Steve Aoki is off to New York City in the Sprinter-van tour bus when the Zoom call comes in. The famous DJ stammers on his iPhone, brushes his sweeping black hair, and greets younger friend and collaborator Justin Blau, aka 3LAU. The two are eager to talk about a technology they say will change the business model for music and redefine the relationship between artists and their fans. “It used to be the only chance for a fan to be a commodity,” Blau says, becoming animated while making his case. The next opportunity, he says, is what he and Aoki are sure to be in music’s hot new thing: NFTs, or Non-Fungible Tokens.
The term describes unique items listed on a blockchain — most commonly pieces of art, but also other digital artifacts such as songs — that can include ownership rights to these items. In 2021, NFTs have become part of the cultural zeitgeist as celebrities shell out millions to collect digital primates known as Bored Apes, and artist Beeple sells an NFT at auction for $69 million.
Today, most NFTs are worth a fraction of what they earned during the previous mania, and trading volume is down more than 80% from its peak in early 2022. NFTs now often act as a punchline — a folly that illustrates the worst excesses of cryptocurrencies, rather than a serious investment. But Aoki and Blau, like a growing number of artists, are convinced that NFTs are a transformative technology, and that the speculative frenzy of 2021 was a prelude to something much bigger.
Photo by Saeed Rahbaran
For Aoki, the Grammy-nominated DJ who is also an author and producer, NFTs offer an expansive new way to connect with fans. By distributing NFTs associated with his work, he can identify the people who are most passionate about music, connect with them and even collaborate with them through the digital domain known as Web3.
“I’ve never felt a community like I did in the Web3 space. I’ve never really felt this much energy in reality,” Oakey says.[NFTs] Allowing things I never thought I’d do before, like making a song with a fan.”
Aoki’s latest project involves making music and art with Blau under the PUNX banner, which the pair describe as an “IRL audiovisual meets metaverse supergroup.” Details were under wraps at the time of publication, but the project relies on CryptoPunk NFTs for the binary. These NFTs, like Bored Apes, are part of a limited collection owned by a studio called Yuga Labs but give collectors wide freedom to develop brand-related intellectual property — for example, by customizing image designs.
Meanwhile, Blau is using NFTs to create new copyright arrangements between musicians and fans. His company, Royal, is a platform where artists can create and sell NFTs that are partial ownership of a song or album, allowing the buyer to collect a portion of the streaming revenue. Royal NFTs usually offer additional perks such as early access to new songs or opportunities to meet or chat online with a musician. Meanwhile, artists get a new way to directly monetize their existing work and raise money for future projects.
Royal, which has raised $71 million from investors, is introducing what Blau sees as a fan club for the blockchain era — a club that lets musicians interact with the people who love their music best, while taking advantage of an income opportunity that doesn’t rely on intermediaries who shortchanged artists in the past. So far, Royal remains a niche offering: the company says it has 11,000 users who have paid a total of $2.1 million to invest in 39 “drops” on the platform by artists including rapper Nas and Diplo, a top DJ. (Secondary sales brought in another $5.4 million.) Users have earned a total of about $140,000 in royalties. While the numbers are modest, Blau says they amount to an opening as NFT technology gains a broader footing. “It’s only the first run of NFTs ever. The second run is going to be wild. Things are going to work better,” he says.
He might be interested in something. Even as NFTs remain a source of derision in mainstream culture, other creative types — from actor Seth Green to comic book legend Todd McFarlane — are embracing them as a way to connect with fans. And while the overall market is still far from its 2021 highs, NFTs still generated more than $700 million in monthly sales in February. Meanwhile, the alleged lowest price for items in the notable bored monkey collection was above $100,000 in March. It’s hard to shake the impression that NFTs are here to stay. Aoki certainly thinks so — and hopes a mainstream breakthrough is just around the corner: “Imagine if Kendrick Lamar made a song and released it with the Web3 community? Or Paul McCartney sold one to Beatles fans?” NFTs, he says, “allow imagination and intuition to do things quickly.”
This article appears in the April/May 2023 issue of luck With the title, “Fans and Funds: Why NFTs Look Nice to These Musicians.”