NFTs for Artists: Hype or a Whole New Business Paradigm?

Abstract

The post-pandemic rise of non-fungible tokens (NFTs) within the music industry
has presented a disruptive innovation that has the potential to reshape traditional
business models, offering artists new revenue streams and direct-to-fan engagement
opportunities. As music NFTs grow in prominence, they challenge the entrenched
systems of royalties and intermediaries, prompting questions about their long-term
viability and value for both artists and fans. This thesis investigates the potential for

NFTs to disrupt the music industry and introduce an innovative business model for
artists, particularly in regard to fan-driven revenue and decentralized ownership.
Through a combination of literature reviews and qualitative interviews with industry
stakeholders, this exploratory study explores both the opportunities and barriers
associated with music NFTs. Key findings indicate that while NFTs offer new ways
for artists to monetize their creative work, significant challenges to widespread
adoption remain, including technological complexity, legal ambiguities,
sustainability issues, and market speculation. A thematic analysis further reveals
that the adoption of music NFTs is being catalyzed by their potential to enhance
transparency, copyright protection, and fan interaction.

This thesis concludes by proposing a conceptual business model as a business model
canvas (BMC) that incorporates NFTs as a key component of artist monetization
strategies. The model addresses the existing gap between enthusiasm for NFTs and
their practical application, suggesting that if NFTs continue to stay relevant and
evolve alongside growing institutional support, they may offer artists more creative
autonomy and financial independence in the long run.

Popular Abstract

Imagine owning a one-of-a-kind piece of your favorite artist’s work—directly from them, without middlemen. NFTs, or Non-Fungible Tokens, offer artists a chance to break free from traditional music industry constraints while creating new ways to engage fans. But are they the future of music, or just another tech craze fueled by speculation and pandemic hysteria?

The music industry has long been dominated by intermediaries—record labels, distributors, and streaming platforms—that often take a significant share of artists' earnings. NFTs promise to change that. By using blockchain technology, NFTs allow artists to sell unique digital items like songs, concert tickets, or exclusive experiences directly to fans. Fans, in turn, can own a piece of their favorite artist’s creativity, whether it’s a collectible track or virtual backstage pass.

But the path to this decentralized, artist-driven future isn’t without challenges. While NFTs offer new ways to generate income and enhance copyright protection, they come with significant hurdles. Environmental concerns over blockchain’s energy use, the technical complexity of creating and selling NFTs, and market volatility are just some of the barriers artists face. Moreover, legal ambiguities and the speculative nature of the NFT market add layers of uncertainty. Blockchain platforms must become more environmentally friendly, and artists need accessible tools to navigate the technical and legal complexities of creating and selling NFTs.

In this thesis, the potential of NFTs to disrupt the music industry was explored. Through interviews with industry professionals and a literature review of existing research, it was found that NFTs could indeed empower artists, offering them financial independence and direct engagement with fans. However, these opportunities hinge on addressing the technology’s current limitations.

To bridge this gap, a business model was proposed where NFTs play a central role in artist monetization strategies. For example, artists could program NFTs to include royalties from resales, ensuring ongoing income as their digital assets change hands. Fractional ownership—where fans can co-own a piece of an NFT—could democratize access, making these digital collectibles more affordable and inclusive. Furthermore, NFTs could support innovative crowdfunding methods, where fans invest in an artist’s future works in exchange for unique perks or shared revenue.

While some view NFTs as a speculative bubble, this research suggests they might be more than just a passing fad. If the industry can overcome technical, legal, and environmental challenges, NFTs could redefine how music is created, shared, and valued. They hold the promise of shifting the balance of power toward artists, fostering a new era of creativity and fan participation.

So, are NFTs the future of music? Time will tell. But one thing is clear: they have sparked a conversation about giving artists more control and fans a deeper connection to the music they love—an exciting possibility that could change the industry forever.

• author: Bikic, Amer
• supervisor: Lars Bengtsson
• organization: Innovation Engineering
• course: INTM01 20242
• year: 2024
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: NFT (non-fungible token), Music industry, Ownership, Blockchain, Business model innovation, Disruptive innovation
• language: English
• id: 9179003
• date added to LUP: 2025-01-07 09:13:22
• date last changed: 2025-01-08 13:59:27