Artists Giving Away Tokens To Reward Fans – Billboard
It’s been more than two years since news of a multi-million dollar non-fungible token (NFT) sale first hit the music headlines. In 2021, Grimes made $6 million overnight with a collection of audiovisual NFTs, 3LAU raised $11.6 million in a record-breaking auction and Steve Aoki claimed to have made more money from NFTs than 10 years of record label success.
For a moment, it looked like NFTs were a new way to value music, unlocking seemingly huge sums of money for artists. Now, in the cold light of a crypto bear market where NFT trading has fallen 85% from previous highs, those sales figures were unsustainable in retrospect. Instead, instead of trying to sell NFTs at high prices, artists are experimenting with an entirely different tactic to engage their fanbases: giving them away for free.
At the grassroots level, independent artists are giving out free NFTs to capture their earliest fans and kick-start a community. At the superstar level, artists like The Chainsmokers use free NFTs to reward their fanbases. Far beyond speculation, platforms in the space have revolved around focusing on non-financial use cases such as integrating free NFTs into Spotify pre-stored campaigns, incentivizing email capture, Web3 fan clubs, token-gated exclusive content, community building, rewards and commemoration . tokens.
Chain smokers Alex Pall and Drew Taggart were among the first to embrace the new trend. The duo saw the NFT explosion play out while recording their fourth album, So Far So Good, but instead of following the million dollar playbook, they gave away 5,000 NFTs tied to their album for free. The NFTs also give fans a 0.0002% share of streaming royalties in the album. The duo doesn’t even take a cut of NFT’s secondary sales, which go straight to the album’s songwriters.
“Alex and Drew made literally no money on these NFTs,” says Adam Alpert, the duo’s manager. “They’re actually losing money because they’re giving away a royalty.”
So why didn’t the Chainsmokers follow the NFT hype and cash in? “It didn’t really appeal to us,” says Alpert. “We didn’t think it was the right use of the technology at this time.” Instead of financial speculation, the Chainsmokers saw NFTs as a way to deepen their relationship with their fans. “Having a happy superfan as a result of this is worth more money than selling an NFT.”
The Chainsmokers have built their entire NFT campaign around free giveaways and exclusive fan experiences. NFT holders get access to a “gate” Discord server where Pall and Taggart interact with fans directly, answering questions and playing music. Instead of paid meet and greets, the duo invites token holders to meet backstage at shows. “It really felt like [the fans] was part of something no one else was, says Alpert. “That’s the power of NFTs.”
What started out as free NFTs are now changing hands for an average of $55 each. The tokens have naturally increased in value as the duo have added new perks for their fans, such as a recent free “airdrop” of the lo-fi version of the album. Perhaps Web3’s killer use case, then, is not the hyperfunding of music, but a “sincere, modern version of the fan club”, as Alpert puts it.
NFT platforms are also pivoting to explore these free use cases. Decent.xyz started as a Web3 music platform to sell NFTs backed by streaming royalties, but now offers a variety of non-financial Web3 tools for artists. “Our team has always been looking for less speculative use cases,” says Charlie Durbin, founder of Decent.xyz. “They force people to consider what NFTs are good for beyond patronage and trading.”
Durbin sees free NFTs as a new layer in the artist’s funnel that allows them to convert social media fans into stickier “collectors.” Emails and phone numbers are hard to collect, he says, but “free NFT promises to tip those odds.”
Another platform called Showtime.xyz allows artists to give their fans a free NFT in exchange for pre-storing their track on Spotify. Meanwhile, POAP is an app where artists can give fans a free NFT as a reward for showing up to digital and IRL events.
Last year, independent pop artist Annika Rose gave out nearly 500 POAPs to her fans every time she interacted with them, serving as proof of their support at the start of her career. “She needed to grow [her community] one member at a time, says Hannah Hyman, Web3 project manager at NVAK Collective, the Web3 record label that represents Rose. “By offering a free POAP to people Annika engaged with, she was able to timestamp when she connected with them, introduce them to her artistry, and begin to develop a relationship with them without having to sell anything.”
When Rose later released a paid NFT, she put all POAP holders on a “presale” list at a discounted price. It sold out immediately, ensuring that NFT went straight to her earliest fans and supporters rather than speculative traders.
Avoiding speculators was also key for The Chainsmokers. “We tried to minimize it as best we could,” says Alpert. Eighty percent of the tokens were only available to the Chainsmokers VIP list for the first two hours, ensuring that existing fans had priority access.
Of course, none of this means that speculation and financialization of NFTs will disappear. “I’m not saying no to it as an income stream,” clarifies Alpert. “I think it can be very useful for developing artists, especially those with a small but loyal fanbase. But I think for big artists, creating a community is a much more powerful and pragmatic use.”
The future of Web3 is probably somewhere in the middle: A healthy combination of non-speculative NFTs to build community combined with financial NFTs to unlock new revenue streams. In retrospect, many realize that turning the music industry into a casino was perhaps a misjudgment, but sustainable use cases for blockchain and NFTs can still add value to an artist’s relationship with their fans.
