Music NFTs Are Like Battle Jackets

All photographs are taken by Peter Beste at peterbeste.com

Symbolic acts, so vivid

Yet at the same time were invisible

-Death, Symbolic, Symbolic (1995)

Music fans have long expressed their individual cultural identity, from showing off their band shirts, to collecting vinyl, to broadcasting their Spotify Year in Reviews. The culture is embedded into the music. Heavy metal, my genre and culture of choice, is a great example of this. We love collecting merch just as much as listening to the music itself. Wearing a band’s merch, whether it’s at a show or in a coffee shop, is a statement. It’s a flex and a signal for other metalheads lurking from the underground that their devotion is shared. For metalheads, the ultimate flex is the battle jacket.

A fashion statement popularized by the metal scene, battle jackets are a collection of patches of music-related art stitched onto a jacket. Each patch symbolizes a unique connection to the music, perhaps it could be a band whom you saw live for the first time, or an album that cut deep at a vulnerable moment in your life. Taken as a whole, it’s the ultimate symbol of provenance distinct to a metalhead’s identity. The most devout metalheads express their individual taste by literally wearing them on their sleeveless denim.

I’ve personally gone to hundreds of concerts, bought dozens of band shirts, listened to several thousands of hours** of music in my life. Yet the receipts of these experiences are lost in time, hidden in ticket stubs long tossed away, a wardrobe of band shirts collecting dust, and listening data fragmented across several music platforms. Those trinkets are constrained by limited space and fragility across time. As dearly I hold these memories, their physical reminders often need be thrown away for practical reasons. My collective experience as a music fan exists within my consciousness and manifests itself in my identity. But, there’s nothing real that ties it all together.

Music NFTs tied to a decentralized identity can make this experience whole.

First, a gentle introduction for what I mean by a Music NFT: Music in this context refers to the holistic, full sensory experience of the music. There’s the audio portion, but that’s only a small part of it. It could include pieces of visual art, a record of concerts you’ve attended, or the merch you’ve bought. The NFT would just be a receipt verifying that all of these experiences are real. The NFT itself could represent a physically redeemable utility, such as backstage passes, access to unique merch, revenue sharing (don’t tell that to the SEC). But it doesn’t have to. It could just represent a piece of art produced by the musician, such as a virtual patch. Importantly, this NFT can be minted from the artist themselves. This lets them see with unprecedented vision who their fans are. Altogether, you get a collection of verifiable credentials about your music fanhood unique to you.

Like a battle jacket.

I can already hear the tremolo of skepticism. Why would we reinvent something that already exists in the real world? Why would you corrupt art by financializing it? What’s the point in doing this all on a blockchain, or using NFTs, or any of this crypto-bro mumbo-jumbo?

My short answer is that the rails being built to make the financial system more transparent, efficient, and accessible can enhance the music experience for everyone.

For the long answer, read on.

Let’s Get Phygital

Despite the digitizing of everything these days, music is an artform that will always be tethered to the physical world. According to the RIAA, streaming platforms brought in $12 billion in 2021. Physical music sales reached $1.6 billion, $1 billion of which came from vinyl, the highest since 1986. On the other hand accounted for about $500 million and have declined by almost 40% since 2019. This doesn’t take into account 2021 revenue from merchandise (~$100 million), concerts, ($5 billion, down from a $10 billion in 2019) and secondary sales from fans giving each other stuff (impossible to quantify).

Vinyl and streaming platforms is an apples to an all-you-can-eat buffet comparison. Digital music allowed for streaming platforms to dominate because it’s easier to build on top of digital than analog rails. How much more can you innovate on top of a CD? Yet at its current state, digital-only music consumption tends to be shallow. This is somewhat intentional, as it’s allowed music to be conveniently deployed and consumed by the end user. After all, you wouldn’t bring your vinyl player to the gym to blast your workout playlist. Although digital media dominates shallow music consumption, there will always be that lingering demand for that deep, holistic music experience.

As a result of the utilitarian way of consuming music, album covers have become a lost art, taking up half of your phone screen mere pixels away from being able to tap to the ‘next song’. There’s nothing like listening to a record while marveling at the album art, reading the notes, and watching the disc spin. It deepens the connection to the music. The digital realm has enabled artists to play with the visual and the audio dimensions of the music experience that existing platforms otherwise could not provide. Instead of looking at a static physical jpeg while listening to a record, the digital visual art can be interactive. It can be animated, or even react towards a listener’s actions. Digital visual art can enhance the story behind the album and bring it new life. And with the NFT ecosystem, artists are better incentivized to experiment with this unexplored frontier.

Simultaneously, physical objects that bring music to the meatspace will always have value. Combining the ‘realness’ of the physical world while using the tools of the digital world is the next logical step.

Physically redeemable NFTs are an emerging concept that attempts to bridge the digital and physical realm. An artist may issue NFTs that can be a claim on a physical object, such as an exclusive tour shirt, giving the collector the digital right to redeem that object. Collectors may either transfer that right until that physical object is claimed, or actually claim the object and combine a digital twin to pair with their collection. For the artist, this has the added benefits of leveraging the efficiency of markets using an auction model, giving artists unprecedented visibility on who their most lucrative fans are.

Artists could also experiment with royalty models off of secondary sales where, they’d otherwise get nothing. Tape trading was a popular way of proliferating music within the scene. Although artists indirectly benefited from expanding their audience, they didn’t get a cut.

Overall this enhances the analog and digital experience, creating a new class of stuff that unlocks new ways to enjoy art that we’ve barely scratched the surface on. Expect to hear the word “phygital” a lot in the coming months.

Purists will lament this so-called financialization of music. Artists in particular tend to be squeamish when talking about money. “Sell-out” is often used to denigrate bands who end up being too good at making money. Surely enough the mob of NFT hating ludditry will only grow louder as new methods of commerce are adopted by artists. Yet, we already engage in commerce for music in the form of buying music, merch, and experiences. Why is financialization suddenly taboo? It’s the same thing. If artists create something that fans want to buy, they are giving the people want they want.

Digital streaming platforms may have streamlined music consumption, but the physical experience of music will continue to live on. Speaking of platforms…

Music, Money, and Riding the Gravy Train

And did we tell you the name of the game, boy?

We call it riding the gravy train.

-Pink Floyd, Have a Cigar

Vultures sucking gold from you Will they still suck now you’re through?

-Black Sabbath, The Writ

Platforms have made it stupidly cheap and easy to consume music. Music platforms have transformed music into a utility. This comes at a great benefit to the consumer, giving them all-you-can-listen access for an affordable flat fee. The flip side is that this put downward pressure on the value of music. There is only so many hours of the day where people can listen to music, yet the universe of music released can expand endlessly. Musicians earn less than a cent per stream on Spotify. Unfortunately, the vast majority of artists cannot subsist on just making music, let alone just broadcasting them via streaming platforms.**

Other traditional forms of music revenue unfortunately are not much more efficient.

The market for concert tickets is so inefficient that intermediaries can profitably extract value from customers without providing value. Anyone who’s ever bought a ticket online knows to brace for at least a 30% upcharge from random fees. Promoters can’t just charge less for tickets either. They are forced to optimize the best fixed price upfront, before the market reveals any information. If they’re too cheap, scalpers buy up tickets that are undervalued and resell them at a higher price. If they’re too expensive, then that’s fewer revenue for tickets. This is all value that could be going to the musicians, who have to manage a mini-economy of expenses when going on tour.

NFTs offer the chance to make this operation more capital efficient. Artists and venues can directly sell to the consumer without the need for ticketing platforms. This system allows the artist to capture the maximum value of their art that would otherwise go toward paying for ticket platforms and other intermediaries. Granted, users will still have to pay for fees on their smart contract platform of choice, and they’re not cheap. With scaling solutions in active development, I think it’s a matter of when and not if. A system where computers rather than people execute contracts is much more apt to scale. After all, machines don’t need health insurance.

**For the record, I think the streaming industry is the steepest hill to climb for a Web3 alternative to beat an incumbent. Similar to how Amazon is able to dominate despite not turning a profit for several years, incumbent platforms can operate at a loss and offer competitive prices, giving them a significant advantage in capturing the market. A Web3 alternative will have to somehow convince a critical mass of artists and consumers to migrate their attention. If it can construct an attractive enough revenue for artists while keeping the costs competitive and providing a frictionless experience for the end user, then they may have a shot. The fundamental difference is Web3 platforms are equipped to acknowledge the uniqueness of identity. Their will always be fragmentation of different platforms. Regardless, given the utility they provide to fans, streaming platforms are the most effective tool to make music heard, even if they don’t generate the highest margin returns. There Even if a Web3 streaming platform is unable to usurp the incumbents, better value capture revenue streams may subsidize reinvestment into less profitable tools for increasing the audience.

Battle Jackets and the Metaverse

Thus far I’ve mostly talked about the plumbing of the music industry. Whether you buy the increased efficiency offered by Web3 or not, the central question that needs to be asked is: “Does anyone want this?” You don’t need a blockchain to sell digital stuff or verify that someone is a poser.

This is a difficult question to answer. The only way is to try these ideas out and let it succeed or fail. If we are going to make our best effort however, let’s think big. Allow me to make the case.

Imagine if there was a unified record of all of your beloved music experiences and your most prized collectibles from your favorite bands that you can own. Imagine if you can wear those experiences on your vest in a realm for the world to see and find your people. These are all things that music fans already do in the real world. Technology can be harnessed to satisfy those innate cravings in a deeper, more satisfying ways.

It would be great to find someone who’s also listened to Voivod for hundreds of hours and was at Psycho Las Vegas 2022 (if you are also this person, let’s talk). Alas, no such solution exists yet. That data is stored separately on Spotify’s and some ticketing platform’s database somewhere. An interconnected social network where individuals can carry their data anywhere, regardless of platform, can get us there.

Skeletons in the Closet

Any skeletons, and all your other sins Any skeletons, in the closet Any skeletons, any misfortunes Any skeletons, hiding in the closet

-Anthrax, A Skeleton in the Closet, Among the Living (1986)

The flip side to broadcasting your fragments of your life is that it creates an attack vector for anyone to destroy your reputation. Forget your street cred, we’re talking about your career! Are you sure you want the world to know you liked that quirky black metal artist who films problematic youtube videos in the forest, anon?

This is just the reality for anything anyone broadcast online. We’ve reached a point where an entire digitally-native generation unknowingly strapped their future selves in dynamite just by socially interacting with their world during their formative years. If everyone’s canceled, then nobody’s canceled.

Ultimately exposing your identity this way will still be voluntary. Physical music and hard drives will continue to exist. Venues will still accept cash. You can choose to reject these social terms and conditions if you prefer to keep your music identity private.

Rebuild the Industry

Modernize, Desensitize Re-colonize, Downsize Watch it fall Before your eyes The numbers drop Your money dies

-Dethklok, Crush the Industry

Music NFTs can open up opportunities for collectors and creators alike. The promise of music NFT’s is that it will enhance the things that fans already enjoy into a more compelling experience. Despite the rampant scams, grifting, or misapplications of the current NFT scene, I believe the adoption of music NFTs is emphatically not turning your music experience into a financial asset.

There are still shortcomings that exist in the current music NFT scene. The music industry or the culture of music may resist the adoption of this technology. I think the confluence of tech and culture in Web3 will keep growing in momentum in the coming years that it will be too loud to ignore.

Music has evolved in unpredictable ways in the last few decades. Who could have predicted that broadcasting the devil’s tritone on an inconspicuous blues record would spawn countless subgenres, a global subculture, and a billion dollar industry? There is a growing ecosystem of creators that are on the frontier of a new technical and cultural breakthrough. If they succeed, then every music fan will be stitching their own digital battle jackets.

Special thanks to Noxis for his thoughtful feedback. **