Why NFTs are the new business model for music [Video]
When Grace Christian started recording music with her neighbor at age 15, she never thought she’d be using NFTs to take her career to the next level. The self-described psychedelic pop artist, who goes by the stage name Mazie, has always maintained a “do-it-yourself” approach to music, creating an independent music label with her producer to keep everything in-house and maintain control. Now she’s one of a small group of hand-picked artists who will sell NFTs on the Quincy Jones-backed NFT platform OneOf.
“This is a huge opportunity for me to provide my fans the opportunity to invest in me early and also provide a symbiotic relationship where as I grow, they grow as well,” Mazie told Yahoo Finance in an interview. “That’s really exciting for me.”
OneOf, an NFT platform backed by 27-time Grammy Award-winning record producer Quincy Jones, who worked with legends such as Frank Sinatra and Michael Jackson, has hosted NFT collections from the Grammy Awards and major artists like Doja Cat. Now OneOf is launching a new program for independent, up-and-coming artists to sell NFTs they’re calling “rookie cards.”
“When I think about who this technology can help, the thing that gets me most excited is independent artists using NFTs to finance the early parts of their career,” said Adam Fell, Co-Founder of OneOf, longtime artist manager and president of Quincy Jones Productions.
OneOf is one of the star-studded music platforms leading the NFT music charge. But others like Royal, founded by EDM DJ Justin Blau, are also staking their claim while Coinbase (COIN) just launched its NFT marketplace where it’s partnering with artists for exclusive drops.
NFTs — or non-fungible tokens — are certificates of authenticity that show proof of ownership for digital collectibles. The tokens are typically assigned to one-of-a-kind digital music, sports memorabilia and virtual real estate, among other items. NTFs are proving to be a new business model for the music industry, empowering individual artists to finance their music careers with them while fans can make money as an artist grows and an NFT trades up in value.
Traditionally, artists have had to seek out a record deal or publishing deal to get capital to record songs in a professional studio or make professional videos. Now they can use revenue from NFTs to finance themselves and avoid a record contract or postpone a deal, which also enables them to negotiate contracts with better terms.
‘Taking a loan out against myself’
Artists can earn royalties from NFTs that give them a percentage of the sale price when their creation is first sold and each time it’s resold on a marketplace. That is, after the original artist first sells the NFT, the buyer could sell the NFT to another buyer in the secondary market and the original artist would receive royalties on that secondary sale.
“[The music industry] is not made to necessarily benefit creatives,” said Mazie. “If I have the space to be able to continue to develop myself without needing to take another record deal, which is basically taking a loan out against myself, and just having the space to continue to independently grow is really exciting.”
OneOf’s new program, called CO//SIGN, is the start of a process to create recurring revenue with a fan base where the artists have an economic relationship with their fans. CO//SIGN will highlight breakout, buzzworthy artists and offer them creative, financial, and marketing support.
Each artist will have their own “rookie card” — a unique trading card-style 3D animated NFT for sale via OneOf.com. The artists will receive a large portion of the proceeds in perpetuity, creating a long-lasting revenue stream that can fund their careers, from recording to touring. By purchasing the digital collectibles, fans put money directly into artists’ pockets.
“They’re just like electronic baseball cards for up-and-coming artists, allowing them to bet on their rising star power, while also helping to finance the artist’s career,” Fell says. “You get in early when the artist has 5,000 fans and hope they go to 100 million fans.”
NFTs will start at $10 and range to $50, with gamification opportunities as the collection of Co//Sign artists grows. Built on Tezos blockchain, minting an NFT on OneOf’s platform uses far less energy than other proof-of-work networks — allowing them to charge le
ss for NFTs, according to OneOf. OneOf will issue a limited number of rookie cards for each artist, banking on select numbers of cards that will appreciate in value as fans grow. If all the artists’ NFTs sell out, OneOf doesn’t make its money back. Instead, the NFT platform is focused on the secondary market where artists make money as NFTs trade up in value and fans make money too.
The company plans to airdrop initial buyers free NFTs each time the artist makes a career milestone like reaching a certain number of streams or taking home the coveted Grammy award. “This gives fans an incentive to hold the original asset,” Fell says.
Jennifer Schonberger covers cryptocurrencies and policy for Yahoo Finance. She has been a financial journalist for over 14 years covering markets, the economy and investing. Follow her at @Jenniferisms.
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