The embrace of NFTs by Kings of Leon was a wake-up call for their record label—and the music industry, which is now racing to avoid the same mistake that almost killed it 20 years ago.
ore than two decades after it released its first album, Kings of Leon was honored at the Rock & Roll Hall of Fame. But what got the southern-inflected rock band to Cleveland last April was not its music; it was its non-fungible token (NFT) called “NFT Yourself.”
The digital tokens went on sale in March for the Ethereum equivalent of $50 a pop, and included a copy of the band’s latest album, a unique piece of artwork, a one-off gold record and musical outtakes. Over the two weeks it was available, KoL moved 6,500 copies of “NFT Yourself” for a total of $2.2 million, including six “Golden Tickets” that sold at an average price of $100,000. Those extra-special NFTs included lifetime VIP concert access to one show per tour, complete with a chauffeur. Since the original two-week offer, the NFTs have generated another $246,000 in aftermarket sales, with the band collecting 10% of that.
While the financial performance wasn’t revolutionary, the ripple effects are being felt throughout the music industry.
“Record deals have lost their value, in a way,” says Nathan Followill, Kings of Leon’s 42-year-old drummer. “Nowadays a kid can make a record on GarageBand and put it out on TikTok or put it out as an NFT or put it out in any form. It’s almost like they don’t need to rely on the record industry as much as they used to, which in turn, I think, is making the record industry kind of panic.”
Most people know about NFTs because of the mania this spring surrounding a few auctions of digital art. In March, the lowbrow Wisconsin artist Beeple (real name: Mike Winkelmann) captured the world’s imagination when he sold a collage of 5,000 JPEGs at Christie’s for a jaw-dropping $64.9 million. Musical NFTs are no different, except that in addition to any artwork, they come with audio files like the MP4s sold by Kings of Leon.
Beyond the cash directly earned by selling the NFTs, the digital tokens—each unique and like cryptocurrency, tradable on a blockchain—also provide a direct and permanent link to the super fans who hold on to them. Even though the buyers are just anonymous numbers floating in the blockchain ether, musical acts can use them to market—and sell—new music, fresh artwork, concert tickets and merchandise. Done right, NFTs offer the ease and ubiquity of internet distribution (think Napster), but with digital rights protection built in (think iTunes).
That’s triggered a growing effort to capitalize on the opportunity. Kings of Leon used YellowHeart, a New York-based blockchain startup founded by Josh Katz, a veteran New York music professional, to sell “NFT Yourself.” But the band had other options. Andrew Gertler, who represents singer Shawn Mendez, recently joined Jay-Z and Andreessen Horowitz in a $19 million investment in Bitski, which is building a new NFT platform for music. In May, Miami-based OneOf raised the largest NFT music rounds to date, $63 million, to build an energy-efficient marketplace to sell rare music by the likes of Whitney Houston, Quincy Jones and John Legend. Celebrity investors are piling in. Mark Cuban and Ashton Kutcher joined a $4 million investment in music marketplace NFT Genius in June.