 So since I've been at this music business thing for a while and have covered music marketing and technology for well over a decade on my old blog news formation, writing for alternate press, and most of all on this channel, it's come to be that people depend on me to stay up on technology and explain it to them. Sometime last week I would wake up every morning and see half the people I know texting me asking, Jesse, what is with these NFTs? Am I losing a ton of money by not doing this? What the hell? The tweets came and the message board posts. So as the biggest nerd in music business and tech on YouTube, I decided I'd better hop on putting out a YouTube because truly hell has no fury like a bunch of scorned nerds. So in this video, I'm going to tell you what the future of NFTs and music looks like and why this is a lifestyle, not a trend. Hi, I'm Jesse Kennan, a music marketing nerd who's teaching musicians how to grow their fan base from zero to 10,000 fans, and this is music formation. So a lot of you are asking, what the fuck is a NFT? And I'm going to break that down in less than 30 seconds since there's much more fun things to talk about. A NFT is a non-fungible token and it's part of blockchain technology that allows you to verify ownership of something that is digital. Just as you can buy fake versions of the Mona Lisa, but we know which one is the real one, this allows us with digital files like waves, MP3s or gifts to say this one is the original and this person owns it and have it not be stolen, which then creates value. And that right there is why we're now interested in these for musicians since they need money ASAP, if you haven't noticed. So basically this is technology that allows you to sell gifts, songs, pictures or other digital assets as a one off or even a 10 off and have the buyers be able to prove that they are the owner of a rare or limited in quantity digital asset. OK, so I was skeptical of NFTs until this weekend. Since all of the most annoying people I know who lost their life savings on Bitcoin or GameStop stock, we're now talking about this, which turned me off, but some who prides themselves on being the person who could find good sources and do a ton of research that helps me not do embarrassing takes. I figured it was time to hit the books and talk to some smart people. And now I have my take. And that take is I regret to inform you that the most annoying person in your feed who talks about Ethereum all day is unfortunately correct. NFTs are going to be the most consequential change in music since streaming music and iTunes before that. I also say YouTube algorithms encourage us YouTubers to be hyperbolic to get clicks. And some of my peers really abuse this, but I try to not. And I really do believe what I just said or I wouldn't say it. I think you will get that as you hear what I'm talking about and what I describe as going to be the future in these NFTs. Let's first talk about why that is one of the most over quoted phrases about the music business is the Hunter S. Thompson quote, the music business is a cruel and shallow money trench along plastic hallway where thieves and pimps run free and good men die like dogs. There's also a negative side. And the reason this is relevant to what we're talking about is you have never seen a bunch of people who will try to grab a quick buck like this business. And even before it became far less profitable post the 1990 decline, they would put their names on goddamn slap bracelets, fanny packs and tons of other cringe just to make a goddamn buck. Seriously, how much merch have you seen that no one should be wearing yet they will do anything they can to make sure that they get that out there and profit off of it. And I'll also say this, as someone who manages some successful musicians and bands, I'll give you a peek behind the curtain of this oh so glamorous lifestyle. The musicians you manage will constantly text you wondering about income streams at 3 a.m. At least every other week and any opportunity to make money especially if it doesn't require the musician putting in much effort will be exploited to the fullest extent as they will ask you about it until you make sure it's happened. Even more so they will bug you if it means you will do all the work and they will just need to approve a webpage which they'll then take a week to do. No really, I'm not chated. To make matters worse, the major labels have those horrible boards of directors. You know the things with an insatiable thirst for profit that make capitalism gone uncheck the most destructive force in our world? Well those corporate boards are already calling every single legal department to make sure they find a way in their contracts to be able to sell and exploit NFTs to the full extent so they can keep their quarterly earnings going up so shareholders and investors are as happy as the pigs and shit that they resemble. But one of the other reasons this is so consequential and you will see musicians dive into this as fast as possible is it offers income that pays for years to come. So aside from musicians being able to do the initial sale and getting money from it, the real game changer is they can keep a percentage of the NFT sale. So let's say someone buys an asset of an artist's logo for this album cycle at $10,000. The artists can then designate in that sale that they keep 10% of all future sales. This means they get a percentage of the sale every time a sale happens of this NFT. And then with you doing no work at all, if your fan base keeps growing and demand grows and you need sales for $100,000 next time, you the musician get $10,000 of that. And let's say someone sells off your logo because you've been putting out trash songs after deciding to explore your experimental side and it then sells for $50,000, you still get $5,000 for the sale when someone dumps you. I wish I got that for some of my breakups. But I know some of you smart people out there are thinking, well, yes, musicians will supply the NFTs, but where's the demand? By the very laws of demand that govern how our economy exists, there's a demand for this because we have tons of people who have money in this society and passion towards music along with the clout that surrounds it. And because this business will try any way to make money, they're gonna try with all their might to will this into existence. But trust me, that won't be hard. I don't know if you missed this, but there's a whole generation of people who think they are Elon Musk without the hair plugs. We're going to think they can invest in a musician as they are coming up and buy their logo as a way to gamble on that they understand the music business. This is far more glamorous than competing with a bunch of Reddit incels for game stock, stock tips. And if you don't think tons of people are primed to want to do glamorous stock trading around musicians, you've apparently never levied the hell I have of being on the bathroom line at a music festival and heard some bros say, damn, yo, Tim Cook is a fucking gangster. I don't know if you've heard, but we live in a society. And that society is filled with a bunch of people with too much money that they spend on things they think make them look cool. And the opportunity to own a piece of the ultimate cool, a music artist, is clout like there's never been before. But let's be real here. The big money sales are gonna come from someone who thinks they're gonna be managing a hedge fund soon. But the majority of the sales will be from people today who buy rare vinyl. It will be for bragging rights and display rights. They're gonna buy some of those digital frames and they're gonna Instagram it inside that digital frame that they bought for the art that they bought in the NFT and show it to everyone who has the misfortune of coming to their house for dinner for the rest of their mouth-breathing life. Anyway, let's discuss what NFTs are gonna look like as far as how musicians will make money from them. There will be a few ways these become huge money makers for musicians. The first phase of this will be musicians selling art. This can be their logo, album cover, or some other iconic art. The reason this will be the first phase is this is what the technology is already allowing to be done easily. If you notice the artist Ilmine who's already made a ton of money off selling NFTs of his music is only selling samples because no one has figured out how to sell songs yet since musicians will need lawyers to make user agreements that stipulate that the buyer only owns the file of the song but does not control its use. Anyway, artists already have album art, t-shirt designs, concert photo prints, though those are a little bit complicated because the photographer has to be involved in the sale and they have to get royalties from it. But trust me, they're broke from no one going to shows right now and them not being able to photograph them so they'll be psyched for the fucking money. And these will all get sold so fans can buy in and own a piece of the artist that means the world to them. Now some people are talking about selling trading cards from musicians since that's already what's being done from the NBA but if you watch that recent excellent documentary Feels Good Man, you watch this totally lame bro walking around with a baseball card like NFT of Pepe the Frog which sold for $320,000 but this is just not going to catch on with musicians. Trading cards I don't think have ever been the culture but art has always been the culture and displaying the art around music is much more in line with artists than sports bro things. Instead, there's going to be prints of the album, art, logos, and concert photos and these will be readily available to be shown off for Instagram branding rights. When the artist gets that iconic photo of them, guess what? The NFT will go on sale and what we will start to see is Specs First Resolution and people will buy digital frames to make sure they can display them avidly as they have a one-of-a-kind piece that they now have ownership over. And also from the jump and this is already even starting there's going to be ways to do let's call it a digital merch. The artist Muramasa who I'm a huge fan of has already made some glyphs which just seem like drawings to me and Yeji made a digital pet which you're watching on the screen now and yeah, things will get weird. I could already see selling exclusive Instagram filters where only a few people can use the filter asset and have a license of it. The next phase will be figuring out how to sell master recordings of a song and I already talked about how I see that going down but that will be the biggest share of what NFTs really take over music and start making it profitable. But it will really be bragging rights since these will be solely limited and trust me when I say those legal limits will go to court so many times we all want to gouge our eyeballs at after how many articles we're going to have to read about some little shit with a lawyer uncle not reading the user agreement and wondering why he can't play that song and collect royalties from it and why he doesn't have the right to the publishing of it. We live in hell and this will be a flavor of it. Now I know artists like Blau are already doing this and making 11 million dollars selling things like limited edition vinyl pressings and unreleased music but this isn't actually selling the master recordings yet and trust me when I say you will see the artists who own their own masters able to act really agilely here and do lots of really interesting marketing and capitalization before the major labels can gain their footing through all the legal hurdles they're going to have and to give you an idea of how much attention this is going to take up and how much of the discourse of what we talk about music this will take up I want to talk about exactly what this will look like. Every day you will open the internet to tweets it and posts and blog posts around when a song is going on sale. Some artists will put their new song up on sale before it's out so you bet on their past work anticipating this next song will bang as well. Some will put it out 24 hours after release date so people can't quite tell data on how much people liked it but instead we'll bet on that we'll judge it on their own enthusiasm towards the song. And some will put it on sale 30 days after the song is out so they can sell it upon demonstration to potential investors people like the song and it's rising in popularity and will be a good investment for years to come. Trust me every one of these tactics will be used and we will all begin to speculate the artist knows the song is bad since they put it up for sale before anyone heard the song and I will have to discuss this at the bar with friends when I really just want to discuss how break-ins' punk 2 is the best record of the last year. No, but seriously it will also spark a lot of artists who find this all totally gross and rebel against it but remember that's always existed I mean in the 90s Fugazi refused to sell merch tons of bands wouldn't put UPC codes on their albums or even sell CDs for that matter there will be a stark divide of people who do not want to participate within this and that's fine that's how it's always been with every technology another thing that's going to be sold is tokens of live performances you know those high production live streams everyone's doing in quarantine well from here on out 1 to 10 people will be able to own that NFT and it will be a way to make some extra money for the artists when they do those streams when live shows come back there will be video of that show and you will have the opportunity to buy the NFT of the recording of that show people will figure out best practices for how to get some extra money from all of these things and we will see NFTs in every pre-order of a record or bundled with every single live stream and merch bundle as well VIP experiences and meet and greets are all going to come with NFTs of perhaps your selfie or some other digital asset since it's one more thing to help make it more exclusive since NFTs are all about exclusivity and so are meet and greets so they will go hand in hand so let's go through some of the pushback I'm going to get from this video since I love to anticipate what my comments will be since mostly these are texts my friends have already pushed back against beyond so I'll answer some of the best ones I've gotten so far how will small artists with less than 10,000 fans be able to capitalize on this? now if you watch this channel you know I actually focus mostly on marketing for DIY musicians with small fan bases so I've been thinking a lot about how this will affect them sadly there's a trend in music and for that matter this country where those on the bottom get no help for benefits and if anything the money all goes to the few at the top and the bottom gets drained of funding and I hate to say it this is probably going to be another place where that happens I really only see the majority of this money going to groups who have amassed an abundance of enthusiasm and the groups who don't have a lot of fans just don't have enthusiasm but let's also remember it only takes one super fan to make a huge bid and make a big difference in your funding and a lot of us in the music business have been longing for the day that we have a tip jar where funding can go directly to musicians and not through a middleman I think one of the coolest things about NFTs is they can be a way that fans can give a musician any amount of money they so choose and it can really help boost up their funding while the fan gets something back and this can kind of act like a tip jar Jesse the artist can't sell these songs as NFTs they don't own their masters their labels do oh boy apparently you haven't met the musicians and their managers they will find any orifice to fuck a record label over including the piercing of the ear if the opportunity arises the artist will sell sheet music or a midi file which they will own since they own their songs publishing or they will re-record the song and they own the master of that musicians have a lot of the power here but let's not underestimate that a record label will also fucking an artist if they can find a hair follicle of a hole to do so the record labels will scour their contracts and find ways to sell these as well but regardless of whether the musicians find a way around selling their songs around the record label or not if you have the money you will soon be able to buy your favorite song as an NFT and let's remember just as a song is the most powerful marketing tool for musician this is the most valuable thing musicians have to sell so you're damn right that they're gonna be selling them is this just a trend come on man what the fuck is a trend where cd is a trend they will basically be non-existent in a few years so they had a 30-year run but to most people right now CDs are totally worthless and yes they were a trend but what will come first is they will bring in a ton of revenue for the artist that sell them and that's what matters not their lasting value how much money will we see musicians make from this any smart analyst will tell you tons of fools will rush in and at some point the market will see a peak where a lot of people are making a lot of big moves that are happening over a lot of purchases and then the actual value of NFTs will become more stable and at some point it will all crash and die is that in five years 50 years or 500 who fucking knows but what you should focus on is that cd example I just made they served a purpose to make the music business the most profitable it has ever been and brought in tons of new revenue as people re-bought the stuff they had on vinyl or cassette and made musicians tons of profit since they had a high retail value the music business used to embrace switching technologies like vinyl to cassette and to cd every few years since it meant people re-bought their technology now with NFTs they can continually profit off trading and trust me that's going to excite everybody and the amount of money that will be worth is more than the investment anybody will be putting in to get into this market um isn't the market going to be super saturated hell yes like anything else they will be trying to sell you NFTs of polyshore movies no one even enjoyed when they first came out and just like there's 60 000 songs being uploaded to Spotify every day most of which never even get a single listen guess what there's going to be a huge flood of this market but none of that ever matters everybody just ignores the noise and focuses on the signal there will be tons of tales of mishaps of people who paid way too much money for NFTs that aren't worth anything that's how markets work y'all and trust me the most annoying thing of all this will be every know-it-all dickwad who used to be able to tell you about record pressing color variants of vinyl will soon instead pull out an app and tell you how much the NFT of a song is valued at oh always remember even if this world is fun and we have some nice things hell is other people and despite those people i'm excited and my skepticism towards NFTs has lifted so this is youtube where you discuss things in the comments and let me know any thoughts you may have as i will do a follow-up video to this and answer your questions in it i want to learn and discuss this stuff show me the cool shit you're seeing and i will do the same especially if you join my forum on facebook which is linked below in the description please like and subscribe since if you're interested in music marketing or smart discussions on music this is the channel where we're doing it thanks so much for watching