Why Electronic Music Sets The Tempo For NFTs

From Detroit to Berlin to the metaverse, electronic dance music has always had a symbiotic relationship with technology’s cutting edge. The genre was forged in the 1970s and ’80s by artists using then-state-of-the-art synthesizers and drum machines. The EDM boom of the 2010s was made possible by the internet, laptops, digital audio workstations and digital service providers. As these advancements made EDM more mainstream, other genres adopted the tech initially popularized by electronic acts.

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“Electronic artists have always been at the forefront of innovation and are quicker to adopt technology than other genres,” says Dean Wilson, the longtime manager of deadmau5, one of the electronic world’s most tech-forward acts.

Now, history is repeating itself as a mega-festival lineup’s worth of electronic artists — including stars like deadmau5, Steve Aoki and Claude VonStroke — have emerged as early adopters and innovators of non-fungible tokens (NFTs) and the blockchain technology behind them.

“Electronic music has always been of great cultural influence,” says DJ, producer and label owner Vivie-Ann Bakos, who performs as Blond:ish. “Honestly, a lot of artists that are independent in this scene have been banding together and collaborating with crypto people. Naturally, that became a ripple effect.”

The electronic scene is thus again pushing the music industry into the future — a future many believe will be more equitable for artists through Web3 technology. With this tech, many acts are creating solutions to technology-wrought challenges of the past by using NFTs to rewrite the rules of music ownership, distribution, profitability, fan connection and more. But they’re finding themselves under new pressures in the fast-changing metaverse as they scramble to bring — and keep — their fans on board, while preventing the value of their NFTs from dropping.

The pandemic helped catalyze this moment. While the first NFTs were minted in 2014, the explosion of NFTs in the dance space coincided with the rise of livestreamed DJ sets during quarantine. Electronic artists were already at the forefront of this livestream culture (again through the community’s innate relationship with tech) on platforms like Twitch, with channels becoming popular “places” for artists and fans to “hang out” during a time when live events weren’t possible. The online-oriented communities, crucial to the success of NFTs, coalesced more fully while many DJs worked from home.

“Back in 2017-18, it was hard to get anyone to take [Web3] seriously,” says Sean Gardner, the co-founder of MODA DOA, a new network focused on creating tools for musicians and artists to own and distribute their work using Web3 tech. “Then in mid-2021, when NFTs started popping off, everyone was locked in their bedrooms because of COVID-19, wondering what they were going to do instead of touring. It was the perfect storm of technology coming of age and what was happening in the world socially and with online culture.”

Launching her Twitch channel, Abracadabra TV, during the pandemic, Bakos initially got into NFTs as a way of offering value to hardcore fans who were spending upwards of 12 hours a day on her channel. “We were like, ‘Wow, these guys bring so much value to the ecosystem. We couldn’t do this without them.’ We wondered how we could reward them.” This question led to the development of her own social token, $ISH, which launched this past December. Fans were able to earn these tokens for free by sharing information about Bakos’ music, content, the causes she advocates and the $ISH token itself via social media. (The token is not yet minted and will thus not be available for purchase until its platform, P00LS, launches its marketplace.)

Bakos emphasizes that the value of many NFTs is not just the piece of music or visual art itself. Rather, NFTs — as programmable assets that can contain access to airdrops, events, merch and more — can offer continued value and create ongoing conversations with fans that aren’t reliant on the opaque algorithms of centralized platforms like Instagram or Facebook.

“It feels like music now has more purpose for the intended medium and message,” Bakos says. “Honestly, if a label reaches out for me to do a remix or something, now I’m like, ‘Meh.’ In Web2, it doesn’t excite me at all anymore.”

Potential fan involvement with NFTs goes far beyond digital merch drops, however. For many electronic acts, a major benefit of NFTs is their functionality in selling royalty ownership directly to fans, essentially turning these fans into shareholders. Justin Blau, an early NFT adopter who makes music as 3LAU, launched one such NFT marketplace, Royal, last May. In November, he auctioned off a one-of-a-kind song, “Waveform,” at Art Basel Miami in collaboration with Christie’s and NFT marketplace OpenSea. One hundred percent of the rights to “Waveform” were transferred to the buyer, who also received full master recording and publishing rights. The NFT sold for 127 ethers, or ETH, on the ethereum blockchain, which equated to $550,000 on the date of sale.

“This is just the beginning of an era where artists and fans see each other as partners,” says Blau. “When a fan actually owns rights in an artist’s music, their incentives are more aligned to share and spread the word about that artist.”

Through NFTs, the dance scene’s core value of expressive freedom now extends to circumnavigating traditional music industry ownership structures. “Dance producers have embraced the democratization of music production, which made it possible for anyone with a laptop to create music,” says Swedish House Mafia’s Steve Angello, a recent investor in Swedish blockchain platform anotherblock. “Blockchain technology is the next step in democratizing the industry, and this time it’s about simplifying ownership and royalty payouts.”

But NFTs present opportunities to earn income even if an artist doesn’t partake in royalty splits. The difficulty of making a living wage through streaming (by no means an issue limited to electronic artists) is why many electronic artists are constantly touring, with live shows functioning as a primary revenue stream. The necessity of relentless touring has led to widespread burnout for many artists traversing the global dance circuit. With concerts having disappeared during the pandemic, NFTs have become particularly attractive for electronic acts, world famous and otherwise, looking for sustainable income.

“If you’re a dance/electronic musician with 1,000 true fans who releases a music NFT for $100, that’s $100,000 in revenue — significantly more than most artists have ever seen from the streaming services,” says Matt Medved, co-founder/CEO of the NFT education platform nft now and a former Billboard editor.

With the prices of NFTs based on type, project, supply and other factors, “it’s hard to really say anything in absolute terms,” Medved says of cost. The original price of an NFT is also only a starting point, with rates often shifting dramatically when the NFT reaches the secondary market. Many popular generative avatar projects, like Bored Ape Yacht Club that were originally minted for less than 0.1 ETH (roughly $250) have since sold for far more during secondary sales, demonstrating that even without standardized pricing, money is  there to be made.

In October, venerable independent electronic label Dirtybird did a drop of 9,090 generative NFTs, each priced at $250. Called Dirtybird Flight Club, this drop sold out in five minutes (buyers included dance scene elite like Steve Aoki, GRiZ, Blond:ish and A-Trak) and generated over 545 ETH, which at the time equated to $2.27 million. (This number now equates to $1.4 million, given the current ethereum exchange rate.) Subsequent exchanges of these NFTs have earned over 1,000 ETH (roughly $3.2 million), of which Dirtybird claims 7% (roughly $224,000). Over 3,500 purchasers currently hold Dirtybird Flight Club Birds, which currently range in value from about fifty bucks to roughly $48.000.

“Similar to buying a painting the value is hard to estimate, Dirtybird Founder Barclay Crenshaw, who performs as Claude VonStroke, says of base NFT pricing. “The overall trading value is whatever you can sell it for on the secondary market, but the value to the user, and especially a Dirtybird fan, could be much higher.”

Still, the market is not a free for all, with Medved cautioning that the NFT community “tends to be wary of new projects with high mint prices, because it smacks of a cash grab.”

Dirtybird director of NFTs Emily Swank (Crenshaw’s sister ) acknowledges that NFTs offer innovative ways for artists to make money while also solving “a myriad of problems faced in the music industry, especially when it comes to the big record labels.” She cautions, however, that there’s still much to explore and solve regarding royalty splits, publishing and platform development.

Indeed, if there’s a prevailing issue with NFTs in the electronic scene and the music industry beyond, it’s that they’re complicated. Many artists are still figuring out how to get involved, and most fans don’t yet know how to access or navigate blockchain or set up the crypto accounts required to maneuver through this world. “Currently, the ecosystem is not fully evolved and the user experience is very fragmented,” says deadmau5. “It can be confusing for consumers, and more work needs to be done to educate fans about the basics, like setting up [digital] wallets. Over time this will change, but as we see time and time again, people are scared or resistant to change.”

The NFT world is fast-moving and demanding. Work on many NFTs is never really over, given that their generative nature demands that successful tokens will continue to unlock assets in perpetuity. For artists already spread thin in the studio or on tour, this workload of propping up their value can be a burden.

“You can’t just put something out and [expect] it’s going to be successful,” says Bakos. “There’s this whole layer of gamifying, or leaving breadcrumbs along the way. You always have to keep the community engaged, otherwise they’ll just sell the NFT and say ‘bye-bye,’ so it actually adds a lot of stress.” Such gamification means that NFTs are programmed to include hidden features and assets that are unlocked when a user wins the game that’s also encoded into the NFT.

The 24/7 pace and economic risks that come with cryptocurrency raise the threat of physical and mental burnout. “The NFT space is exhilarating,” says Swank, “but the pace is nearly impossible to keep up with, and the crypto markets can be extremely volatile.”

Many producers and others interested in NFTs are thus turning to Web3 agencies for support, making such businesses a gold-rush area of the industry. Wilson, deadmau5’s manager and a co-founder of metaverse venture Pixelynx, recently announced that his long-standing management firm, Seven20, is transitioning to a Web3 entertainment company focused on blockchain, the metaverse and continued work in music.

It seems inevitable that Web3 teams will become as standard as agents and managers as this tech becomes more integrated with an artist’s day-to-day business. The brain trust offered by such teams will also help artists properly integrate into the metaverse by fostering a deeper understanding about how to design cohesive strategies that take full advantage of NFTs and smart contracts.

“A lot of the drops right now are pretty basic,” deadmau5 says. “And convincing a fan to buy a JPEG or a GIF that provides no additional ‘utility’ might be tough for some. This will change as new ways are launched.”

The dance space is well acquainted with such learning curves. Many producers probably didn’t entirely understand what they were doing when first experimenting with synthesizers or while uploading their first MP3. This boundless, Wild West aspect of technology has always had particular appeal for forward-thinking electronic artists, making NFTs the latest chapter in an old story.

“This new ecosystem feels a lot like [the digital music boom] era. However, something that era lacked was a way to create lasting financial value for creators,” says Wilson. “What we’re experiencing right now ticks all the boxes.”