The world is changing. And, as it changes, new opportunities are emerging for musicians and artists to make money with what they create. One of the most exciting developments in recent years has been the explosion of Non-Fungible Tokens (NFTs). Unless you’ve been living off-grid for the last few months, you probably heard about the sale of digital artist Beeple’s NFT for a staggering $69 million at a recent Christie’s auction. But what exactly is an NFT? And how can artists and musicians capitalize on this recent craze to reach a new audience and make some money in the process? In this post we’ll take a look at the recent NFT explosion – what they are; why you might want to get involved with them now; and some resources for finding out more.
Subheadline: What Is an NFT?
NFT is short for Non-Fungible Token. Put simply, this means that each token is different and one of a kind. What makes NFTs different from other tokens on the blockchain is that they are not divisible. You can’t break an NFT down into smaller units like you might with, say, Ethereum or Bitcoin. This scarcity is what can make NFTs so valuable and highly sought after by collectors. What sets NFTs apart from other collectibles is their digital nature. They’re not physical items like paintings or antique furniture, but are instead cryptographic records on the blockchain that represent unique digital assets.
Subheadline: Ok…But How Do They Work?
In order to create an NFT, an artist or musician will need to upload their art or music file(s) onto a blockchain-based system. They’ll then have the option of making that NFT available for purchase by others. The most popular way to do this is through an NFT platform such as OpenSea or Rarible. Once an artist uploads their NFT to one of these platforms, they’ll then be able to set a price and determine when they want the NFT to go on sale. Alternatively, artists or musicians can also create their own platform-based solution for selling their music and art as digital collectibles. This is where blockchain technology becomes more complex because it requires developers with technical know-how to build everything from scratch.
After an NFT is purchased, the owner can display and manage their assets via a new digital wallet. Included in this is the ability to transfer ownership of an NFT from one user to another. One can easily imagine virtual museums blending together with social media in a new way that allows people to find others with similar interests and share their collectibles.
Subheadline: What NFTs Mean For Intellectual Property and Royalties
One of the primary reasons that many artists are flocking to NFTs is that this new form of digital art grants artists more rights and protections than more traditional forms of art. Given the immutable nature of blockchain technologies, NFTs cannot be counterfeited or reproduced. Because of this, NFTs are a great way for musicians and artists to maintain full ownership of their intellectual property, which is especially beneficial because it allows them to continue monetizing in the future. Unlike traditional forms of art where creators must confront any number of middlemen or gatekeepers before they can earn royalties from sales (or even try to enforce copyright protections) digital collectibles allow owners to set pricing structures themselves. A common pricing structure that many artists use is a fixed royalty-rate for resells. For example, say an artist posts an NFT and sets the royalty rate at 10%. If the individual who purchases the NFT turns around and sells that same NFT for $100, then the artist will receive $10 from the sale. If this second buyer sells the NFT for $1000, then the artist will receive $100 from the sale. And so on and so forth. This kind of payment structure allows artists to continue making money off of their artwork long after the first sale.
With this being said, there are still many issues that need to be addressed when it comes to NFTs. For instance, the fact that digital collectibles rely on a decentralized system can make tracking royalties difficult for both artists and companies alike. While NFT exchange platforms like Rarible and Zora allow artists to implement a recurring royalty rate like the one mentioned above, problems arise if and when a buyer moves the NFT to another platform, such as OpenSea. The reason for this is that ERC-721 tokens (the standard token used for NFTs) isn’t compatible across multiple platforms. To overcome this challenge, a team of developers has recently proposed an improvement to the royalty standard called “EIP-2981” which would allow royalty rates to be maintained in the token across exchange platforms.
The Future for NFTs
Regardless of whether an NFT can be traded across platforms or not, one thing is certain–they have the potential to help musicians and artists make more money than ever before. While the recent sale of Beeple’s “Everydays: The First 5000 Days” at Christie’s has brought the NFT marketplace to the mainstream, it is still the early days of this exciting new movement. Artists and musicians are finding new ways each day to bring their work to adoring fans through blockchain technology.
In addition, there are lots of opportunities for companies looking to implement improved ways of creating, selling, and collecting NFTs. ROI Express is always willing to explore new opportunities for growth and we invite you to contact us if you are interested in learning more about how we can help you or your company get involved in the NFT explosion.