Business model

Why NFTs are the new music business model

When Grace Christian started recording music with her neighbor at age 15, she never thought she would use NFTs to take her career to the next level. The self-proclaimed psychedelic pop artist, who goes by the name Mazie, has always maintained a “do it yourself” approach to music, creating an independent music label with his producer to keep everything in-house and in control. Now, she’s one of a handpicked small group of artists who will be selling NFTs on the Quincy Jones OneOf-backed NFT platform.

“It’s a huge opportunity for me to provide my fans with the ability to invest in me early and also provide a symbiotic relationship where as I grow they grow too,” Mazie told Yahoo Finance in an interview. “It’s really exciting for me.”

OneOf, an NFT platform backed by 27-time Grammy Award-winning record producer Quincy Jones, who has worked with legends like Frank Sinatra and Michael Jackson, has hosted NFT collections from Grammy Awards and major artists like Doja Cat. OneOf is now launching a new program for up-and-coming independent artists to sell NFTs they call “Rookie Cards”.

“When I think about who this technology can help, what excites me the most are independent artists who are using NFTs to fund the early parts of their careers,” said Adam Fell, co-founder of OneOf, manager of longtime artists and President of Quincy. Jones Productions.

American producer Quincy Jones salutes on stage during the 53rd Montreux Jazz Festival on June 30, 2019 in Montreux. (Photo by FABRICE COFFRINI/AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

OneOf is one of the star music platforms leading the NFT music charge. But others like Royal, founded by EDM DJ Justin Blau, are also claiming their position while Coinbase (COIN) has just launched its NFT marketplace where it partners with artists for exclusive drops.

NFTs – or non-fungible tokens – are certificates of authenticity that prove ownership of digital collectibles. Tokens are typically awarded for unique digital music, sports memorabilia, and virtual real estate, among other things. NTFs are proving to be a new business model for the music industry, allowing individual artists to fund their music careers with them while fans can earn money as an artist grows and an NFT takes on value.

Traditionally, artists had to pursue a record deal or a publishing deal to get capital to record songs in a professional studio or make professional videos. Now they can use NFT revenue to finance themselves and avoid a record deal or postpone a deal, which also allows them to negotiate contracts on better terms.

“Take a loan against myself”

Artists can earn royalties through NFTs which give them a percentage of the sale price when their creation is first sold and each time it is resold in a marketplace. That is, after the original artist first sold 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,” Mazie said. “If I have the space to be able to continue to grow without needing to take another recording contract, which is basically taking out a loan against myself, and just having the space to continue to grow from independently is really exciting.”

OneOf’s new program, called CO//SIGN, is the beginning of a process of creating recurring revenue with a fanbase where artists have an economic relationship with their fans. CO//SIGN will shine a light on artists who are talking about them and will offer them creative, financial and marketing support.

Each artist will have their own “rookie card” – a unique collectible card-style 3D animated NFT for sale through Artists will receive a large portion of proceeds in perpetuity, creating a sustainable source of income that can fund their careers from recording to touring. By purchasing the digital collectibles, fans are putting money directly into artists’ pockets.

MIAMI, FL - FEBRUARY 01: Justin David Blau aka 3lau attends Gronk Beach at North Beach Bandshell on February 1, 2020 in Miami, Florida.  (Photo by Jason Koerner/Getty Images)

MIAMI, FL – FEBRUARY 01: Justin David Blau aka 3lau attends Gronk Beach at North Beach Bandshell on February 1, 2020 in Miami, Florida. (Photo by Jason Koerner/Getty Images)

“They’re like electronic baseball cards for up-and-coming artists, allowing them to bet on their rising star power, while helping fund the artist’s career,” says Fell. “You come in early when the artist has 5,000 fans and hope they will hit 100 million fans.”

NFTs will start at $10 and reach $50, with opportunities for gamification as the collection of Co//Sign artists grows. Built on the Tezos blockchain, creating an NFT on OneOf’s platform uses significantly less energy than other proof-of-work networks, allowing them to charge less for NFTs, according to OneOf. OneOf will issue a limited number of rookie cards for each artist, leveraging a select number of cards that will grow in value as fans grow. If all of the artists’ NFTs sell, OneOf doesn’t get their money back. Instead, the NFT platform focuses on the secondary market where artists make money as NFTs gain in value and fans also make money.

The company plans to release NFTs for free to initial buyers whenever the artist reaches a career milestone, such as hitting a certain stream count or winning the coveted Grammy award. “It encourages fans to keep the original asset,” Fell says.

Jennifer Schonberger covers cryptocurrencies and Yahoo Finance politics. She has been a financial journalist for over 14 years, covering markets, economics and investing. Follow her on @Jenniferisms.

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