NFT music market trends

It is a collaborative research document to analyze NFT music market trends by genre, label, platform / protocol, tools and more, and covers over $ 86 million in primary sales.

This is what sets an NFT apart from a vinyl record, for example, it’s the smart contracts used to create NFTs that allow creators to deliver more benefits to fans directly over time, in a modular way by give a sense of personal connection and / or social status. Music NFT also comes in the form of music rights, which may include royalties of artist music and ownership rights during the NFT sale.

Over the past month, several contributors from the Water & Music community have collaborated to analyze the dynamics of the Music NFT market, based on data from our Music NFT database, which is for members only. This report is the result of an in-depth analysis of NFT music sales in 2021 by artist genre, platform / protocol and label affiliation, covering over $ 86 million in revenue. While their database is not exhaustive, it is certainly the most comprehensive view of musical NFT activity found in the world today.

The main experiences from this research:

  • 20 new NFT music platforms launched in the second half of 2021
  • NFT music revenue skyrocketed in early 2021 with mega celebrity-driven declines with a slowdown over the summer, rising slightly in the fourth quarter.
  • During the year, independent artists accounted for the majority (64%) of NFT’s sales, while large label artists accounted for the minority (36%).
  • The average price of NFT music remains expensive but has fallen over time. Between February and December 2021, the average NFT music price dropped by 46%, from $ 18.8K to $ 10.2K per share. unit. The median fell 27% over the same period, from $ 1,000 to $ 825 per share. shares.
  • The most popular category by revenue share was electronics (65%) followed by hip hop (19%).

  • The competition in the NFT music market has increased significantly. At the beginning of the year, Nifty Gateway dominated with over 60% of NFT revenue from mainstream music. At the end of the year, however, the leader (OpenSea) had only a primary revenue share of 28%, and faced competition from many new music NFT platforms such as Sound, Pianity and Nina.
  • The use of non-Ethereum blockchain protocols has also diversified significantly. In the first half of 2021, Ethereum had dominated with a market share of over 90%, but claimed only about 50% of the declines in the second half, as alternatives, including proof-of-stake chains like Tezos and L2 chains like Polygon, have been more adopted.
  • The usefulness of NFT offerings has also varied considerably. In addition to various forms of NFT media (eg audiovisual art, music videos), artists have experimented with various forms of complementary offerings such as royalty shares, usage rights, NFT splits, online / offline bundles, live music and community.

2021 has been a banner year for music experimentation and Web3. Monthly sales averages fell more than 90% in May after peaking at the beginning of the year, but have since risen slowly. The dramatic decline in music NFT activity from the spring high reflected the NFT market as a whole. However, we noticed a marked increase in activity towards the end of the year due to a number of new music-related NFT-focused platforms launched in late 2021.

Looking at the year as a whole, a few artists dominated the market, especially in the highest sales we saw in early 2021. A cluster analysis conducted by the collaborative researchers showed that five artists stood out as leaders representing the activity we have seen. of the year: 3LAU, Deadmau5, Tory Lanez, Grimes and Steve Aoki. With nearly $ 18 million in NFT sales in 2021, 3LAU has become a leader in music NFTs in 2021 for several reasons. Of the best-selling artists we tracked in 2021, 3LAU did not sell the most units, but had the highest average sales per year. Its royalty-driven NFT Royal music marketplace, which we’ve discussed in previous studies and again below, secured $ 71 million in seed and Series A funding rounds last year.

Independent and unsigned artists comfortably dominated NFT music sales in 2021. Artists from the big labels certainly attracted a lot of attention in the market at the beginning of the year – but the allure of the absence of middlemen along with direct control over rights and access to artist environments has created much activity vis-à-vis NFTs for the indie sector.

Questions left

There are still questions about whether royalty-bearing musical NFTs can be classified as titles? Web2 streaming royalties are already meager, raising questions about whether buyers will ultimately generate a return on their investment. Royalties and license terms are usually established through a legal contract that exists outside the blockchain and separate from the NFT smart contract. Token licensing models that give NFT holders commercial rights (usually in full) to exploit the creative works embedded in NFTs have slowly gained ground in music.

Creating Web3 communities is also a challenge for artists and requires additional team support, not to mention basic knowledge of technology. There is a clear need for resources for savvy artists to think strategically about their fan travel in a native Web3 context. The best is ahead …

Leave a Comment