At the start of the pandemic, musicians and producers turned to social media to survive, presenting releases and virtual concerts. Platforms like Spotify and Facebook noticed quickly.
On October 1, 2020, Facebook changed its terms of service and prohibited artists from using videos to create a “music listening experience.” Anyone who used videos on the platform, including live performances, risked having their videos blocked and their pages, profiles, or groups removed.
Those restrictions caused financial harm to DJs and musicians who relied on platforms such as Facebook during the pandemic when in-person shows were impossible. Independent artists were hit particularly hard. Today, many of those artists are exploring blockchain technology and cryptocurrencies to recoup losses and move forward. Music-related NFTs are emerging as a promising way for artists and fans to connect directly.
According to a recent RIAA report, streaming accounts for more than four-fifths of the music industry’s revenue. Yet 90% of streams come from the top 1% of artists. Spotify’s payouts to artists are modest—an average of $0.004 per stream. Independent artist Gilligan Moss, for example, reports about 90,000 streams and received a payment of $8.19.
Given the rise of blockchain streaming platforms and NFT marketplaces, we examined how much artists might have earned if their music had been hosted on a blockchain-based streaming site versus conventional streaming services. We also interviewed Josh Katz, CEO and founder of YellowHeart, a live-ticketing and NFT-blockchain platform, to get his perspective on how these tools could reshape the future of the music industry.
NFTs can give independent artists a fighting chance
NFTs can give independent artists a realistic chance to survive, compete, and stand alongside major acts. Companies that prioritize artists and fans can not only survive but also thrive beyond the precedent set by platforms like Spotify. In practical terms, blockchain can help narrow the gap between artists and listeners.
NFTs are unique in that they give listeners ownership of a work while the artist retains copyright and reproduction rights, similar to physical art. Anyone can buy a replica of the Mona Lisa, but only one entity owns the original.
NFTs benefit artists because they can be programmed to pay creators a percentage every time the NFT is resold or traded. This lets artists capture value as their work gains popularity and rises in value — something that regular streaming models rarely enable.
The gulf between conventional streaming and blockchain royalties
The comparison below highlights the difference in per-stream payouts between traditional platforms and blockchain-based services. Artists earn an estimated average of $0.34 per stream on Audius, a fully decentralized streaming platform, according to sources cited by industry observers. By contrast, conventional services such as Tidal, Napster, Apple Music, and Amazon Music pay only a fraction of that. Napster reportedly pays the most among these at $0.019 per stream, which is still many times less than Audius returns.
Audius hosts a vibrant community of fans, developers, and artists sharing and collaborating on music. Functionally, it operates as a blockchain-based alternative to SoundCloud or Spotify. When artists upload tracks to Audius, the platform timestamps the content to create a reliable record of origin.
Audius connects artists and fans directly and uses smart contracts to ensure that musicians receive fair, timely payments.
Artists are already experimenting successfully with NFTs. Mike Shinoda of Linkin Park tweeted about the limits of traditional digital service payouts: even if he distributes a complete song broadly across DSPs, he noted, he would never approach the tens of thousands of dollars after platform fees, label cuts, marketing, and other costs.
Recent NFT sales demonstrate the market’s appetite: in March, DJ and producer 3LAU sold music NFTs for $11.6 million in 24 hours, while Canadian artist Grimes reportedly earned $5.8 million in about 20 minutes.
All kinds of creators can mint NFTs to sell a variety of digital media, and fans can pay with Bitcoin, Ethereum, and other cryptocurrencies. Dallas rapper Rakim-Al Jabbaar predicts NFTs will increase the artistic and financial value of music: “NFTs will give artists another outlet to create exclusive content for fans in a more artistic way. In the future, we’ll see songs appreciate in value like Basquiat paintings.”
Top artists losing billions to conventional streaming
An analysis that compares estimated earnings for the most-streamed Billboard artists on traditional services versus blockchain streaming suggests enormous potential differences. For example, estimated earnings for Drake on conventional streaming services amount to roughly $348 million, whereas on blockchain streaming the estimate jumps to $14.7 billion, implying a potential shortfall of about $14.3 billion. Ed Sheeran’s estimated earnings show a similar gap: about $258 million on regular streaming versus $10.9 billion on blockchain streaming, a potential loss of $10.6 billion.
Today, most artists still earn primarily from merchandise, social media, and live performances rather than streaming royalties. Blockchain technology could shift that balance by guaranteeing fairer royalty payments. Record labels would be able to track music usage more effectively and pay every contributor to a song or album promptly. Venues could reduce the risk of counterfeit tickets by integrating blockchain-based ticketing.
Final thoughts
Distributed ledger technology offers a way to streamline royalty payments, establish clear provenance for music creators, remove costly intermediaries, and publish music more efficiently. Blockchain and NFTs have the potential to change how music is sold, managed, produced, and consumed — making those processes fairer, more transparent, more engaging, and potentially more lucrative for artists.
Q&A with YellowHeart CEO Josh Katz
We spoke with Josh Katz, CEO and founder of YellowHeart, a live-ticketing and NFT-blockchain company. Below is an edited transcript of the interview focusing on his views about how NFTs are likely to change the music industry.
Q: What are the key benefits for musicians releasing NFT collections?
NFTs can serve many purposes for musicians and the broader music industry. Many consumers think NFTs are just unique images and assume “music NFTs” are simply artwork linked to music. But NFTs and blockchain empower a lot more than visual art. At YellowHeart, we help musicians issue “social tokens” and NFTs that act as keys to unlock and grant access not only to content — exclusive album art, unreleased videos, and extra tracks — but also to real-world events and opportunities.
A fan who owns a piece of an artist’s NFT collection might gain access to afterparties, seat upgrades, or sponsor deals. Beyond exclusive content and dynamic ticketing, NFTs can be used to commemorate and track the rights of composers, publishers, and copyright holders.
Q: How do blockchain streaming services benefit artists compared to conventional services like Spotify? Could these platforms eventually replace regular streaming services?
I’m a big fan of Audius in this space — they pay artists directly, which is something the music business has needed. It will be hard to unseat Spotify, Apple, and Amazon; those platforms are entrenched and still have the opportunity to evolve and integrate blockchain and NFT features.
I can imagine a future where Audius grows as large as Spotify, and new decentralized music platforms continue to appear. Personally, I’m waiting for a decentralized version of SoundCloud to emerge.
Q: What benefits do blockchain streaming services offer to fans?
Fans can gain substantial utility through blockchain. Web 3.0 is often called “the internet of value,” and blockchain lets fans both give and receive value from artists and creators. Blockchain can enable a fan’s “music identity” to travel with them, unlocking access and interactions online or in the real world. This could lead to richer and more satisfying music experiences.
Q: How will the music industry adapt to the growing popularity of NFTs? Will NFTs become more common for music releases?
NFTs will become an additional format. Just as music has been released on cassette, CD, and mp3, albums will increasingly be released as NFTs. We’ve already released albums exclusively as NFTs at YellowHeart, and both artists and fans responded positively. I don’t see NFTs replacing streaming entirely, but they will enhance the experience.
NFTs will be additive: fans who buy the NFT version of an album will receive the most interactive and exclusive listening experience. The industry is still learning how best to use NFTs. Historically the music business has been slow to adopt new technologies, but the right people and companies are working to avoid past mistakes. Consumers and artists are driving NFT adoption, and more musicians are managing their careers and release strategies directly.
We believe NFTs and blockchain are here to stay. YellowHeart is currently the only company in North America actively facilitating NFT ticket issuance, and this is just the beginning. Once major industry players understand what NFTs and blockchain make possible, I think this will be the most significant change to music consumption for both live and recorded music that the industry has ever seen.
Q: What other uses of NFTs in the music industry are showing strong potential?
Rights management is a major opportunity that is just beginning. Publishing companies will move to blockchain for record-keeping, and those that don’t may struggle. Composers, artists, and producers will prefer to work with companies that prioritize transparency and timely payments. NFTs can memorialize ownership.
NFTs are traceable digital assets that can include built-in payment models or automated royalties — a powerful and practical tool for the music business. At YellowHeart, we focus on interactive experiences: getting fans engaged and creating compelling content and experiences. Right now, we see huge potential in NFT ticketing.
An integrated, interactive ticketing and live-event experience can benefit the whole industry. Fans who buy and hold an artist’s NFT or token can receive special access, discounts, offers, or event-specific content when that artist uses NFT ticketing at a concert or festival.
One unique practice we’ve introduced is delivering exclusive content, offers, and downloads to fans as they exit an event. A ticket’s digital “stub” can change color or evolve after it’s scanned or once the holder enters a geo-fenced area, and the NFT creates an immutable on-chain record that this particular fan attended that specific show. The possibilities are vast and we are only beginning to explore them.