With new technology arriving that has the potential to change the music industry, I took part in the sale of the first-ever mainstream album sold as an NFT. This is how it went.
Attending gigs and live music has always been a staple in my life… except, of course, over the last year. The pandemic forced me to confine my love of music to the four walls of my home or by plugging in headphones on a socially distanced walk. But my music-based inner-turmoil is nothing compared to the impact the music industry has faced. Some music venues have shut their doors for a year now and many will not be able to open again due to loss of revenue. Artists have also had to cancel gigs and tours that often bring them more money than album sales.
This crisis forced the music industry to innovate, to think of new ways to make money during this lockdown period. Technology played an important part in making this happen. One area that shone for me was the improvement and added interest in live music streaming. More artists were willing to give it a go over the past year as production values grew and innovation followed. I saw Katie Melua perform live through my computer screen to an empty Ballroom against sweeping camera angles and a few wardrobe changes. I even watched Travis Scott perform a live gig as a gigantic pixelated monolith inside the popular video game, Fortnite.
This growing innovation between music and technology has also moved into other spaces. Like many out there, I’ve been intrigued by and sucked into this whole blockchain and crypto technology world. It’s within this that I discovered NFTs and their recent linkup to the music industry.
What Exactly Are NFTs?
NFTs are a hot topic at the moment. You can’t flick through a news website without reading about them. For those of you not in the know, NFTs (or Nifty’s as they’re affectionately known) stands for non-fungible tokens. They operate as part of the blockchain, just like cryptocurrencies such as Bitcoin or Ethereum, but the difference with digital cash assets like these is that NFTs cannot be exchanged for something else that is exactly the same. Each NFT token is unique, which makes them collectible.
The point is, they have a finite amount. They can be art, moving gif images, or even tweets (the owner of Twitter recently sold his first-ever tweet as an NFT for $2.5 million). In the real world, physical collectibles such as Pokémon cards could be seen as similar. For example, you can buy rare Pokémon cards that are more valuable because there are fewer of them. People could find these cards in a pack then sell them on for a much higher amount. It’s the rarity that makes them valuable. The same can be done with NFT tokens.
In fact, it has been done with a range of digital basketball collectible NFTs called ‘NBA Top Shots’. These feature short, moving images of basketball stars that are selling for crazy amounts of money, and just like trading cards, you can buy packs and sell on the rare ones to the highest bidder.
It’s still confusing to many and I can see why. A lot of people just don’t give value to digital assets and it’s confusing to think that images can be sold for thousands as an NFT, yet you can just download that same image yourself for free. What gives NFTs value is the fact they are digitally stamped, digitally numbered. They are unique. If there’s one thing that many of us love, it’s having something that no one else has and that’s why people are prepared to pay money for them.
Kings of Leon Release Their New Album As An NFT
This brings me onto my own foray into NFTs and the music world. You may have heard recently that Nashville band, the Kings of Leon released their new album, ‘When You See Yourself’ as an NFT. This has the potential to change the record industry for good and send it off in a myriad of different directions. Being a fan of the band and intrigued by the technology, I decided to purchase one. I wanted to be part of digital music history.
So, what would I actually be getting with this purchase? I’d get an NFT featuring a special version of the album artwork. Coupled with this I’d also get a downloadable music file as well as a physical special edition, gold-coloured vinyl record of their latest album. There was also the possibility that other benefits would be added on at a later date. The NFT would only be on sale for two weeks and once the sale was over, no more would be made. Ever. There was the collectible hook and that’s what dragged many in.
The band teamed up with a company called Yellowheart to achieve this who were actually co-founded by another well-known band, The Chainsmokers. Yellowheart is a fully decentralized platform that runs on a public blockchain. In basic terms, a blockchain is a digital ledger that can continuously keep an updated record. In the case of cryptocurrency, it can keep track of which digital wallet holds a certain amount of, for example, Bitcoin. In the NFT world, and with the new Kings of Leon album, it does the same. It knows how many NFTs have been purchased, where they are stored, and how many are available.
What Does The Music Industry Get From NFTs?
But how does this benefit the artist? Well, whoever creates the NFT is able to collect a part of the sale. This could go direct to the artist or can be split between different people. On top of this, the creator has the option to claim a percentage of any resales. Say someone buys an NFT then decides to sell it, because everything is recorded on the blockchain, the creator could set it up so they would instantly get 10% of any resale. Artists and the music industry have never really been able to profit from resales before so they are very excited. On top of this, it could be useful for other worthy projects such as stopping ticket touts selling at extortionate prices, which is something that Yellowheart are actually looking into.
The NFT Journey Begins…
The first stop on my NFT purchase journey was the Yellowheart website. There were instructions on the website about how to purchase, albeit pretty basic, and also a link to a Youtube video that went more in-depth. The company also had the foresight to create a Discord. Discord is basically an online message board where questions can be asked and information swapped, in this case, regarding the purchase of the NFT. A great idea with actual Yellowheart employees on the message board to help out.
To actually buy the token, first of all, you had to set up an account on an NFT marketplace. This is a place where people can sell NFTs and also where people like me can buy them. This NFT was using a marketplace called Opensea which sells all kinds of digital assets using blockchain technology, from artwork to collectible trading cards, or even domain names.
Creating an Opensea account was pretty painless but then you have to also set up a wallet. This is where your purchases will be held and where you can store or sell your NFT. The Yellowheart website recommended I set up a wallet called MetaMask, which then links directly to the Opensea website from a web browser. As you can see, things were already starting to get a bit more complicated which will put some people off. The process is not as streamlined as it could be, but as more people set up wallets and the technology grows, it’s bound to get easier.
So, I now had my marketplace account and an online wallet that works in conjunction with said marketplace. Almost there, right? Well, actually, no…
Cryptocurrencies Enter The Fray
In order to buy the NFT, I needed Ethereum. Ethereum is a cryptocurrency that many see as the next most popular after Bitcoin. Having already dived into the world of cryptocurrency, I already had some Bitcoin and Ethereum. If I didn’t have this, I would have had to set up another account at another marketplace – one for cryptocurrency – and purchase some Ethereum. If you were completely new to crypto and NFTs that would already be the third account you would have to set up. It’s a pretty time-consuming endeavour to be on the potential edge of digital music history…
I now had my Opensea marketplace account, my online wallet that connects to the marketplace, and Ethereum to buy with. I was getting there. I now had to transfer my Ethereum into my MetaMask wallet. To do this, it would incur fees. One thing I would say that needs to be improved with this whole process is more explanation about these fees. At this point in time, it can be expensive to transfer cryptocurrencies and that means it’s an added cost to the purchase of the NFT. The transfer of my Ethereum into my Metamask Wallet cost £12. This was charged by the crypto marketplace I was using to transfer my Ethereum.
This is a difficult process to get used to. You have to make sure you have the address of the wallet you’re sending the Ethereum to (which will be a long code of characters), then you will need to use this address to send the cryptocurrency over to your wallet. I managed to do this and, hey presto, £12 down and a few minutes later my Ethereum was in my MetaMask wallet ready to purchase the Kings of Leon NFT. Or so I thought…
To buy this NFT it was going to cost me 0.035 Ethereum. In sterling, at the time, that was £48. This already felt a little steep for a physical record and a digital collectible, but I just thought screw it, I wanna be part of history. I had my 0.035 ETH in my wallet ready to go, so I hit purchase. ‘Processing…’ came up the message. Good start. Then another message followed: ‘You do not have enough Ethereum in your wallet to cover gas fees’. Wait, what? What the hell are gas fees?!
Gas Fees – A sticking Point For NFTs?
Gas fees are what it costs in Ethereum to process your purchase on the Blockchain. They are basically payments made by users to compensate for the energy in computing power that it takes to process your NFT. These gas prices fluctuate depending on how busy the network is and how many people are sending transactions.
Gas prices have become extortionate lately because there are so many people buying Ethereum and sending transactions. It’s a problem that crypto geniuses are working on and gas prices are tipped to tumble later on in the year, making the system a lot more user-friendly and cheaper. But for now, this meant my gas fee to buy the Kings of Leon NTF was £28. More than half the price of the actual NFT! That would bring my total cost of purchasing the NFT and its included bits and pieces to £88. That’s The NFT, The Gas Fees, and the Ethereum transfer fees.
£88 is expensive for the average music fan. It’s an expensive piece of electronic art accompanied by an expensive music download and physical, limited edition vinyl. It’s also an expensive risk if you’re planning to sell it after the auction closes because there is no guarantee you’ll make your money back.
However, I’d come this far and I wasn’t backing out now. Next step…add more Etherum to my Metamask wallet to cover the gas fees. Unfortunately, this would also set me back another £12 in transaction fees. Let’s raise that total cost of purchase up again shall we? It’s now cost me, pretty amazingly, £100 on the nose. Not the milestone I wanted to hit.
Let’s recap the process so far. I went to get some basic instructions from the Yellowheart Website. Signed up to the Discord for added support and help. Signed up to an NFT Marketplace, signed up to an online wallet that works with said NFT marketplace. Transferred Eteherum to my online wallet which works with the marketplace (you’ll have to sign up to a cryptocurrency market place as well if you haven’t already done so…). Tried to buy the NFT but didn’t realise I had to pay gas fees. Sent more Ethereum to my wallet to cover gas fees. Paid further transfer fees and now I’m able to purchase. Phew.
I Purchased an NFT!
I clicked the purchase button and this time it went through. Success. After a few minutes, my Kings of Leon NFT had arrived in my Opensea account. The NFT has a pretty similar design to the actual real-life album cover with two separate monotone, blurry images of the band but it also had a golden background. On top of this, what really makes the NFT stand out is the constantly expanding and contracting cherry image in the bottom right-hand corner. It’s pretty cool, but I wouldn’t say it’s worth £100 of cool.
Even though I had the NFT, I was still a bit baffled about how to listen to the album or how the physical vinyl record was going to reach me. I hadn’t added a mailing address at any point during this whole meandering process and the Yellowheart website was a little sparse on details after the actual purchase. I guess you have to remember this is a completely new process for everyone; the people creating this technology are also still learning what people will need and the best way to provide their service. It’s never been done before. That’s why they set up the Discord, so that’s where I headed.
Reading through the comments of people in the same boat as me, it was clear there was a lot of confusion. This process is new for many people and pretty complicated so I wasn’t surprised. ‘Where’s my NFT?’ ‘How do I add Ethereum to My Wallet?’ ‘I haven’t received my NFT!’ ‘When do I get the vinyl?!’ These were just some of the many questions that people deservedly needed answers too.
Support was there in the form of moderators and kind-hearted individuals that were more in the know than I was. It was a community all trying to learn and take baby steps with a new and confusing technology. This was the best idea Yellowheart had in dealing with queries and getting everyone on the same page. Questions were answered, people were (mostly) satisfied, and the announcements section was constantly updated to try and cover all the main questions that kept coming up.
The questions were usually to do with the actual physical vinyl and how it would be received, or about selling on the NFTs and if you would still get the physical record. Great questions. The answers came back. The vinyl would be redeemable when the sale ended after two weeks. You would be able to redeem your vinyl record by confirming your details at the Yellowheart website. You could redeem the downloadable album straight away, but it was only a one-time deal. Once downloaded, that was it. You had a year to redeem the physical vinyl. For me, there still seemed to be a lot of unnecessary steps in the process to complete the transaction. This definitely needs to improve in the future.
A Young and Confusing Industry
For those people that had bought the NFT hoping to sell it at a higher price at a later date, the deadline of a year to claim the vinyl could cause some potential issues. Some people who bought the token may not have been fans of Kings of Leon at all. They may have just been fans of new technology, fans of NFT’s in general, or wanting to make a pretty penny when the sale was over and the tokens would potentially become more valuable. However, if they wanted to sell the NFT in its entirety with both the physical and downloadable album intact (both a one-time deal, remember), they only had a year to do so. It was a given that an NFT on sale including the vinyl record was going to be more valuable than selling one without. This brought up the conundrum and it’s one that only the future will be able to solve.
I purchased the NFT within the first couple of days of its sale and ended up with a token that was numbered in the low 2000s. The sale finished after two weeks. The amount of token’s minted (the term for when an NFT is created) came to a grand total of 6486.
With the sale finished, the Discord is still buzzing with questions, queries, and confusion. There are still teething problems, especially with the physical product. Yellowheart had to wait to find out the final figures to be able to produce these one-off special edition vinyl records which now means the turnaround time to send them out to the purchasers could be up to 4 months.
That’s a long time to wait for a record that is available instantly on streaming services or as a normal edition vinyl. This is something that will need to be looked at in the future. Oh, and I also found out I was to be hit with one more cost… it was revealed that shipping to the US would be free, but you would have to pay for it to be shipped anywhere else. I live in the UK so it looks like I won’t be settling on that nice round (yet expensive) sum of £100 after all.
Some people are already trying to sell off their NFT’s for extortionate prices, which I’m sure those with the lower end numbers in the top 100 for example, will be able to do so. Think of it in comparison to owning a low numbered edition of, let’s say, The Beatles White album on vinyl. Those are worth thousands. If people are willing to pay for them, there’s a market.
Nifty of Shifty? Final Thoughts
So, is NFTs collaboration with the music industry a nifty or a shifty idea? At this moment in time, for me, the process and price to purchase NFT’s and all the added extras that come with them feels too complicated and expensive for the majority of consumers. It’s an amazing technology and has the potential to be a real game-changer for the industry, bringing another income stream to more independent artists and also bringing fans closer to the favorite bands and singers. But like all new technology, it’s going to have its bugs and issues. The system and price to purchase will, hopefully, improve over time if it proves to be popular.
Me? I’ll be holding onto my NFT and redeeming that physical vinyl. I’m a fan of the band and I want to own a piece of digital music history. I’ll listen to the record and enjoy it even though this would lower the value if I ever wanted to sell. I believe that NFTs in the music industry are going to be here to stay and have many more uses than just unique digital album covers coupled with physical products. There’s scope to change the entire music industry as we know it today, but whether this will actually benefit fans or just make them more out of pocket remains to be seen. For now, I’m happy to sit back and listen to my record (when it arrives in four months…) and watch as this new and intriguing technology grows and improves.