We've seen a few music artists dropping NFTs. We've seen even fewer dropping fan tokens.

In today's post, I'll dive deep into fan tokens, what they should be like, and explore how, if done correctly, they can change music in a way NFTs won't.

I want to start this section with a quick overview. The web3 music community is staying strong during this rough period. It's positive to see new artists joining the space, and most importantly, they're trying new things - paving the way for the future of music in web3.

Now, while many artists are joining the space and the number of new music collections seems to grow, the revenue generated is marginal. This opens a whole different can of worms where many individuals in the space will mention statements like "I'm not in NFTs for the money", or "I want to build a community first". While these statements could be valid, I'll focus today on a model that can financially change music while empowering artists.

While a number of companies have emerged with tools that allow artists to drop their own "artist tokens", I feel there's a better way to do things.

This requires a bit of background information.

There are a number of creation tools that allow artists to create their very own fungible tokens. Many have tried these but I disagree with how they work.

Generally, these tools have their own token & smart contract and all music tokens created with these tools have no smart contract of their own - but rather they're a “sub-token” of the one created by the tools.

Let me break that down.

Let's say I create Music Token Hub (a fictional company), a platform that lets musicians create their artist tokens. There are three key elements to my platform: the smart contract, the token (let's call it $MTH), and the platform itself.

The distribution of their $MTH token might look like:

35% Investors 15% Team & advisors 20% public supply 5% community 25% for sub-tokens

"What's the problem with that?" you may ask.

As you can see, any tokens that are created via the Music Token Hub, will always be a sub-token of $MTH, limiting the tradeability of the token just within the Music Token Hub exchange, and forcing the creator to forgo the ownership of their own token and smart contracts (as they belong to the Music Token Hub).

Many music artists are opting to hire their own developers when creating NFTs. This is great - it shows accountability and drive. Think of it as choosing your own producer, mixing & mastering engineers.

Taking into consideration the number of musicians that create their own contracts, the web3 community should open-source the code needed for artists to create their custom fungible tokens.

A few things artists dropping their own token should consider are:

• Tokenomics

• Listings

• The drop

I’ll be exploring “listings” and “the drop” in an upcoming post, so today I’ll look into Tokenomics.

It'll probably get a bit technical but it’ll make sense in the end.

An example of token supply could be similar to the one used for $MTH with a few adjustments:

35% Artists & creators: The portion of the total supply kept for the artist, songwriters, producers... and anyone else who took part in the music creation process
40% Private sale: This is where it gets very interesting. Instead of relying on a single label to offer you a deal, this model opens the floor for multiple labels to invest in a musician (however early they are in their career). More on this later.
20% public supply: The portion of tokens to be sold during an ICO. 5% Community: The portion of tokens to be airdropped to early community members.

Note that not all 10M tokens will be available to the rights holders & investors right away. An interesting vesting schedule could look like:

20% public supply immediately available after ICO. Artist, Private sale, and Community portions will vest every quarter during a period of 4 years with a cliff period of 12 months.

"Wait, wait, wait. What the hell does that sentence mean?"

This means that the artist will raise funds from the private sale (30% total supply) and the public sale (20% total supply) but the value of the token won't sink as the investors, artists and community won't be able to trade their tokens at least for 12 months.

This prevents large investors, artists and fans from dumping the price of the token

Many artists dream with getting a record deal. That sweet $100k that could lead on to a tour, and a second album, and then a $1M+ advance. This limits the artist to a single option. One label to offer the advance and give them that chance to finally break.

However, offering a token based option, artists have the opportunity to raise funds for their album from multiple labels and investors, and labels can get a stake on potential future stars without fully committing to a full advance.

That means, instead of relying on a single label to offer funding for a music project, you can invite multiple labels to become passive investors into a music project - expanding their rosters while removing any further responsiblities.

Artists that join web3, they are simply offering small supply NFT collections at really low prices (and most often than not, for free) in order to build their community and careers.

Making this sort of setting easy for musicians would mean many more could have the funds they need to build a team, release their music, make a living.

There are a few limitations right now, though:

Legislation: If music fan tokens need to be regulated, that would mean many artists won't get on board with the idea of dropping a token as the costs to be compliant with regulations will potentially be larger than what they'd be raising.

Industry backlash: A token based economy in music could give the wrong impression to record labels that the decision making power is stripped away from them.

While this might sound like a potential route to take power away from record labels, it's not. A music industry that allows a model where music institutions & fans are investing in artists can really amplify the revenue generated by such niche industry.

Most revenue in music is generated by the effort, blood, sweat and tears of music professionals that work alongside artists to exploit music. If on top of that, we allowed the average fan to also trade, invest and speculate the value of tokens related to a musician, it could generate a new inflow of cash that can multiply the year-on-year music revenues.

These ideas shouldn’t be taken as definite or advice of any kind. My views are personal and always subject to change if the adequate evidence is presented. 

This information is not financial advice and it’s intended for entertainment & educational purposes only.

We've seen a few music artists dropping NFTs. We've seen even fewer dropping fan tokens.

In today's post, I'll dive deep into fan tokens, what they should be like, and explore how, if done correctly, they can change music in a way NFTs won't.

I want to start this section with a quick overview. The web3 music community is staying strong during this rough period. It's positive to see new artists joining the space, and most importantly, they're trying new things - paving the way for the future of music in web3.

Now, while many artists are joining the space and the number of new music collections seems to grow, the revenue generated is marginal. This opens a whole different can of worms where many individuals in the space will mention statements like "I'm not in NFTs for the money", or "I want to build a community first". While these statements could be valid, I'll focus today on a model that can financially change music while empowering artists.

While a number of companies have emerged with tools that allow artists to drop their own "artist tokens", I feel there's a better way to do things.

This requires a bit of background information.

There are a number of creation tools that allow artists to create their very own fungible tokens. Many have tried these but I disagree with how they work.

Generally, these tools have their own token & smart contract and all music tokens created with these tools have no smart contract of their own - but rather they're a “sub-token” of the one created by the tools.

Let me break that down.

Let's say I create Music Token Hub (a fictional company), a platform that lets musicians create their artist tokens. There are three key elements to my platform: the smart contract, the token (let's call it $MTH), and the platform itself.

The distribution of their $MTH token might look like:

35% Investors 15% Team & advisors 20% public supply 5% community 25% for sub-tokens

"What's the problem with that?" you may ask.

As you can see, any tokens that are created via the Music Token Hub, will always be a sub-token of $MTH, limiting the tradeability of the token just within the Music Token Hub exchange, and forcing the creator to forgo the ownership of their own token and smart contracts (as they belong to the Music Token Hub).

Many music artists are opting to hire their own developers when creating NFTs. This is great - it shows accountability and drive. Think of it as choosing your own producer, mixing & mastering engineers.

Taking into consideration the number of musicians that create their own contracts, the web3 community should open-source the code needed for artists to create their custom fungible tokens.

A few things artists dropping their own token should consider are:

• Tokenomics

• Listings

• The drop

I’ll be exploring “listings” and “the drop” in an upcoming post, so today I’ll look into Tokenomics.

It'll probably get a bit technical but it’ll make sense in the end.

An example of token supply could be similar to the one used for $MTH with a few adjustments:

35% Artists & creators: The portion of the total supply kept for the artist, songwriters, producers... and anyone else who took part in the music creation process
40% Private sale: This is where it gets very interesting. Instead of relying on a single label to offer you a deal, this model opens the floor for multiple labels to invest in a musician (however early they are in their career). More on this later.
20% public supply: The portion of tokens to be sold during an ICO. 5% Community: The portion of tokens to be airdropped to early community members.

Note that not all 10M tokens will be available to the rights holders & investors right away. An interesting vesting schedule could look like:

20% public supply immediately available after ICO. Artist, Private sale, and Community portions will vest every quarter during a period of 4 years with a cliff period of 12 months.

"Wait, wait, wait. What the hell does that sentence mean?"

This means that the artist will raise funds from the private sale (30% total supply) and the public sale (20% total supply) but the value of the token won't sink as the investors, artists and community won't be able to trade their tokens at least for 12 months.

This prevents large investors, artists and fans from dumping the price of the token

Many artists dream with getting a record deal. That sweet $100k that could lead on to a tour, and a second album, and then a $1M+ advance. This limits the artist to a single option. One label to offer the advance and give them that chance to finally break.

However, offering a token based option, artists have the opportunity to raise funds for their album from multiple labels and investors, and labels can get a stake on potential future stars without fully committing to a full advance.

That means, instead of relying on a single label to offer funding for a music project, you can invite multiple labels to become passive investors into a music project - expanding their rosters while removing any further responsiblities.

Artists that join web3, they are simply offering small supply NFT collections at really low prices (and most often than not, for free) in order to build their community and careers.

Making this sort of setting easy for musicians would mean many more could have the funds they need to build a team, release their music, make a living.

There are a few limitations right now, though:

Legislation: If music fan tokens need to be regulated, that would mean many artists won't get on board with the idea of dropping a token as the costs to be compliant with regulations will potentially be larger than what they'd be raising.

Industry backlash: A token based economy in music could give the wrong impression to record labels that the decision making power is stripped away from them.

While this might sound like a potential route to take power away from record labels, it's not. A music industry that allows a model where music institutions & fans are investing in artists can really amplify the revenue generated by such niche industry.

Most revenue in music is generated by the effort, blood, sweat and tears of music professionals that work alongside artists to exploit music. If on top of that, we allowed the average fan to also trade, invest and speculate the value of tokens related to a musician, it could generate a new inflow of cash that can multiply the year-on-year music revenues.

These ideas shouldn’t be taken as definite or advice of any kind. My views are personal and always subject to change if the adequate evidence is presented. 

This information is not financial advice and it’s intended for entertainment & educational purposes only.