Music NFT market and music collectibles business is segmented by product as NFT Digital Collectibles, Statue/Figurines, Instruments, Poster/Wall Art, Mugs/Tankard. Major Focus is on NFTs and the platforms that provide sales of NFT assets in association with artists and music companies.
The music NFT market has, in the past two years, experienced exponential shifts affecting its core model. This report would be covering those shifts, their effects on the market right now and what it could mean for the future of the market.
Music Non Fungible Token (NFT) Collectibles market was valued at $6.1 Billion in 2021 and is expected to grow at a CAGR of x% during 2022 to 2031.
Record labels, bands and artists suffered a major setback due to cancellation of tours and events specifically mapped out to generate revenue and connect more with the music fans.
Before the Pandemic, the basic revenue source for the music industry came from two major means:
● Live performances: Which accounted for 50% of overall revenue and;
● Produced music: Which included streaming, digital downloads, physical sales, licensing (for games, movies and TV)
This forced most artists to hold back from launching their albums as they wouldnt have been able to promote it with tours and live events. With the Pandemic disabling the major revenue generator, and further crippling the sales of concert themed collectibles, music collectibles sales were consequently affected.
The effects of the Pandemic saw the revenue gotten from streaming rise from 9% to 47% across streaming platforms as listeners were stuck in their homes. The first incentive to online communities.
NFTs gained more popularity during the Pandemic, starting out in the gaming industry and gradually making its way into the music and music collectibles industry. As soon as the music industry grasped the potential of this Blockchain technology, it immediately capitalised on it and recorded its first NFT sale in September 2020.
Initial use case
With artists denied of their main revenue source and a profitable means to keep in touch with their fan base, the advent of NFTs provided them with new ways to monetize, not just their music consumption but to restore the collectibles market also, in a whole new economy. Artists like Snoop Dogg and Lionel Richie are among an increasing number who have raked in millions from selling their collectibles. Three main benefits the use of NFTs brought:
● Ownership: The artists didnt need the involvement of their record labels to create their NFT collectibles, and the authenticity certificate behind this Blockchain technology proved to be a step against piracy.
● Royalties: Apart from the initial revenue obtained from the sale, NFTs allowed the owners to "lock in" what percentage theyd love to receive whenever theres a trade or resale.
● Demand: Scarcity could easily be created with the use of NFTs to create limited edition collectibles, thereby increasing its demand. This was also in tandem with the overall hype around the digital collectibles market.
The Second (Current) Use
After the initial hype and release of limited edition collectibles, the music collectibles market experienced a peak in March at $26.7 million and then subsequently continued to plummet as the focus shifted to building an exclusive online community. This was a welcomed development as fans had an opportunity to identify closely with any given artist of their choice. This also allowed artists to have direct access to their fan base and fanbase data, allowing for a more interactive relationship.
Perks of the Digital Communities.
The bulk sales of music collectibles were no longer restricted to physical stores and e-commerce, as artists now had a faster and more efficient reach to a broader audience. The profit margins are also a lot wider, as launching a digital music collectible isnt as expensive as its physical counterparts which would incur manufacturing and distribution costs.
Fanaply, a digital collectibles creator focused on nurturing online communities for artists, has features that allow their artists create digital collectibles that immortalise certain events, or milestones, like ownership of a track on an album, or being among the first 100 attendees at an online event and so on.
These collectibles allow followers to claim milestones like "first listener" and "first to watch" , thereby incentivising followership and encouraging activity within the online communities.
Digital + Physical
The advent of digital music NFTs didnt spell doom for their physical equivalent, it rather bolstered its uniqueness, adding to the overall feel of exclusivity.
As the world is opening up again to tours and live concerts, digital music collectibles can be further used to reward active followers by tying them to physical collectibles, here are some use cases:
● Backstage pass to active community members.
● Signed album for the first 100 digital listeners.
● Exclusive listening party for Album or track owners.
The incorporation of digital music collectibles can consequently be a collaborative effort to further increase fan base and bolster followership.
The Return of Vinyls.
Digitisation wasnt the only major shift in the music collectibles market. Vinyls hit a, not so surprising, record sales number in 2020 in the United States. Its numbers were not as high as the digital sales but it surpassed the annual CD sales for the first time in 34 years.
In 2020 the Recording Industry Association of America reported a 28.7% increase, $626 million, in vinyl sales when compared to 2019. The trend is continuing as the first six months of 2022 saw a 108% rise in Vinyl LPs when compared to the same duration in 2020.
Vinyl and music collectors at large would not be surprised at this trend as vinyl sales have been on a steady rise within the past decade, this listening format also saw an increase in sales in the UK as the British Phonograph industry reported a total of 4.8 million copies sold across the UK in 2020.
Here are two main drivers influencing the return of vinyl records:
● Uniqueness: When placed side by side with other formats, vinyls stand out. Theyre now antique and considered collector worthy both among old collectors and new music enthusiasts.
● Artists: Releasing limited editions of their albums on vinyl as a means of taking advantage of the steady rise in Vinyl sales, saw the demand in vinyls go even higher.
● Cost: Vinyls are more expensive when compared to other formats, this subconsciously makes them more collector worthy, as its an unspoken rule that highly valued music collectibles, or memorabilia as theyre often called, should be expensive.
With the return of vinyls and the advent of digitisation, music NFTs have taken a slightly different front, creating more profitable revenue streams for artists and more irrevocable means of social proof and belonging among fans.
Industry Segmentation and Revenue Breakdown
Product Analysis (Revenue, USD Million, 2022 - 2031)
Region Analysis (Revenue, USD Million, 2022 – 2031)
Non Fungible Token (NFT) Music Collectibles Market Companies (Actual company profiles in report will include focused companies dealing in Music Collectibles. Mentioned companies are only for reference)
Specialized Collectible Shopping Portals:
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