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How to Tokenize Music

Image of Ben Plomion
Ben Plomion
A selection of electric guitars hang from wall-mounted racks.

The same modern streaming platforms that make digital distribution possible also pay fractions of a penny with each play. Thankfully, artists are finding new ways to engage directly with fans by selling exclusive tracks, assets, and collectibles. There’s just one problem — understanding how to tokenize music without falling into the same pitfalls that plagued the old ways of digital distribution (or discovering all-new ones). Thankfully, the process is far less complicated than even the biggest names in music might realize.

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What Is Tokenized Music?

Examples of Tokenized Music

Haleek Maul

Kings of Leon

Snoop Dogg

Grimes

How to Tokenize Music and Industry Collectibles

Choosing Your Asset

Choose Your Tokenization Partner

Pick Your Music Token Distribution Model

For Physical Items, Vault Your Asset

Distribute Your Tokens

Ready to Get Started With Music NFTs?

What Is Tokenized Music?

Tokenizing music is the process of taking unique musical assets — such as exclusive songs, music videos, demo tracks, or signed instruments — and linking their value to a non-fungible token (NFT). In this format, fans are not just customers but also shareholders of a musician’s property.

When handled correctly, music NFTs ensure that every digital “pressing” of a musician’s work is a unique artifact, much like a vinyl record. For consumers, these artifacts are an opportunity to buy exclusive collectibles — in physical and digital formats — and either hold them for their inherent value or resell them on blockchain marketplaces. Unlike second-hand music, however, the value of music NFTs can increase over time while also contributing revenue directly to the artist.

In a time when traditional streaming media usually limits musician revenue, the benefits of music NFTs are difficult to ignore. To learn more about these benefits, get in touch with Dibbs today, or sign up to receive updates on what we can offer your brand using the form below.

Examples of Tokenized Music

Though they’re still a relatively new medium, music NFTs have already proven highly lucrative for artists, generating $25 billion in sales during 2021 alone. Here are some of the most profitable examples:

Haleek Maul

Within a single week, rapper Haleek Maul earned an estimated $235,000 by selling four tracks that comprise his 13-minute Inner EP. For comparison, his estimated annual Spotify earnings only pulled in $178. (Yes, that’s $178.00, not $178,000.)

Kings of Leon

When Kings of Leon minted music NFTs alongside the release of 2021’s When You See Yourself, the band earned over $2 million in sales. Their range of NFTs included digital copies of the album, exclusive artwork, and front-row seats to Kings of Leon concerts for life, as well as access to exclusive physical albums.

Snoop Dogg

Snoop Dogg has produced several experimental NFT releases, starting with his collection A Journey With the Dogg. Buyers received a digital package that included art inspired by the NFT movement, musings on his early career, and the original track “NFT.” Not willing to rest on his laurels, Snoop produced additional collections, including one that earned $44 million in five days.

Grimes

In early 2021, Grimes launched the NFT artwork collection WarNymph Collection Vol. 1. These offerings included new art, poems, and the exclusive music video “Death of the Old.” As a bonus, some NFTs were bundled with previously unreleased songs and demos. When the sale finished, the entire collection had sold for $7 million, making Grimes one of the most successful artists in the NFT space.

How to Tokenize Music and Industry Collectibles

It may not be obvious at first, but musicians often have an untapped well of physical and intellectual property perfect for being tokenized and sold on the blockchain. This can provide an immediate payout as well as a recurring source of income to help fund the rest of their career. Here’s how to get started.

Choosing Your Asset

Naturally, the first step is determining which asset you’d like to tokenize. Will you produce an original collection? Launch an unreleased track? Sell the remaining posters from your most popular tour? Signed instruments? All of the above? In some cases, these items may need audits to determine their starting value after minting the tokens.

Choose Your Tokenization Partner

Understandably, few musicians also have experience as blockchain developers and engineers. That’s why it’s important for artists to find a tokenization partner or blockchain platform that can lend their technical expertise and business acumen to each project. These partners typically handle smart contract development, token issuing, and other factors that the musician or producer can authorize.

Pick Your Music Token Distribution Model

Given the wide range of musical assets available for sale, each NFT should serve a specific purpose. For example, a music NFT for a digital album will need to unlock access to encrypted files for playback. That digital link won’t be necessary if you’re selling a guitar used during a concert performance, though that requires its own extra step we’ll get to shortly.

It’s usually best to narrow your focus to token distribution models that reflect your goals for each music asset. Here are a few examples:

  • A “single edition” NFT or 1/1 is a unique track or album that cannot be found anywhere else, much like how an original painting can be photographed but never fully replicated.
  • “Open edition” music NFTs are produced in unlimited numbers for a limited time. Once this timeframe concludes, the tokenized music will only be available from the original purchasers.
  • “Limited edition” refers to tokenized music with a fixed number of tokens, which lets artists directly control how much of their work will ever be in circulation.
  • Finally, physical-backed music NFTs can bundle songs and real-world memorabilia, such as vintage records, rare posters, or even the artist’s clothing!

For Physical Items, Vault Your Asset

If your asset is a physical commodity, such as a signed jacket or drum set, it’s vital to protect and authenticate its value. The best choice is to audit the asset and immediately secure it with an insured vaulting service. Your tokenization partner can usually handle this step — some will store the collectible on-site, while others work with dedicated security firms. You can find out more in our collectibles guide, How to Tokenize an Asset.

Distribute Your Tokens

Once the musician and their tokenization partner have sorted the details, it’s time to issue and list the music NFTs. These tokens can then continue trading on primary and secondary markets to increase their value — and your revenue, since each one is permanently linked to you as its creator.

Ready to Get Started With Music NFTs?

By understanding how to tokenize music, artists can be well-equipped to navigate a growing music NFT market. Yet despite this potential, any new technology or sales channel has risks. It’s vital to choose tokenization partners who understand the market and have the technical expertise to get your tokens safely into fans’ hands, giving you a new way to connect, a new revenue source, and peace of mind for your brand.

Learn more about how partnering with Dibbs can benefit your brand.


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