Describing Major Music NFT Platforms as Music Products — Part 1: The Rise of Curators + The Push for Product Metadata

Introduction

Recently, I was on Twitter and saw a bunch of tweets about a Music NFT offering from super producer Diplo via the Royal.io platform.

The language “I just bought of piece” of “X song” didn’t seem accurate to me. And that language seems to be autogenerated by the social sharing tool provided by the Royal.io NFT music platform.

One thing I keep coming across in the Music NFT space: I hear about the Music NFTs and the artists and platforms offering them, but I never see upfront what the actual NFT is in terms of being a music product. This Fortune.com April 2022 profile on Music NFTs seems to gloss over what the actual products offer buyers.

My next few Music Data Pro posts will focus specifically on a few Music NFT platforms that have grown over the past year, attracting both great music talent, fans, and NFT buyers alike. A better understanding of a handful of the major Music NFT platforms will give one at least an idea of what the music product is attached to many NFTs.

The Diversity of Music NFT Products

There are likely 100 great articles which attempt to define what “Music NFTs” are in terms of being products related to the music business, and they are all pretty much correct. I assume most of you readers know what Music NFTs are.

A music NFT is a certificate of ownership of a unique musical work that can be sold to another party. The owner has the exclusive right to determine how the composition is used. — “Investing in NFTs” article from The Motley Fool

Yet this description from The Motley Fool is not correct for every Music NFT product, for example some Music NFTs may just be unique digital cover art synced to the audio of a musical release. And the majority of the time it’s untrue that “The owner has the exclusive right to determine how the composition is used” — only a few Music NFT platforms offer such Music NFT products that allow the owners exclusive rights to the music.

In the Spring of 2021 there was a Music NFT buying boom. I think it’s good to look back at how Malen Blackmon of the Dallas Observer defined Music NFT’s at the time of that boom.

In the music world, an NFT could be defined as a rare collectible that is stored on a digital ledger. Artists and musicians can create NFTs themselves to auction off various forms of digital media to their fans who pay using cryptocurrencies like Bitcoin, Ethereum and others. They could add multiple buyers to the NFT or make it so there is only one owner. The artist can also receive royalties every time a buyer of that digital copy sells it to somebody else — Malen Blackmon, Dallas Observer

A year later since the initial boom there has been a proliferation of diverse NFT products related to the music industry — NFTs that allow fans to access concert tickets, fan clubs, an artist’s musical copyright including the pay out of mechanical and performance royalties, and revenues from sales and streams of an artist’s music. A buyer can even get their hands on the original recording sessions of a musical artist’s song via a Music NFT product, and then make their own remixes and mixdowns of that song that are unique to the buyer.

The volume of music product innovation that NFTs are driving seems inexhaustible.

The diversity of music NFT products means for buyers today there won’t necessarily be a few known large marketplaces to trade or sell the Music NFTs as the products will not have parity. A rock band fan club NFT holder may not want to trade or sell that to acquire the music publishing NFT of a particular song by an artist producing dance music. Expect lots of little Music NFT marketplaces and product verticals.

The rise of major platforms curating Music NFTs

Water & Music (aka W&M), a music business research collective and industry community, is my (and probably yours too) go to for keeping up to date on every new development related to Music oriented NFT products. The latest count of news articles, case studies, research papers on the W&M site carrying the term “Music NFT” is currently close to 70. In mid 2021, following a Music NFT sales boom, W&M a turned in a Q2 2021 report showing Music NFT sales were down 90% from that peak.

The W&M Q2 2021 report showed that the majority of Music NFT sales were held on on NFT platforms Nifty Gateway, Blockparty, and Fanaply (and also auction houses like Christie and Sotheby’s). But over the past year and since that report was filed, the landscape has changed entirely for Music NFT sales.

NFT platforms exclusively focused on music offerings have now captured majority of Music NFT sales and the attention of the community focused on music and NFTs.

These emerging Music NFT platforms are not open to all types of musicians, but instead are focused on curating talent and presenting a series of Music NFT releases over the course of what the platforms are calling a “season”, or several months.

The Spring 2021 boom in Music NFT sales primarily happened on just a handful of NFT platforms that offer all types of NFTs, while the 2022 boom is happening on several Music NFT platforms that are highly curated

I noticed that a few Music NFT platforms were gaining attention in the second half of 2021, and that they were selecting specific musical artists to promote — specifically Catalog, Sound, Royal, OneOf are the platforms I came across the most in music community spaces and social media conversations.

Red circle emphasis is mine — to show that the major, noted Music NFT platforms, curate the musical artists and music NFT offerings sold on their platform. This chart is from Water & Music’s report —” From protocols to people: A study of music NFT platforms’ onboarding strategies”

The above graph is included in Water & Music’s “From protocols to people: A study of music NFT platforms’ onboarding strategies” report. The report not only highlights the curatorial nature of popular Music NFT platforms, but it also demonstrates the diversity of Music NFT product offerings.

The primary goal of that specific Water & Music report is to explain how musical artists can engage these curatorial platforms to be included in their Music NFT offerings.

I loved the “Music NFT Platform Breakdown” chart from that report which shows that the major platforms are curatorial. I wanted to also see on this chart, a row on it — something to the effect that says what kind of Music NFT product is being offered on each platform — for instance is it a “fan club”, “access to musical stems (recording sessions)”, “original master audio of a song”, “slice of music publishing revenue on a song”. I have not yet found any “Music NFT Platform” Guide which briefly lays out what types of Music NFT products a platform offers.

Classifying and Grouping Music NFTs

Water & Music recently expanded its Music NFT database and released a collaborative research report titled “Music NFT Sales 2021 — What We Learned”, replete with a FREE 51 page slide deck (While the slide deck is free, I highly encourage you to subscribe to their platform to continue to support their amazing research).

This Water & Music report assigns the term to “utility” to describe what a Music NFT product actually offers a buyer. In their larger (subscriber access only) database of Music NFT’s, a “utility” data field / category is missing from the 2021 Music NFT sales records, which number over 2000. In the same database there is a “web 3 / Music NFT tools” sheet which organizes the Music NFT platforms by “utility” with categories such as “Music / Audio Collectibles”, “Fan / Community Awards”, “Royalty Investments”.

In the Water & Music full slide deck, it’s apparent that “utility” is not a simple categorization of Music NFTs and it’s worth digging into the various ways a Music NFT will align with “utility”.

Water & Music categorizes Music NFTs with the term “Utility”

Similarly to “utility” categorizations, Web3 enthusiast Coopathroopa in his following chart, made the valiant effort to group Music NFT into groups that define the product offerings. For example, of the major Music NFT platforms I have mentioned they line up category wise here as follows: Catalog offers “1:1” Music NFT products, Sound and OneOf offer “Editions”, Royal offers “Royalties”.

The Music NFT Landscape infographic by Cooopathroopa — it was recently updated to show new entrants into the market, but this is already complex enough for demonstration purposes

Coopathroopa also offers a weekly Substack email titled “This Week in Music NFTs” which is a must read to find all the latest Music NFT “drops”. The term “drop” is exchangeable with the music industry term, “new release”.

Could Coopathroopa’s weekly email “drops” guide could be organized by “Music NFT” product category? For instance, sections for drops that fall into those categories: “1 of 1”, “Royalties”, “Generative”, “Editions”, “Fan Clubs” etc. I think it would make it easier for buyers and fans to sort through their Music NFT options and better understand what the artists are offering each week. Yet Music NFT expert fans and collectors likely already “get it” and know what kind of product each major platform is offering.

Meanwhile, Adam Levy in his “Beginner’s Guide to Music NFTs” categorizes Music NFTs into two main buckets — “patronage” and “ownership”. Those two categories in my opinion do not describe the underlying music product related to the NFT. Yet I do understand his classification, with “patronage” being a Music NFT that will generate revenue solely for the musical artist, and the buyer is solely a collector. A “ownership” Music NFT would be one that would generate revenue for both the artist and the buyer through commercial success of the music that is part of the NFT offering. Commercial success would mean a large volume streaming and sales revenue related to a song, EP, or album, and the buyer of such a Music NFT gets a percentage of that revenue as a benefit of owning the NFT.

The complexity of Music NFT products likely means that there will be no standard industry classification like their is for music products — for example — LP / album (10+ tracks), EP (3–5 tracks), single (1–2 tracks). Such product classifications are included in music metadata schema. If you are not familiar with how the music industry organizes music metadata, a pretty good explainer is offered by SoundCharts (link).

Water & Music reports that the musicOS project is working towards interoperable metadata and context layer for Music NFTs. The musicOS manifesto:

It will be interesting to see if the work of musicOS will produce some kind of standardized Music NFT product metadata schema that could be folded into larger metadata efforts, like DDEX, that are widely accepted and adopted in the music industry.

Why Music NFT metadata matters

The Water & Music report “Music NFT Sales 2021 — What We Learned” says the lack of metadata made their reporting difficult:

Due to a lack of standardized metadata across platforms for music NFTs, we at W&M still need to find, verify, and interpret drops on a manual, case-by-case basis

But even more importantly, this takeaway from the report is the most crucial:

[the lack of Music NFT metadata] “creates major discoverability pain point for artists and fans”.

To be honest, Music NFT product category titles like “1:1” and “Editions” (as organized by Coopathroopa on his Music NFT chart), at the time of writing this post, are beyond my comprehension at this point to be able to quickly describe them as music products.

Over my next few Music Data Pro posts, I will attempt to align the major Music NFT platforms with music industry concepts and music products that would make sense to a traditional music fan / listener. In the beginning of this post I called out Music NFT platform Royal.io’s social share for NFT buyers — “I just bought of piece” of “X song” — as not making much sense. So, I will start with Royal.io as the first platform I investigate in terms of aligning the offering with music industry concepts; stay tuned for that post very soon, with the link appearing in right here as soon as it publishes.

UPDATE: What about the crypto $$ ?

In order to make a music product into an actual Music NFT, a platform will have to tie the NFT to a numerical / text address on the Blockchain. Without getting too technical for any reader that doesn’t understand the Blockchain, this numerical / text address on the Blockhain is like a web URL address — it points to a specific location / item. The easiest way to generate this address is to tie a Music NFT to crypto currency, most commonly in the Music NFT space it’s Ethereum. Water & Music reports 79% of all Music NFTs in 2021 used Ethereum.

For fans, having their Music NFTs tied to a specific Blockchain address means two things — they can openly display their Music NFTs in their cryptocurrency wallets or on NFT exchanges like OpenSea. It’s a true way of showing that “patronage” and “ownership” that Adam Levy mentioned.

Second, it makes the Music NFT products much more transferrable to other fans. It’s a lot easier than listing a vinyl record on the music collectables site Discogs, finding a buyer, and then having to ship out the record by mail. The Blockchain digitizes music collectables and makes them more portable.

Music NFT Royal.io eschews using the term “Crypto” on their website, but I’m not sure that’s a good thing

While Music NFT Royal.io platform may eschew using the term “Crypto” on their website, I’m not sure that’s a good thing because it’s important to understand what attaching a Music NFT to crypto currency means for buyers and sellers.

Just after I published this post, the Ethereum (aka ETH) currency took a noise dive, losing about $500 USD in value per 1 Ethereum coin over a matter of a few days. If a fan is uses Ethereum coin to buy a Music NFT, or any crypto currency for that matter, their Music NFT may lose value over time as these currencies fluctuate.

If a fan bought a Music NFT at .1 ETH last week it was worth $250 and by the end of this week, $200. Of course, a fan could reprice their Music NFT for resale to reflect the drop in ETH value, at .125 ETH which would equal about $250, their original purchase price. The currency fluctuations are the drawbacks of tying Music NFTs to crypto currencies.

Dances points out the problems with fluctuating Music NFT prices

FOOTNOTE: What about the “Music” with Music NFTs?

I could also envision Cooopathroopa’s “This Week in Music NFTs” guide offering a list organized by music genre. Water & Music research finds that an overwhelming 66% of Music NFT sales in 2021 were in Electronic Music, and 18% in Hip-Hop. Therefore maybe there is not enough diversity in music genres to organize Music NFTs this way just yet.

Beyond Nas, Diplo, Snoop Dogg and a few other major artists, only a few artists I am familiar with are offering Music NFTs today. And this small handful primarily produce in the Dance / Electronic music space — Abjo, TOKiMONSTA, (both on Sound) and QRTR (on Catalog). I still am in full research mode so I am sure I will find more artists I know in this space soon. And again, the major Music NFT platforms are so curatorial, they are acting as music discovery platforms for many, presenting potential buyers / listeners, artists they may have not heard of before.

I am a musical artist with my group FSQ and I find the idea of producing Music NFT products to be exciting, primarily as a way to generate more revenue than we currently make from merch, vinyl sales and streaming. However, I am not finding that many of my established artist peers have jumped into the space. I would almost say there’s a sentiment against them. Furthermore, there’s an environmental cost in terms of creating NFTs which is generating controversy — you can read about those issues here.

Music NFT positivity is not prevalent in my music community — yet

Water & Music also reports that 64% of all Music NFTs are by independent artists. Within my music community of independent artists, I would estimate the adoption rate of Music NFTs is likely below 5%.

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musicdatapro

Music Data Pro by Chuck Fishman: in depth about music marketing + data — specifically marketing musical artists on streaming services, streaming + radio.