sold as blockchain-based assets, NFTs can be used in a variety of ways. Music NFTs are one of the fastest-growing ecosystems in the blockchain business landscape.
On the surface, music NFTs appear to be a blockchain-based alternative to purchasing music from iTunes. When you purchase a track on iTunes, however, you are just purchasing the right to listen to that music.
On iTunes, you don’t own anything; you only have a license to play what you’ve just purchased. Music NFTs, on the other hand, allow anyone to listen to tracks while still granting ownership of the material through an NFT.
Why pay for music you can already access? Music NFTs may appear counterintuitive. The answer is the same as purchasing JPEGs, that anybody can right-click and save. Possession of incontrovertibly unique and original assets is valued by markets and individuals alike.
Also read, How NFTs can change the Music Industry
For some, such value may come from a deeper connection with a favorite artist. Others may be interested in gaining financial exposure to an artist they believe will succeed. The worth of the music NFT they’ve invested in could climb if the musician becomes big.
For certain musicians, music NFTs can be a valuable source of income. Bajan artist Haleek Maul made $226,800 in music NFT sales on Catalog, according to one music NFT supporter @Cooopahtroopa, whereas his annualized Spotify revenues are only $178.
When queried about the numbers in the tweet, Maul told CoinDesk that he earned 81 ETH from five Catalog trades, which were worth over $250,000 at the time.
Despite that the world’s largest NFT marketplace, OpenSea, offers a dedicated catalog for music NFTs, most musicians choose to debut on music-specific platforms.
In the NFT universe, Catalog is the principal marketplace for single-edition music NFTs, sometimes known as 1/1s. It’s based on the Zora protocol, which also drives OpenSea’s Zora rival marketplace. Artists have issued $2 million worth of music NFTs on Catalog so far since February 2021.
Sound.xyz is a popular alternative for this, as it offers virtually daily drops where collectors and merchants can mint limited editions of music NFTs. These newly created NFTs can be promptly resold on secondary markets such as OpenSea or Rarible.
Foundation, Arpeggi, and FormFunction are among of the other platforms that allow artists to create 1/1s. Different music genres have their own platforms. Groovetime is a platform for dance music NFTs, while HEAT is an upcoming platform.
Normally, music NFTs are used to verify on-chain ownership of a token linked to a piece of music. They don’t grant any more rights, including, most critically, no royalties.
However, there are platforms that are working to change that. Royal assists artists in the creation of royalty-bearing NFTs known as Limited Digital Assets, or LDAs.
LDAs make it easier for fans who own NFTs to share earnings from streaming royalties. 3LAU’s song Worst Case and associated artworks earned him the platform’s first LDA in October 2021. The streaming royalty rights are split 50/50 among NFT holders.
Another platform attempting to incorporate royalties into music NFTs is Opulous. It allows token holders to keep a piece of the music copyright through a deal with the artist.
Other unique elements of the platform include: Artists can get DeFi loans based on the amount of royalties they earn in a year. DeFi investors can use cryptoassets to supply capital and earn significant returns, while there are still DeFi risks.
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