Every day people upload thousands of songs to Spotify and tens of millions of photos to Instagram. These companies rake in billions of dollars thanks to the efforts, talents and good looks of their content producers. But what would happen to those tech giants if digital artists were in a position to be supported directly by their followers?
This is where censorship-resistant blockchains and NFT technology can revolutionize the industry. They introduce a paradigm shift in the way artists monetize their work and interact with their audience. Content producers now have the ability to sell their digital works directly to their fans, without any middle-men taking a significant cut of their income.
Imagine if you could own the first music track ever published by your favorite artist, or the first Instagram photo of your favorite model, and it would give you access to locked content, or even be a source of residual income. This is the exciting future of digital media.
NFTs Build A Closer Connection Between Artist and Fan
To briefly summarize, an NFT or non-fungible token, is a unique digital item stored on a censorship-resistant blockchain. It could be a game item, a piece of art, a song, or a photograph.
A content producer can mint their own NFTs by simply visiting a website that has an interface to the underlying blockchain. From the website they can upload their work, sign it with their private key, and set the parameters of the sale, such as how many copies of each item can be sold and what percentage of each second hand sale will be paid to the producer.
The NFTs are then sold in a "drop" where the artist sets the price of each item and fans purchase copies until they sell out. The content producer receives an instant payment the moment each sale is made, typically in the cryptocurrency native to the blockchain that the NFT was created on. Buyers can then resell the NFT, often at a higher price, on the secondary market.
This firsthand transaction between buyer and seller allows the content creator to build a closer connection to their fans, who in turn feel good supporting their favorite artists directly. Instead of receiving checks from a faceless corporation, the artist receives payments from their fanbase and the entire process feels a lot more personal.
Emotional Fans Will Pay Top Dollar for Digital Collectibles
WAX (Worldwide Asset Exchange) is a blockchain designed specifically for the trading of NFTs. It's fast, feeless and easy to use for non-techies. The co-founders saw the potential of the NFT marketplace and worked with famous intellectual property brands who were interested in testing out the technology.
Some major brands that partnered up with WAX include Garbage Pail Kids, Street Fighter, and Major League Baseball, all of which released their own digital collectibles on the WAX blockchain. Their drops usually sold out within hours, proving that digital collectibles are just as popular, if not more so, that physical ones.
A lot of the people who purchased these collectibles had already developed an emotional connection to these brands over decades and were therefore willing to pay top dollar to own a piece of them.
Imagine applying the same concept to famous Instagram models who have amassed millions of followers. Many of these followers have developed (unhealthy) emotional attachments to the models. You can imagine how much they would they be willing to pay for exclusive digital collectibles, especially if they granted special privileges or unlocked additional content.
For example, let's say a model were to take a daily snapshot of herself, mint it as an NFT, and sell 10 limited copies of it on the marketplace. What if she did that every day for a year, and anyone who collected the entire set of 365 photos by the end of the year was granted a virtual date with her.
Or let's say anyone who owned at least 100 shots of her yearly collection would be granted access to her next level of content. Or what if she minted a limited number of premium membership NFTs that would entitle holders to an exclusive drop from her once per week.
You can see how the content producers could get quite creative with structuring the rewards based on different combinations of NFT ownership.
The opportunity for additional income via NFTs is huge, and the interactivity of the platform could steal a lot of attention away from apps like Instagram.
From Photoshoots to the Recording Studio
According to my most trusted sources, 60,000 tracks are uploaded to Spotify every day, and the fact of the matter is most artists earn a pittance whenever their songs are streamed via the platform.
Now imagine if artists minted each of their tracks as an NFT and then sold them on the open marketplace. This is a clever way to get some investment from the community, as you can imagine how valuable the artist's original NFTs would be if they happened to become famous in the future.
Rights to steaming royalties could also be included in the NFTs, so that any time a track is played the owner would receive residual income, instead of an intermediary like Spotify.
The concept is starting to gain traction with some famous artists. Back in March, rapper Soulja Boy released his first audio NFT on the Rarible platform.
Often tracks are a collaboration of several individuals - singer, guitarist, drummer, editor, producer, etc. The NFT can be programmed to distribute income proportionally to each member when the song is either streamed or resold on the market.
These days the thought of minting photographs or songs as NFTs and selling them on the open marketplace is a foreign concept for most artists. In fact, a lot of people are poking fun at NFTs, kind of like how people laughed off Bitcoin back in 2013 and the Internet back in 1994. But make no mistake about it, this space is going to explode.
Which NFT platforms are destined for the most success? It's tough to say. At this stage, I think any team who is dedicated and works consistently has an opportunity to carve out a niche in this mainly untapped industry. Those who build a solid community will remain relevant even if a more popular platform gains traction. For a list of NFT platforms check out Coingecko's NFT coin list.
As content producers become more comfortable with the idea of tokenizing their works and selling them as NFTs, the need for middle-men to connect them with their fans will disappear. We are heading into an era where artists and fans will interact and support each other on a much more personal level.