Analysts at investment bank Jefferies predict that the NFT market will reach a valuation of $35 billion in 2022. By 2025, they predict that number will surpass $80 billion.
In music, NFTs have quickly gone from relative obscurity to a part of the industry’s daily lexicon over the past year and a half – and an increasingly serious revenue stream for artists.
In fact, NFTs are so widespread and lucrative right now that one superstar is announcing it habit The release of an NFT becomes almost as newsworthy as an NFT platform raising millions of dollars in investment.
One such platform is the US-based electronic music-focused RCRDSHP, which has raised over $5 million to date.
RCRDSHP’s seed round was backed by Dapper Labs, the Warner Music-backed blockchain firm, which itself recently raised $250 million in new funding.
RCRDSHP’s seed round also attracted participation from prominent NFT collectors Metakovan and Twobadour (via PortKey Technologies), the couple who purchased a $69 million digital artwork created by Beeple in March 2021. (Auctioned at Christies, that $69 million remains the highest price ever paid for an NFT.)
RCRDSHP launched in August 2021 with a circulation of 5,555 “Genesis Packs” consisting of digital electronic and dance music collectibles. According to the company, the drop sold out within a few hours.
Speaking to MBW about RCRDSHP’s origins, Founder Obie Fernandez says he’s “played with crypto for years and was briefly obsessed with CryptoKitties, so I was aware that NFTs represented a major technological shift in the making.”
Inspired by the success of Dapper Labs’ popular sports-focused digital collection platform NBA TopShot — on whose platform more than $780 million worth of collectibles have been bought and sold — Fernandez predicted that creating something similar, but for music, “had a good chance of succeeding.”
While most other NFT marketplaces are based on auctions or fixed price sales, RCRDSHP curates and publishes digital content packs. These packs contain everything from music tracks to mixtapes, video clips, static images, and other multimedia collectibles.
With a platform built on the Flow blockchain, RCRDSHP says that to date it has worked with both established and emerging DJs, as well as producers, labels, festival organizers, clubs, promoters, visual artists and other “residents of the dance music world”.
RCRDSHP’s latest innovation is RCRDSHP Studio, where artists create tracks in live sessions, with participating fans voting on the direction of the music as it is created.
Once mastered, the track and accompanying media will be released as an NFT, with participating fans receiving co-production credit upon release.
Each of these fans, as well as the artist(s), will then receive NFTs, which RCRDSHP says “they can treasure or sell…a unique collectible that honors a unique co-creation experience.”
To help launch Studio, RCRDSHP teamed up with New York dance music duo Disco Fries; About 250 fans of the duo recently voted on the musical direction of a new track, which was created during a two-hour RCRDSHP studio session.
Here, MBW chats with RCRDSHP Founder Obie Fernandez about the RCRDSHP Studio platform, the future of the NFT market and the potential impact Web3 could have on the music industry…
RCRDSHP closed a multi-million dollar investment round in September backed by prominent NFT collectors. What can you tell us about this round and who was involved?
We’ve had dozens of angels and funds involved, but our biggest investors are Dapper Labs and their CEO, Roham [Gharegozlou]who truly believed in our vision to create the most technologically advanced and musician-friendly platform on their flow blockchain.
We’ve also had massive support from Metakovan, who made headlines last year with his record-breaking purchase of this Beeple NFT.
In addition, there are a number of other fairly high-profile investors, including Tobi Lutke, the billionaire CEO and founder of Shopify, and EDM artists like Gareth Emery and Tiga.
How competitive is the NFT market becoming for sourcing investment?
I can’t answer that as our seed round last fall was fully booked and oversubscribed relatively quickly. But there is definitely a lot of excitement in this sector as a new music crypto project seems to pop up every day.
I think what really separates RCRDSHP from competing projects in the eyes of our investors is how authentically we support working musicians who have been hit the hardest during the pandemic.
We see what is happening with NFTs in terms of what they will enable over the next 5-10 years and this approach drives us to design our product offering in a way that is more attractive to artists and fans than your typical crypto project.
Tell us about RCRDSHP Studio. What is it and how does it work for artists and fans?
RCRDSHP Studio is the place where artists connect with fans via live streaming on the RCRDSHP Twitch channel. Opportunities include interviews, sets, and participate-to-create challenges.
With all of this, Parpreciate-To-Create is a new initiative that allows artists and fans to collaborate in the creative process. This experience leverages creativity, community and real-time fan engagement.
Through RCRDSHP Studio, RCRDSHP aims to “deliver other ownership/engagement experiences that are more exciting than micropennies from streams” – Can you tell us a bit about the thinking behind it?
For the majority of music fans, their passion and interest in music is not usually driven by speculative ideas, most just want to be closer to the artists and music they love.
“It’s hard to imagine that most music fans would want to speculate on an exchange for the music world.”
Fan experiences enabled by Web3 and NFT technologies that reward fans in this way are a perfect use case for this technology. It’s hard to imagine that most music fans would want to speculate on a stock market for the music world.
What do you think of artists who sell NFTS that give fans a cut of their music/a percentage of the artist’s streaming royalties?
It’s just about kicking the can out into the street and pushing the fundamental problems in the underlying economics of streaming down to fans, rather than actually solving the fundamentals.
As we move towards a wider adoption of Web3, this is becoming an issue as music fans realize it.
What makes RCRDSHP different from other NFT platforms?
RCRDSHP is basically a fan experience platform. We’re not creating a version of an artist web merch store filled with expensive JPEGs. RCRDSHP collectibles are rich and immersive media experiences that allow artists to express themselves and connect with their fans in ways other formats don’t allow.
“RCRDSHP is basically a fan experience platform.”
We are building rewards programs with hundreds of artists that offer fans both digital and IRL value for engaging with the music they love.
With challenges and platforms like RCRDSHP STUDIO, we give independent artists compelling opportunities to play around with new marketing ideas in the burgeoning Web3 space. Fundamental to this is our philosophy of reducing complexity for both creators and music fans.
For this reason, collectibles are denominated in dollars. While you can buy crypto if you want, we want to reach as wide an audience as possible who are learning and getting used to supporting their artists in this new way.
How sustainable is the NFT market and in particular the secondary market for NFTs?
I guess we’re about to find out, right? The thing that most outsiders don’t necessarily understand about the NFT space is that we are very early in the adoption cycle.
There are perhaps a million or two people worldwide who are interested in NFTs in any significant way. While there will be ups and downs along the way, there is still so much potential growth left before we reach saturation point.
What are your predictions for the future of music on the Web3?
As awareness grows that projects like RCRDSHP operate on “green” energy-efficient networks like Flow Blockchain, more and more music fans will be excited about this new way of interacting with their favorite fans. That connection is what it’s all about, and the artists who are enthusiastically leaning into the new engagement model are the ones who will be way ahead of the game.
“The artists who are enthusiastically leaning into the new engagement model are the ones who will be way ahead of the game.”
As an artist, you really have to see Web3 as more than just a glorified 21st century fan club. It’s more like being the CEO of your own small company with superfans as shareholders.
Believe me, this is a radical and scary thought for many artists, but what we have seen in practice is that it can also be very fun and rewarding.
What are the biggest challenges in Music NFT?
The biggest challenge lies in most people’s reluctance to change. Artists need to embrace this radically different way of interacting with fans.
DJs/producers obviously have a head start, having experimented extensively with platforms like Twitch during the pandemic with this model, but that was free to fans.
The question is, will the average fan want to get more involved with their page if it means spending more money than what they’re used to lately (whereas Spotify and YouTube are practically free).
Where are the biggest opportunities in the NFT sector and how big can the music NFT sector get?
The identity of tomorrow’s space thought leaders is being defined right now. Artists who are willing to take a risk and put in the hard work of delighting their fans with the new mechanics available in the NFT space will set themselves apart from their peers and establish an enviable position for years to come.music business worldwide
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