Imagine getting residual income from your favorite songs and artists on a regular basis. Seriously, imagine that when you play that Tems song for the millionth time while you are prepping to go to brunch with your girls, you get a percentage every time you run the track back. You’d literally be getting paid to play the music you would normally listen to anyway. Sound far-fetched? Well, actually, it’s not!
Artists like Nas are making that happen for their fans, allowing music lovers who purchase their NFTs to receive a percentage of streaming royalties for certain songs. Initially, providing your community a financial incentive to purchase an NFT and essentially giving them a piece of the pie, sounds like an amazing idea. The artist would also have created a super marketing machine — if I am a fan who’s invested, I am not only going to stream that song, I am also going to promote it heavy so other people stream it and I’m able to get the maximum amount of royalties for that track.
While this idea sounds ideal from a strategy perspective, the execution and results won’t really benefit the actual fans in the way they think.
Now, don’t get me wrong, the thought of getting residual income from music you enjoy (no matter the amount, initially) sounds good, but the amount of money you would receive is worth considering. Many fans don’t understand how royalties work or that the percentage that the artist is offering is only a cut of the small royalties percentage they themselves receive from the song. Not to mention the low percentages streaming services pay artists before the full royalty breakdown even happens.
Below are the approximate royalty percentages from the top major streaming platforms:
Apple pays artists $.01 per stream.
Spotify pays artists $.003 to $.005 per stream.
Tidal pays artists $.013 per stream.
To put this into perspective, one million streams on Spotify only equals $3,000 to $5,000, depending on the artist.
But wait! Artists still have to split that $.003 with record labels, producers, writers, A&Rs, and anyone else involved in their songs, which means you as a fan would be receiving a minuscule payment that would amount to PENNIES.
So, why would your favorite artists offer this? Well, I think their hearts are in the right place — they want to give back financially to their fans who have supported them throughout the years, but they just didn’t deliver in the right way. They want to offer utility and (in their minds) give their fans a piece of their art and provide ownership — an idea that is at the core of Web3.
But, again, the execution isn’t right, which is why it is important to hire the best people to carry out their projects. But that is a different story for a different day.
Another issue that needs to be discussed is how artists are affected by the streaming breakdown — seriously, imagine if your income was soley based on the current payment scheme. Welcome to being a musician in 2022.
After all the work you put into creating the music, marketing, promotions, and more, you are only given pennies for all of this? AND you are expected to pay your label back with interest from these funds? Am I the only one that sees the problem? This is why so many artists live off of borrowed money (from the label) and go broke. Many solely rely on streaming, but the only way to make any real money is to tour and sell merchandise. How long will your body allow you to tour every year?
Wonder why people get residencies in Las Vegas? Wonder why your faves are on tour for nine months out of the year? Wonder why certain artists are still doing club appearances past a certain age? Wonder why some of our faves have to tour until they are 75? Because they DON’T HAVE A CHOICE.
That’s why many musicians have switched into the “influencer” lane through brand deals and partnerships — for a more sustainable way to bring in money. I know what you are thinking: “Well, why should artists have to do all that to get paid a decent wage?” I completely agree, which is where Web3 comes into play as the solution if used correctly.
Blockchain technology allows for artists to not only own their music but utilize their brands and communities to make a REAL living without having to sign their lives away.
Artists are able to sell their music and/or music video as NFTs at any price they deem fit, and they are able to get a percentage of the sales (usually 10-20%) of that music for years to come. Sounds a lot better than those streaming percentages, right? Why doesn’t every artist do this? Well, there are a few reasons. Music NFTs are very new and many artists are not familiar with how the technology works or how to even get started. Also, label contracts require artists to produce music and music NFTs don’t fit into that framework. Lastly, music NFT sales don’t count for charts or awards (yet).
Now, selling your music as an NFT isn’t the only option artists have. You can utilize NFTs to provide your fans exclusive content, experiences, and access. You’d essentially be profiting off of your brand without having to split it with your label or anyone else.
This is the route I think Web2 artists should start with. Instead of promising your fans a percentage of royalties, offer them something that they really want — MORE ACCESS TO YOU! This way you can fully profit off of your NFT collection without having a million hands in the pot AND give your fans something that they truly want.