The NFT for music, in general, is tokenized album art or music files stored on a blockchain – a public ledger where transactions can be recorded. The term “non-fungible token” refers to a unique asset that identifies ownership of a digital asset; “non-fungible” refers to the inability to replace or change the asset.
NFTs are purchased by collectors to display in their personal galleries or to sell on the secondary market for profit. Besides the NFT itself, every transaction associated with that NFT is also recorded on the blockchain, allowing the musician who minted the NFT to earn royalty payments.
Musicians can earn royalties by releasing physical albums together with NFT-linked vinyl records. Additionally, they can introduce IRL perks to their tokens to engage their fans.
The music NFTs are typically accompanied by an animated or static image and a play/pause button so you can listen to the music. The length of some music NFTs ranges from entire albums to short sound clips.
How can you profit from music NFTs?
Music NFTs allow creators to earn money via royalties on minted NFTs or through buying and selling music NFTs.
The creator opens an account on a marketplace and then creates the digital file to be tokenized. By minting NFTs, creators earn royalties via smart contracts. Code is used to identify ownership, allow for transferability when the NFT is sold, and ensure that the NFT cannot be duplicated. This will ensure that its initial creator can continue to earn from future sales.
Whenever an NFT is sold, the creator receives a percentage of the sale price – usually between 1% and 10%. Also, NFT transactions are subject to a fee, called a gas fee, that’s much like the processing fees on credit cards.
There is no guarantee that your NFTs will sell. Its value depends on the author’s ethos, its use, and even its rarity.
Here are some steps you should follow when if you want to create and sell music NFTs
- Choose the music file or album art you wish to mint. NFTs for music are usually album art, sound clips, or some combination of both – such as audiovisual NFTs. The majority of marketplaces accept the MP3, MP4, and WAV file formats if you are creating audio. If your file is larger than 100mg you may have to compress it.
- Provide your NFT’s details. Marketplaces usually provide buttons and guidance to mint an NFT, including fields for a title, description, tags, and genre. You can also link to social media.
- Finish the minting process. You will have to pay a gas fee to digitize your NFT. The gas fees cover the energy costs of validating the transaction.
- Select a method for sales. Put your newly minted NFT up for sale. You can list it for a fixed price or set it up for auction. OpenSea and a few other marketplaces allow private sales. In order to maximize your profits, choosing the right marketplace may be the most important decision you will have to make.
Buying music NFTs can also generate income in the long run
Buying low and selling high is the golden rule of investing in NFTs, just like with any other type of asset. However, investing in NFTs doesn’t guarantee profits, and you could earn nothing at all, just like with other assets.
The action has attracted many celebrities as well. According to Decrypt, Snoop Dogg holds around $17 million worth of NFTs in his digital wallet. Unless you are able to find highly valuable NFTs cheap, owning a notable collection can get expensive quickly.
Obviously, tokens created by well-known musicians are likely to be valued higher. The musician or creator who minted the NFT and its historical significance are major factors that contribute to the value of the NFT.
Shady con by Eminem, Dream Catcher by Steve Aoki, and When you see yourself by Kings of Leon are some of the most valuable NFT music collections that exist on the market today. Dream Catcher is estimated to value at a whopping $4.25 million.