Observing NFT's Place in the Music Industry

Shortly after graduating from college, I was already working in the music industry, involved with early digital music services in the form of ringtones and ringtones (RBT). My first adventure as an entrepreneur, Ohdio.FM, was an attempt to enrich the music ecosystem. Even my current company, KaryaKarsa, started from applying the direct-to-fans concept for musicians, although now KaryaKarsa can be used by any creator. So, my career has been close to technology and music for a long time.

One of the most talked about topics in 2021 is NFT. Blockchain-based, NFT provides musicians with an alternative in earning from creative activities which basically reduces or eliminates the share of work (and the share of profit sharing) by intermediaries such as distributors, even labels. Thus, NFT is predicted as a technology that will ultimately bring more equitable prosperity to the core producers of the music industry, namely musicians, because musicians will be able to set their own prices and royalties.

However, are the prospects that simple?

2021 is going to be a pretty special year for the music + NFT mix. From 3BLAU to Audius, this article pretty much sums it up interesting happenings in the realm of NFT music. From their homeland, Indonesian musicians have started working with NFT; there is Aloysius Nitia releases using TEZ . coins and Alex Kuple releasing NFT songs via Distrokid distributed via Nifty Gateway (using ETH).

In general, the world's interest in NFT - complete with its rejection - will increase throughout 2021. So if you look at it anecdotally, the potential impact of NFT technology on the music industry, Indonesia and globally, is quite large.

What's interesting about NFT is that part non fungible, thus bringing the release of works (such as music) closer as it did long before the internet era began, when the physical number of a work was limited (or restricted).

NFT technology provides undeniable verification of ownership of a digital asset with transparency right down to the initial transaction, an antithesis to the unlimited and unambiguous propagation of digital files that has occurred since the internet was founded. Indeed, the file itself can still be reproduced, but the affirmation of rights to the work is recorded on the blockchain.

The advantages of this technology, combined with the ease with which it is possible to produce any digital work from a computer or mobile phone, give a considerable amount of control and power back to creators like musicians.

Because After all, you can actually do everything yourself, now you can do distribution yourself with the help of sites like Nifty Gateway or Audius, without the need for a record company or publisher (regardless of whether it is necessary or not).

Well, actually independent production and distribution, or often called indie, is not something new. Musicians are already doing distribution independently through sites such as Bandcamp [or KaryaKarsa], or assisted by services such as Distrokid or CDBaby.

However, accessing a large number of listeners will eventually end up in services like Spotify and Apple Music, whose business models are more profitable for whoever labels (or music aggregators, like Believe) have. market share large based on the number of listeners.

Money turnover music streaming lately even dominated by the owner of the old song catalog, which incidentally is mostly in para major labels Universal Music, Sony Music Entertainment and Warner Music.

On the other hand, most music listeners are still reluctant to spend money if what is offered is "only" songs. From the observations, music consumers - who are willing to spend money - choose to pay for music service subscriptions to get the songs they want, and will spend more for "unique" things from the artists/musicians they like, such as merchandise, limited edition CDs, etc.

This consumption preference, of course, opens up the possibility of music NFT being one of the ways for fans of an artist/musician to provide support.

However, there are other factors that greatly affect the possibility of an artist or musician getting income from his work through merchandise to NFT, and even getting more income from services. music streaming. That factor is the listener base or fans.

Keep in mind that NFTs and merchandise, for example, are “sales items”. If there is no potential for the mass to sell goods, it will be a problem. Thus, the formation of this mass of listeners, connoisseurs and fans remains an important element in building a commercial musician's career.

In the previous era, the role of forming this mass of listeners was mostly carried out by record companies. They found a business pattern where they could actually "get" an artist/musician through vigorous promotional efforts via media, ensure the song was featured on TV and radio frequently enough, and form a perception in the media and the public that "the song is good and the artist is good." cool".

In this age of social media, the situation is practically reversed when artists often already have a built-in mass before entering into an agreement with a record company. Artists or musicians who are already quite successful do not depend on the income that can be generated via the record company, because they can "rent" the masses of their fans to the brand directly by doing brand endorsements.

And now, there's NFT.

While an artist's or musician's career today doesn't just depend on the sale of recorded music, this mass-building component is still important to make sure someone buys what he's selling. On the other hand, NFT industry is still very speculative, as are the cryptocurrencies used to print and buy them.

Although I believe NFT collectors have a genuine desire to support the creators whose NFTs they buy, there is still a speculative side that hopes the value of their NFTs will appreciate; this is not a bad thing, as the same is true in the more “traditional” art market through artists, collectors and galleries. Appreciation for art is certainly there, but investment speculation is certainly there. This is a reality that has to be faced.

In the end, at least for me, what matters is how much an artist/musician can make money to continue working. The entertainment industry at a macro level has for many years been inclined towards works that can be sold to large masses, because the capital required to make these works - such as films - is also large, influenced also by the costs required for marketing and distribution.

With a smaller scale, and lower costs for marketing and distribution, there should be a place for creators who have a mass of no more than 1000 followers though.

For me, NFT or any technology that will come to enliven our entertainment experience, only part of the strategy or product that needs to be considered for a sustainable working career.

- Disclosure: this guest entry was created by Ario Tamat. Ario is Co-Founder and CEO Karyakarsa, an appreciation platform for Indonesian creators. He can be contacted at ario[at]karyakarsa[dot]com.