Certain labels are considered to guarantee a level of quality, and thus, many listeners check out all of their releases. However, streaming services don’t currently offer the option to search by a particular label, even though it’s been requested for years. With its Record Label Pages, Apple Music is now taking the first step towards better positioning for record labels.

In the past, people would listen to certain releases in the record shop solely because of the label logo on the back of the record. Now, listeners can use the label pages to discover music produced by the record labels whose music they appreciate.

This tool is not only useful to the fans, but also the labels, who can direct their attention towards other releases and create a brand identity.

So far only for selected labels

In their first step, Apple has selected 400 record labels to receive their own label page. We can hope that this feature will soon be rolled out for other labels, too. Since streaming services generally like to copy the best features of their competitors, the hope also remains that Spotify and co. will make a search-by-label option available, as well.

According to their own statement, Apple Music is proactively approaching record labels themselves. Additionally, there is the option to request a label page via your distributor which can then make a suggestion to Apple Music.

In March it became known that Spotify had purchased Clubhouse competitor Locker Room. One rebrand and name change later, the new social audio app has now been released in 135 markets under the name Greenroom. You can either log in with your Spotify account or register for free.

After registering, you first select your interests. In addition to various music styles, keywords from the areas of sport, gaming, lifestyle, news and more are also available.

Like Clubhouse but not quite

Unlike Clubhouse, Greenroom offers the option to record the sessions. This was to be expected since it creates more podcast content that can then be used on Spotify.

When you create a room, you can choose whether you want to record the conversation. If you select this option, you will receive an MP4 by mail. A combination with the podcast app Anchor, which is also part of Spotify, would be interesting. It allows all songs available on Spotify to be included in a podcast.

Greenroom offers all the benefits known from Clubhouse, such as networking and acquiring knowledge. For musicians, it offers the possibility to get in touch with their fans directly and to organize Q&As or a listening party, for example. And of course, all of this can be used as a podcast.

By the way, Greenroom is available for both iOS and Android.

Spotify launches Creator Fund

While Clubhouse took some time to launch earning opportunities, Greenroom has had them almost from the start, in the form of the Creator Fund, which is set to launch in late summer. With this, they want to reward creators for their content and the community they build. This will primarily reward how the content created is consumed and how many people are listening. The payouts are supposed to be weekly, but how much money is in the find is unknown. You can already register, but for now only if you live in the US.

Investments at the expense of musicians?

The first critical voices are already questioning this fund and Spotify’s business model in general. On the one hand, Spotify is always criticized for paying out too little to musicians, and on the other hand, they made a loss in the triple-digit millions in the last fiscal year. So now money is also to be distributed to celebrities, politicians, athletes and other hosts on Greenroom. Unlike Clubhouse, Spotify wants to pay these out of its own pocket.

Hype about Clubhouse already subsided

At the moment, Greenroom is only available as a standalone app and it remains to be seen whether and if so, when and how it will be integrated into Spotify. We will also have to wait and see how Greenroom can establish itself and how much interest social audio apps still create. The hype around Clubhouse has already subsided again; after 9.6 million downloads in February, there were just 900,000 in April.

When a fan truly wants to support their favourite artist, then the fraction of their streaming subscription won’t be enough. That’s why a lot of them are happy to support musicians with regular donations on platforms like Patreon. And now, during the pandemic with the income losses it has brought, the platform has experienced a resurgence in popularity. But for which artist is Patreon really worth it and how does one find enough supporters?

Only very few cash in

While revenues from streaming or merch sales are uncertain and can fluctuate constantly, Patreon offers a way to receive a steady monthly income directly from your fans. However, only a few can manage that. A study has shown that 72% of musicians on Patreon have less than 10 fans supporting them. This means that around three quarters of these artists barely make 100 euros each month.

What this shows is that the majority of musicians either have not reached the point where they can mobilize enough followers or they are simply going about it the wrong way. To be able to use Patreon in profitably, you need to bring an already solid fanbase with you. The analysis shows that you can get approximately 1% of your fans to join in on Patreon. So, for instance, if you have 500,000 followers on Instagram, you can realistically expect 500 patrons.

Offer something to the fans

But having a bunch of followers are obviously no guarantee, because in order for someone to pay you every month, they really need to be a die-hard fan. It is therefore all the more important to keep in close contact and have a lively interaction with your fans. What is equally important is offering these fans something exclusive, for example showing them songs early or giving them a peek behind the scenes. They want to get something out of their monthly payments.

No income without promotion and time

You will additionally need a clear strategy on how to promote your Patreon. Many artists forget that this can’t just be a one-time promo, but should instead be planned with longevity in mind. This is because on the one hand you need to continuously win over new fans, but on the other also because there will be people backing out constantly. There is also no getting around investing a little money into advertising on social media, otherwise your posts will only be shown to a fraction of your followers.

Last but not least, Patreon requires you to invest time both into creating additional content for your patrons and into keeping in close contact with your fanbase. The goal should be to create a community in which not only the fans can exchange experiences with each other, but also where the artist themselves interact with their followers.

If you have a strong fanbase as well as the willingness to invest time into Patreon, you have the prerequisites you need to use the platform to get a steady income.

YouTube has recently announced that they have paid over 4 billion dollars to the music industry in the past 12 months. For comparison: In 2020, Spotify paid their artists, labels, and distributors around 5 billion dollars. So, while many speak of a two-horse race between Spotify and Apple Music, YouTube is getting on the fast lane, determined to become the leading revenue generator for the music industry.

Content ID as an important source of revenue – but not only

YouTube pays out revenues from all kinds of different sources. These include the subscription revenues from YouTube Music and YouTube Premium, ad-based revenues such as Art Tracks, as well as the revenues from User-Generated-Content (UGC), which are managed via Content ID. UGCs make up 30% of the payouts, which is 1.2 billion to be concrete. Up until recently, this share used to be as high as 50%, which really goes to show a strong increase in paying users.

What also contributed to these 4 billion are the payouts to the copyright collectives as well as the offers in which the fan pays the artist directly, e.g., through the purchase of merch, memberships, or tickets for virtual events. With the combination of video and audio, YouTube is significantly more versatile in this regard than many of their competitors.

YouTube Music grows faster than the competition

They further announced that YouTube Music is the fastest growing streaming provider at the moment. In the first quarter of 2021, more new users signed up for the service than ever before. However, they did not mention any specific numbers, and thus, the most recent data we have is from October 2020, when YouTube had more than 30 million subscribers on YouTube Music and YouTube Premium (which includes YouTube Music). For comparison: Spotify has 158 million paying users.

YouTube is often criticised for paying less for both subscription and ad-based streams than Spotify does. Since in 2020 YouTube raked in 19.78 billion through advertisements alone, you might truly wonder whether the payouts should not be significantly higher. The newest numbers, however, clearly underscore that YouTube is a player that the music industry cannot ignore.

With iGroove you can make your music available both to users on YouTube Music and in the form of an Art Track, as well as monetize your songs via the Content ID.

Many artists ask themselves when it is strategically best to post a music video: Already prior to the release of the song, at the same time as the release, or is it best to wait until the song is available for streaming? At the end of the day, every approach has its benefits – we’ll provide you with the corresponding arguments so you can decide which approach fits best with your strategy.

Before the release

When you post the clip before the release, you can build the anticipation for it. While this approach does not directly lead to more streams, it does help boost the number of pre-saves.

At the same time as the release

When the video comes out the same day as the song, chances are higher that a lot of people find out about your track at once. However, it does mean shooting the works in one go.

After the release

When the video only comes out one or a few days after the release, it serves as a good reminder for everyone who hasn’t listened to the song yet. By posting on social media and sending out another newsletter, you can go for a second round of promotion.

So, you should first decide whether you want to focus more on the anticipation and the pre-saves or whether you want to promote your song once more a few days after the release.

When is the best time to publish the video?

As we’ve said, there really is no right or wrong, but experts tend to recommend releasing the video after the song. However, it may not come down to what you prefer personally, but rather, the behaviour of the users.

An analysis has shown that people consume the most videos on the weekend. On weekdays, consumption is highest in the evening hours (the most prominent days being Thursday and Friday).

Keep in mind that YouTube always needs a few hours before the video is properly indexed, that is, before it will show up correctly in searches. So, if you want to release the video on a weekday, you should post it between 12 p.m. and 4 p.m. On the weekend, you should try to post early, e. g. between 9 and 11 a.m.

Make sure to also check the analytics of your YouTube account to find out when your audience is most active on YouTube (not just when they watch your videos).

If the analysis shows that your fans are most active on Sundays, you should post your video on Saturday already – especially if this is the second strongest day. Assessments have shown that a video generates the most views in the first two days of its upload, so you can really make use of the two most active days. It’s also well worth experimenting a little to see which time works best.

In addition, we recommend setting up a premiere for the video and to promote said premiere. This also gives you the chance to chat directly with your fans before or after the premiere. Thus, you can promote your upcoming track as well as the pre-saves before the release. On the actual A-day, you can then promote the release itself, as well as the upcoming premiere, and finally, shortly after the release of the single you can promote the video, too.

As we reported, major artists are disproportionately represented in Spotify’s playlists. Of course, they also offer playlists that focus on independent artists. One of these is Fresh Finds and Spotify has now significantly expanded it again by entering into various new markets. 

Platform for independent artists

Fresh Finds was launched by Spotify in 2016. Inspired by music blogs and other tastemakers it aims to feature artists who are yet to make their breakthrough. Meanwhile over 25,000 artists have been featured in Fresh Finds playlists. Having previously had 10 Fresh Finds playlists sorted by genre, 13 new ones are now being added for different markets. Fresh Finds is now also available in Brazil, Spain, Australia / NZ, UK/IE, Philippines, Indonesia, Singapore / Malaysia, Vietnam, India, Italy, Germany / Switzerland / Austria, South Korea and Turkey.

Growth thanks to Fresh Finds

When an artist is included in a Fresh Finds playlist, their monthly listeners increase by 108% on average. If it is the first time for an artist to appear in a Spotify playlist, 44% of them will also be included in others. About half of the artists had less than 21k monthly listeners at the time of inclusion and 70% had less than 50k. Fresh Finds is therefore intended to be a door opener for artists whose reach is still manageable.

Partnership Program for additional push

In addition, Spotify has also launched a “Partnership Program” in which selected independent artists receive coaching. This includes a masterclass on their in-house tools, a collaboration with a renowned producer, which then appears as part of the Spotify Singles series, as well as marketing support on and off Spotify. Eight artists are selected each year for this.

Independent playlists and blogs are the key

To increase the chances that Spotify will select you for the Fresh Finds playlist or even the Partnership Program, you should try to place your songs in as many independent playlists as possible. It is probably just as important to be featured on blogs relevant to the scene and to build up a solid presence on the usual social media platforms.

Spotify for Artists has brought many benefits, allowing artists to pitch songs, create a Canvas, and put out Promo Cards. But the high point is naturally the insights into your streams and listeners. Using its brand-new landing page, Spotify now wants to give you even more information about your fans. Even though it’s not personalized, there are still a lot of take-aways. We’ve put together the most important information for you right here.

More saves & likes equals more streams

We’ve already pointed out multiple times how important it is to encourage your fans to like your songs and to add them to their playlists. Spotify’s data have underscored this once more: When a fan saves your song, chances are high that they’ll listen to it multiple times. A listener who has saved your track is three times more likely to play it again in 6 months, for instance, than someone who didn’t.

If a fan adds your song to one of their playlists, they will listen to it 41% more and look at your profile 12% more than someone who doesn’t. What’s more, 60% of all merchandise purchases come from fans who have added a song by the artists to their playlist.

Your super-fans are especially important. The top 5% of your fans listen to your tracks 6 times as much as the rest. Regular releases are good for your catalogue: When a new release comes out, your older ones receive a 15-20% boost, as well.

Promotion beyond the release week

On the day of the release, you have to be ready, because on average, traffic on your artist profile increases by 77%. However, only about 50% of artists update their profiles before a release. Nevertheless, you shouldn’t put all your energy into the release day or the release week. The fact is that more than half of all albums (53%) do not reach their peak in the first week. Promote your release over a longer time span, so that you can reach the fans who missed it in the first week, as well.

Many listeners make their way to Spotify from other platforms. The biggest growth can be observed on Runkeeper Pro, LinkedIn, Discord, Snapchat, as well as newsletter. So, keep regularly posting links to your Spotify on the other platforms that you use, as well. Spotify additionally points out again that Canvas increases the chances of your release being shared by your fans. With Canvas, shares on average increase by 10.7%.

Where are your listeners at home?

The cities where most new music is being discovered are all located in Latin America; namely São Paulo, Santiago de Chile, and Mexico City. Metropolises like Los Angeles, London, Chicago, and Paris follow behind. So, it’s well worth looking up where your listeners come from. Often, it’s not necessarily what you would expect.

Genres are disappearing more and more: Spotify’s analysis shows that many listeners now listen to all kinds of different music styles. 65% of hip hop listeners, for instance, also follow pop artists, and 36% of them also follow rock acts. Meanwhile, 53% of metal listeners subscribe to hip hop artists, as well. Spotify recommends listing multiple genres when pitching your song or album.

For a detailed analysis as well as information on merch sales visit fanstudy.byspotify.com.

When we reported on virtual concerts last fall, the feedback we received primarily indicated that they would never be able to replace real live shows. That continues to hold true, but it’s clear already that livestreamed concerts will be able to establish themselves as an alternative. Spotify is now taking first steps into this direction, as well.

Thus, the industry wunderkind joins its competitors which have already incorporated livestreaming into their platforms: Amazon Music through its subsidiary Twitch, Apple Music with its Livestreams from select artists, and YouTube music using regular YouTube, where live elements have been a long-established part of the platform. Spotify has now teamed up with the British company Driift.

For the first “virtual concert experiences“, as they call it, they have selected five established artists (The Black Keys, Bleachers, Rag’n’Bone Man, Leon Bridges, girl in red). The shows take place between 27 May and 24 June and cost $15. In order to see them, you’ll need a Spotify account.

While the concerts are pre-recorded, you can only see them on the specific dates and won’t have access to an archive for later viewing. This footage is likely to be evaluated as a first trial balloon. It remains to be seen whether the feature will be available for other artists, as well.

Currently, it is already possible to have virtual live shows that you perform on other platforms listed on your Spotify account.

From a consumer’s perspective, it all sounds amazing: Apple Music announced that starting June, they will be offering higher sound quality at no additional cost. Amazon Music quickly followed suit and wasted no time announcing that they, too, will no longer be charging extra. They are thus increasing the pressure on other streaming providers such as Deezer and Tidal, which charge a higher price for better sound quality, as does Spotify, which projected its HiFi quality launch to come later this year.

Good for the ear – bad for the wallet

Musicians see a positive aspect in this development, as well, since consumers now get to listen to their songs the way they were produced and not just some compressed version of them. But if you look at the royalties, then these are no good news for artists. By passing up higher subscription fees, Apple and Amazon are also passing up additional revenues, which means that less money is paid out to the artists.

But why are Apple and Amazon doing this? On the one hand, there is the competition with other streaming services, which all have approximately the same songs in their repertoire. But the more important reason is that for Apple and Amazon, streaming is by no means the main source of revenue. Rather, consumers are meant to enjoy the better sound quality on the speakers or AirPods that these companies produce. Just from selling AirPods alone, Apple rakes in more than double of Spotify’s total profits.

Subscription prices are too low

However, this is just the latest chapter in an already long-existing problem: Streaming subscription fees are simply too cheap. For many years now, the price has remained more or less unchanged at 9.99, or even significantly cheaper when it comes to family, duo, or student plans. But due to inflation alone, a Spotify subscription in the US, for example, should cost $13.36 instead of the $9.99 the company has been charging for the past two years.

Even though they argue that higher prices lead to more illegal downloads, Spotify did increase its prices in some of its markets. But the announcements made by Apple and Amazon will probably slow down the increase in price or even put it to a complete halt. The message to the musicians is clear: Don’t expect higher royalties anytime soon.

Conclusion

The only hope that remains is that while the streaming services might choose not to add a 5 Euro surcharge for HiFi, they might still raise the price for all their subscription plans by one or two Euros. If that doesn’t happen, then this will be yet another skirmish in the battle for market shares that is fought at the cost of royalties for artists and that is additionally fuelled by two tech giants primarily out to sell their own products to the users.

Some distributors, including iGroove, give you the option of sending your songs to TikTok and Instagram/Facebook. These are then stored in their Music Libraries and can be integrated in users’ videos, stories, etc. This is not only an opportunity to expand your reach; the platforms also pay the artists when their songs are being used. But the question is: How exactly?

TikTok

TikTok does not pay artists based on the number of views that the videos reached with your songs, but based solely on the number of videos that were made. So, if there are 10 videos that include your song and they amass 100,000 views, what counts is the 10 videos created, not the 100,000 views.

Since TikTok uses a pro-rata payment model, there is no fixed amount for each uploaded video that includes your song. The amount can thus vary from month to month, but it is well below one cent per created video. So, it takes tens of thousands or, better yet, hundreds of thousands of videos until a significant amount is accumulated. Whether the videos go viral or not has no impact on the payment.

Instagram / Facebook

On Instagram and Facebook, too, the deciding factor is not the number of views but instead the number of stories, reels, etc. that used the song. Additionally, the amount that is paid out for each created story is connected to the location of the creator. Depending on the country of origin, payments can vary between $0.000288 und $0.006812 per uploaded story.

Based on these numbers, the average payment would be $0.0023. So, if your track is used in 1,000 stories or reels, you would make $2.30 or, in an ideal situation, a little more than $6.

Another thing to mention with Facebook and Instagram is that they count your songs not only when videos include them via a music sticker, their content ID also recognises your songs when a user plays the track live in the background of their video.

Conclusion

At the end of the day, the payments from these social media platforms are currently nothing more than a little pocket money for the band. For this reason, you should view these platforms primarily as a promotional tool and the payments simply as a welcome bonus, which in the best-case scenario can get you an additional few hundred or thousand dollars over the year.

Hardly anyone would contest that songwriters, that is, lyricists and composers, contribute significantly to the success of a track. Whoever performs the song is in the spotlight, but they can’t get there without the text and the music. And yet, songwriters receive considerably less for the publishing rights than the artists, or in many cases, their labels, do for the master rights.

Three times less for the songwriters

As we have shown in previous posts, streaming providers keep a third of the generated revenues, while ca. 52% go to the artists or labels for the master rights, and ca. 15% go to the songwriters for the publishing rights. So, more than three times as much money is being shelled out for the master rights. To make matters worse, in most cases, different people work on the text and music of a song, which means that these 15% have to be split between multiple parties.

Streaming revenues are low for everyone, but artists can at least use the streaming providers to direct their fans to other platforms and monetize there by selling merch, concert tickets, etc. This is not an option songwriters and composers have at their disposal. Thus, we have the paradox where individual songs are becoming more and more important (rather than the whole album), but the songwriters cannot profit off them.

Declining revenue due to COVID

COVID has made the situation even worse, because the music publishing revenue streams have gone down due to bars, restaurants, clubs, and concert halls being closed. GEMA reported a 10% decrease in royalties compared to the previous year, mainly because of a 43% plunge when it came to revenues from public performances. Circumstances are even more dire for the British equivalent PRS, where revenues sank by 19.7%, and the live performance department lost a total of 79%. The 2020 numbers also include the revenues from before COVID, so things are not likely to get better in 2021 or 2022 – on the contrary.

How can this imbalance be corrected?

There are various approaches being discussed to solve the problem, but it seems unlikely that the streaming providers will change anything anytime soon, despite their insistence on how important songwriters are to them. Some short-term solutions could include:

• The songwriters asking for a higher fixed price for their work in addition to the revenues from the publishing rights. But if a song goes through the roof, they would still only make a marginal profit.
• The songwriters being given a share (or a bigger share) of the master rights.

However, both of these options would come at the cost of the artists. Essentially, there would only be a shift from artist to songwriter (which in many cases are the same people).

So, for a truly sustainable solution, the streaming revenue pot needs to be bigger. If this were to happen, for instance by increasing subscription fees, then songwriters need to be given a disproportionately large amount of the profit, so that the ratio between master and publishing rights can be balanced.

Non-Fungible Tokens, short NFT, seem to be all anyone ever talks about at the moment – from the art scene to the music industry. iGroove Magazine has closely monitored this trend, but wanted to observe its development first instead of jumping on the bandwagon right away. Since the hype seems to persist, we show you in this posts what NFTs mean to musicians. We will start off by explaining the basics. But if you already have a good grasp on the subject, you can just skip the first part and continue reading below.

NFT: forgery-proof and unique

An NFT is essentially a unique, non-interchangeable key. So, in contrast to bitcoin or a bank bill, an NFT is one of a kind. If I gave you a 50 Dollar bill and you gave me one, we wouldn’t have the same bills anymore, but we would each still have 50 Dollars. This is not possible when you have an NFT, because it is unique.

NFTs make it possible for people to both collect and sell digital goods, which are stored on a forgery-proof (at least in most cases) blockchain.

We’re already familiar with this concept when it comes to physical creations: An artwork by Picasso could hang in a museum or in some rich collector’s home. At the same time anyone can buy a copy of a Picasso almost anywhere. But there is only one original and whoever owns it has a certificate of authenticity for it. Thanks to NFTs, this is now also possible for digital creations – no matter if it’s a JPG, GIF, MP3, meme, or anything else.

Digital files can be copied an infinite number of times, but thanks to an NFT, everyone now knows who owns the original. So, it’s not the digital work that is rare, but the token. Let’s assume someone bought a song as an NFT. That doesn’t mean that the buyer now owns the song. What they do own is the certificate, meaning the proof that they are in possession of the original. They can re-sell the NFT, but they don’t have the right to just do whatever they want with the song – unless this was specifically stated in the Smart Contract.

Earning money on resale

A Smart Contract sets all the details, e.g., who will get how much money from the sale of an NFT. For instance, it could say that 50% goes to the artist, 30% to the producer, and 20% to the graphic designer. Additionally, it sets how much money goes to the creator of the NFT in the case of a resale. For example: You’re selling an NFT for $ 10,000 and stipulate that you make 20% of any resale. The buyer then resells the NFT for $ 20,000, after which it changes hands for a whopping 100k. In total, you have now made 34k.

No NFTs without cryptocurrency

In order to set up or buy an NFT, you have to have a crypto wallet – meaning a place to save your cryptocurrency. After that you will need to buy some Ether (the second biggest cryptocurrency after Bitcoin) and put it in your wallet. A large number of NFTs are sold in Ethers and stored on the corresponding Ethereum blockchain. Finally, you will have to register at one of the market places for NFTs (Nifty Gateway, SuperRare, Opean Sea, Rarible etc.) and connect it with your wallet.

You need NFTs not only as a buyer but also as a seller, since you have to pay a so-called gas fee to mint an NFT.

NFTs: direct connection between artist and fan

When reading about NFTs, you will generally come across two different camps. One is euphoric and believes that NFTs are the future of the music industry and will replace labels and copyright collectives. The other thinks it’s not much more than a bubble in which crypto hipsters with too much money on their hands like to speculate. We want to present both viewpoints to you, as well as the current, and more importantly, future prospects, but also some of the stumbling blocks.

One of the biggest advantages of NFTs is the direct connection between artist and fan. The money flows from the fan straight to the artist, everything is stored transparently on the blockchain, and it can be reviewed by anyone. Other than the NFT platform, there are no more middlemen, and the artists get their revenues faster, as well. Additionally, as we have explained above, as an artist, you also earn money when the NFT is resold.

The fan has the option to support their favourite artist directly, and in return, they receive something that is one of a kind. Many hope that NFTs can bring back the value to music that it has lost through streaming. Nowadays, it’s not all that easy for someone to support their favourite artist financially. Out of their monthly streaming subscription only a small amount with lots of zeros behind the decimal point goes to the individual artist. And albums, merchandise, and concert tickets are not exactly things you buy every month either.

In addition to platforms like Patreon, NFTs thus provide a way to support an artist with a significantly higher figure.

At the same time, the artists have a way to offer their die-hard fans something truly special. Next to digital goods – from songs to videos to artworks – NFTs can also be offered for physical products like concert tickets, vinyl, or backstage passes. When it comes to NFts, we’re still very much at the beginning of the developments and are utilizing only a fraction of the opportunities available.

Share the success with the fans

Another area in which many see big potential is the sale of parts of the master and/or publishing rights. The musician here has the advantage of being able to receive a portion their future revenues at once. The fan can invest in the musician and even make some money off the success of their favourite artist, as well. NFTs could also become a type of fanclub, in which a fan could resell their membership and make money off it themselves.

But this is all still a long way off: the system is simply not ready for it yet. While the buyer does have the right to a portion of the royalties, they also have to know how to collect these. In most cases this is not possible to do over the blockchain, which is why copyright collectives, distributors, and labels still come into play.

The only time it’s possible is when the music is brand new and all the rights are owned by the artist themselves. Older releases usually have multiple parties involved, which makes things extremely complicated.

Thus, we’ve arrived at the stumbling blocks, because wherever new opportunities arise, there are always risks involved, as well.

High barriers for buyers and artists

Hardly a day goes by without news of million-dollar sales or superstars launching their own NFTs. But is art really what’s on the forefront here or is it all just about the collector’s value and thus also the speculation? Are NFTs truly valuable or does their value only come from people thinking they’re valuable, at least at the moment? What’s growing here – a bubble that will soon burst or a genuine, sustainable source of income for musicians?

Let’s first get to the main stumbling blocks: For anyone who hasn’t been dealing with cryptocurrencies for a long time, it’s not that easy to set up and sell NFTs. So, there’s a risk that artists are getting into some technology that they don’t completely understand. Even more problematic, however, are the challenges for the buyers. Few people have Ether in their crypto wallet and are hanging out in NFT marketplaces. Do you know someone who owns NFTs? Exactly. It will take years before they can truly establish themselves within the greater population.

Losses instead of high profits

Many also forget that it’s not exactly cheap to set up an NFT. As mentioned before, there is a so-called gas fee to pay, so you will quickly rack up a $200 bill before you even get started. If you then sell your NFT for a five- or six-figure price, then this is obviously not a problem. But with the media only reporting on all the successful, million-dollar sales, people often forget that many NFTs don’t find any buyers at all.

Chances are high that in the future, things will look similar to the pattern on Spotify and YouTube, where a very small number of people rake in millions of streams/views and the majority has less than 1,000. It’s very probable that only a small number of people will be able to make big bucks with NFTs, while the large majority will earn little to nothing.

Another risk that should not be underestimated are the marketplaces that the NFTs are tied to. If one of them goes bankrupt, the NFT that was bought will vanish into thin air, as well.

So far, only around 150 musicians have sold NFTs (although this number is obviously increasing rapidly). Most of them are extremely well-established and have a strong fanbase. Their NFTs are often sold for astronomical prices that a normal fan could never afford. At the moment, NFTs are therefore primarily a playground for superstars on the one side and crypto nerds and other people with a well-lined purse (or rather, a full crypto wallet) on the other.

NFTs are still a long way from entering the mainstream

While this hobby of the crypto and finance buffs is making its way into the mainstream, it hasn’t quite gotten there yet. It still remains to be seen whether NFTs are more than just an object of speculation. So far, instead of more democratization in the music industry, they have only given rise to a few winning parties. When Grimes sells NFTs for 6 million dollars, it benefits neither the starving artists nor the music industry as a whole. In order for independent artists to truly be able to make a profit, a mass market needs to emerge and prices need to settle at a reasonable level.

But in this whole discussion, we haven’t even mentioned the most significant drawback: Since NFTs are based on blockchain-technology, they are incredibly energy-intensive. So, anyone who cares even a little bit about climate change should keep their hands off them until the industry has found another way.

But in the other aspects, too, we’d say: without a huge and more importantly, well-heeled fanbase, you should focus more on other monetization options rather than NFTs. However, you should also still keep an eye on their development.