You have likely come across the term “NFT” in recent months. But what exactly is it?
By strict definition, an NFT is a unique, digital asset that is certified, authentic, and stored on the Ethereum blockchain.
Make sense? No? Don’t worry, you’re not alone.
If you were also left scratching your head, continue reading for an easy-to-digest breakdown of what an NFT is and how artists are using them to make the big bucks.
What is an NFT?
Sold for $3,600
NFT stands for “Non-Fungible-Token,” or something that is entirely unique and impossible to replace. In recent headlines, NFTs typically come in the form of digital art or digital assets, but in actuality, an NFT can really be anything. To give a simple example, imagine you have a 2000 Rookie Tom Brady Football trading card. Your friend has a 2003 Serena Williams Rookie Tennis trading card. Both cards are incredibly valuable but are totally different. If you and your friend trade cards, you would both have something entirely unlike the card you originally had. NFTs are the same.
Once someone is the owner of an NFT, that ownership cannot be duplicated or deleted. Having that privilege is what makes the NFT valuable.
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Where are NFTs?
NFTs are stored on something known as the Ethereum blockchain, which, in simple terms, is the system that records transactions made in cryptocurrency (in this case, Ether). This does two important things for all NFT owners: (1) it stores your NFT as a unique token that cannot be replicated, and (2) keeps it safe and protected.
What do NFTs have to do with art and music?
DJ and producer 3LAU sold a collection of 33 NFTs (including special edition vinyl, unreleased music, and more) for nearly $12M back in February 2021. But how?
Think of an NFT as unique proof of ownership of something virtual, such as the digitalized collection of items 3LAU auctioned off. While you and many others can still download the art and music themselves, the person who owns the NFT actually owns it, or at least some component of it.
Sold for $3,600,000
How are the artists making money with NFTs?
Artists are making money selling these NFTs and through royalties from each subsequent download. To put this into perspective:
An artist on the Spotify platform makes roughly between $0.003 and $0.005 per stream. Looking at 3LAU’s top 5 most streamed songs on the service, he has approximately 46M streams. That means he made between $138K and $230K from Spotify streaming royalties.
To put that into even more perspective, that is less than 2% of what he made from selling his collection of NFTs.
Sold for $5,800,000
Why is this important?
Why is this important?In the era of streaming and the many career-halting effects of COVID, it has become nearly impossible for musical artists to reap the benefits of their work. They aren’t compensated that well from the massive streaming services, and they have been unable to make money from touring or on-the-road merchandise, either. With the introduction of NFTs, artists are being offered an incredibly lucrative way to make money from their hard work.
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SoStereo is thrilled to see artists finding new ways of getting their work into the world while also receiving proper compensation for their time, energy, and talent. We cannot wait to see what the future holds for the ever-evolving world of NFTs and the many artists out there throwing themselves into the mix!
