Dear Upcoming Artist: Here's a Crash Course on What NFT Entails

It's been a long time coming. I’m probably not the only one surrounded by the new buzzword at every turn online. If you’re not aware, the term ‘NFT’ has been making the rounds these past weeks and I must admit, it took me a while to pay some attention.

As promised, here’s a rundown of some NFT basics to bring you up to speed about this happening in the [global] music business. Many have touted it as a phenomenon that’ll restore value to music; to the dismay of labels and streaming.

Intriguing, I must admit!

Photo credit: Finance Magnates

First, what does ‘NFT’ really mean?

NFT stands for Non-Fungible Token. According to Wikipedia, it's “a unit of data stored on a digital ledger called a Blockchain, that certifies a digital asset to be unique and therefore not interchangeable”. Simply put, NFT is a digital item like merch, artwork - but VIRTUAL.

Here, Blockchain ensures authentic rights and attributions of these items, allowing for the tracking of subsequent transactions as each digital item (NFT) is bought or sold. NFT is a type of crypto that holds assets instead of money.

PS: “Digital Item” and NFT will used interchangeably throughout this piece

Break It Down…

When something is said to be FUNGIBLE, it means it could be mutually interchangeable. It means it has an exact value. For instance, Currency is Fungible as $1 would equal $470 or 1BTC would equal about $54,000 (or so).

NFT, as the name implies is the exact opposite; there’s no exact value. Think NFT as a one-of-a-kind item; like a unique collectible - but digital. A rare Wizkid material (headshot, footage, art - more examples below) can be an NFT. Recently, Gay rights activist, Matthew Blaise made an NFT of the viral video of him agitating for Queer lives during the #EndSARS protest in October 2020. A video said to be iconic in the Nigerian queer history. Rightly so!

A major edge of NFT over physical collectibles is that there can barely be knockoffs of a particular item. Here, every item is audited and verified for authenticity.

NFT in the Music Industry

Think of how signed album copies or merch are revered based on their rarity and you’ll get the idea - but think digital here. An NFT has to be something relatively sought after, highly revered or novel. NFTs in the music industry could be:

• Artwork for a forthcoming release

• Unreleased music, footage, visualizer

• Special rendition of a record or project

• [Digital] merch such as stickers, badge, GIFs

• Tickets, Backstage or meet & greet pass

• Anything iconic, extraordinary or unconventional about an artist

For context, a screenshot of Jack Dorsey’s first tweet was sold for about $2.9m. Imagine a footage of Wizkid’s first ever studio session or something; you get?

Artists Who’ve Since Experimented

A bunch of artists have since latched onto this and here are some examples:

• Mike Shonda of Linkin Park sold a digital art including a song for $30k

• Jacques Greene sold the publishing rights to his song “Promise”

• Azealia Banks sold her and her boyfriend’s audio sex tape for over $17k

• Lil Miquela sold visualizer for $82k

• King of Leon made about $2m selling their new album alongside front-row tickets to their concerts for life

• 3LAU offered a physical sculpture to buyers of his album as NFT, including an experience to collaborate with the top bidder on an upcoming track.

• Tory Lanez dropped an NFT, allowing 450 fans to get 3 unreleased records alongside an opportunity for a virtual hangout with him. The first 2 records were unreleased from his then-forthcoming album and the third track is off his future 80’s themed album, yet to be announced.

• The Weeknd dropped an unreleased song as NFT, which according to him will never be available on other platforms.

• Shontelle dropped an NFT with her comeback single, House Party produced by Dunnie

Upping the ante, Doja Cat recently announced the launch of her own NFT marketplace called Juicy Drops where she’ll be selling her own NFTs.

Who Will Buy Music NFTs?

Collectors, stans, fans, anyone with just enough money or reason to. Actually, NFT shares similar ideas of physical collectibles which are predicated on quality, ownership, uniqueness, novelty, cultural relevance, scarcity etc. Just like physical collectibles, non-fans can also buy an artist’s NFT if they reckon such as an asset they can resell later for much more profit. Also, there might be more collectors than actual music fans buying these NFTs presently, because they’ve been long familiar with the crypto NFT space before now.

Who’s Eligible to Sell NFTs?

First, it’s nothing crazy as just about any digital art file can be converted into an NFT; any image, TXT, PNG, JPG, MP3, GIF…anything! Eligibility here isn't exactly cast in stone. A visual & music artist, Young and Sick with less than 30k IG followers sold millions of dollars in NFTs compared to Shawn Mendes with almost 60m IG followers who sold about $380k. So, it could go either way. The digital item just needs to hold certain standards such as quality, uniqueness, novelty, cultural relevance, cutting-edge etc.

How to Sell an NFT

Currently, most NFTs are on the Ethereum blockchain - not Bitcoin - and it uses the Ether currency. To sell an NFT, you’d have to buy the Ether currency. This is called ‘gas prices’ and it's for the energy spent to put your NFT on the Ethereum Blockchain. This reportedly has a negative effect on Earth’s climate; consuming lots of energy. There are NFT marketplaces and each has fees that they charge. Some charge a percentage off the initial sale while some charge a flat fee. Also, some - though few - marketplace accept payments by credit card so that fans with little knowledge of crypto are not left out in acquiring collectibles.

NFT for Emerging Artists

NFTs are not for everyone. It's probably NOT the answer to your prayers yet. Some of the things you may want to give some thought are:

• Do you have the clout, wherewithal or demand?

• Do you have fans or believers with enough disposable income?

• Where do your fans sit on the socioeconomic spectrum?

I know I made a point above (re: Young and Sick & Shawn Mendes) but truth is, it's still way easier to sell anything when you’ve garnered a sizable audience. Also, the crypto NFT space is like a community thing right now. More people who’re selling and buying NFTs seem to be somehow entrenched in that space.

Major NFT Criticism?

That some items don't offer enough novelty to justify the price tag but hey, so far bidders are not complaining, who cares?

Value of an NFT

The value of an NFT is not defined. The creator of the NFT calls the shot. They control the price, distribution and do not need to convey the value proposition of the NFT. The value of NFT increases as the artist gets bigger, hence some bragging rights (imagine owning raw recordings of a riff by Beyoncé from 20 years ago… err, I promise that wasn't a struggle LOL) for early buyers or an avenue to resell for more profit.

Reselling an NFT

People can buy and resell NFTs for more profit. However, there’s a written code that enables the creator be entitled to a cut whenever an NFT is resold. You will earn a percentage whenever someone resells your digital item - unlike the case of physical items that’s not traceable. While setting up an NFT, you can also set whatever percentage cut you’d like to earn from each resale. For instance, if someone buys your NFT for $3000 and maybe as you got bigger, they resell it for $10,000, if you set your resale cut at 40%, you’ll get $4000 from that resale.

Rationale for Purchasing NFTs?

Do we have to go over this? I mean, people can do whatever with their money, yeah? But truly, like physical collectibles, owning an original of something is not the same as owning its copy. Buying NFTs is like a status thing; its not for everyone. I mean, people buy pricey accessories, designer apparels, perfume, vehicles even physical artwork. Also, its a form of investment that they can potentially resell for much more money subsequently.

“But why should something that I can just download online cost this much?” Well, the go-to quip for such sentiment would be “copying a Mona Lisa artwork and putting it on your wall will NEVER be the same as owning the original”. Perioooodddd!!!

Types of NFT Drop

Your NFT can be sold by Auction or Limited Sales

Auction: Here, buyers will bid on a single copy of NFT. In crypto lingo, it's called “one-of-one”. This makes sense as scarcity also drives the value of collectibles. (re: Azealia Banks’ audio sex tape)

Limited Sale: Here, a limited number of digital items are available at a fixed price (re Tory Lanez allowing 450 fans). Under Limited Sale, there’s something called ‘open sale’ where there are unlimited copies of an NFT but only available for purchase for a limited time.

Copyright/License

Buying an NFT doesn’t confer copyright ownership and also doesn’t grant the right to print or distribute the work WITHOUT the rightsholder’s permission.

Can Producers Latch Onto this Phenomenon

A producer with some unique offering can sell an NFT. A revered producer like Don Jazzy can sell anything regarding his art as NFT and people will be interested. Interesting recordings of his vocals/adlibs from back in the day could be minted as NFT, and people might just show interest. No matter how few.

Conclusion

Truth is, way more people are still unfamiliar with the discourse about NFTs. If you look closely, all the rage about NFT revolves around tech savvy or music business heads in tune with global happenings. Also, as earlier stated, most buyers are tech/gaming/blockchain aficionados or enthusiasts.

Electronic artists are seemingly leading the charge here - as expected - and it might take some time before reaching the mainstream and even more time for Africa.

Now, let me know if this helped.