Music NFTs are ready to explode in 2022. So far, despite all the hype we’ve only seen the tip of the iceberg with regard to what NFTs can accomplish. Recently MBA had a chance to sit down with Fansi.com CEO Tai-Ku ‘TK’ Chen to learn more about where the industry is heading and what the future holds for artists. Fansi, a Taiwan-based company that specializes in curating Music NFT drops and provides a platform where fans can directly influence the success of their favorite artists. TK gave us some great insight into how Fansi creates opportunities for artists, and how they plan to shape the space going forward.
“In the music industry you can sell anything but music, It’s not a sustainable model”
Having a background in computer science and being a self-proclaimed ‘amateur musician’ TK has always had a fascination with combining music and technology. One of his motivating concerns when starting Fansi was his concerns about how the current music industry model for up and coming artists isn’t ideal. TK explains, “Most indie artist can’t survive with the current streaming music model. Even big artists need to rely on tours and merch to make a living. In the music industry you can sell anything but music, It’s not a sustainable model”.
How can NFTs improve the current model for artists involved in the music industry?
“For more than 10 years I have been involved with software startups. Taking a fully holistic view on how to utilize technology in business. When I first was introduced to the blockchain I immediately immersed myself into this groundbreaking technology and realized its potential for use in emerging startups. I realized You can pretty much apply web 3 or blockchain into every industry. This technology will create a new world, and this new world has to be built from scratch, everybody has a fair say, and everyone has to work together to shape this new world. So we think music will be a huge component in this web 3 world. It’s just that no one has figured out how to do it correctly yet. Music in the web 3 era is not for listening anymore, it’s a new form of asset. As a creator you have to treat every NFT holder as one of your shareholders. They may not be exactly like shareholders but they will share the same privileges or rewards a shareholder of a major company would.”
“The fans become your shareholders, your ambassadors, and your sales force.”
And how does this model work for the artist-fan relationship?
“NFTs are tradeable, ownable, and ownership can be verified, those three traits are very similar to what shares can do for shareholders. This puts the Fans in the position almost as an A&R where they are always looking for great talent to invest in. NFTs create a unique relationship that can be built between the artist and fan. Now fans are not only purchasing merchandise or going to concerts but they can be part of the artist’s career and grow the artist, and get a real financial reward in the artist’s success. The fans become your shareholders, your ambassadors, and your sales force. Fans will have a real stake in the success of their favorite artist because the more successful the artist becomes fans can also participate it the rewards of that success. This is a relationship that is very unique and blockchain is pretty much the only technology that can provide this type of sustainable business model. The artist needs to understand that is not about selling things to your fans its more about how can you utilized this technology to build a unique partnership with the fans.”
How are NFTs misunderstood?
“The most common problem with music NFTs is getting people to wrap their heads around the idea of spending $200 dollars on a MP3 when you can just listen to the same music on spotify or youtube. If the artist tries to sell an NFT as just a piece of music it isn’t going to work, because no one is going to pay that type of money for something that already exists for free. Artist shouldn’t use music that already exists on streaming platforms to wrap into an NFT and sell. They need to try and create some kind of uniqueness or rarity for the buyers to understand what they are going to buy. NFTs are just a media that allows musicians to create this unique relationship with the holders, so it’s not really about how great your music is. The artist must know why they want to issue an NFT and how an NFT helps them to reach the fans that are willing to be a partner in the success of the artist. So whether its used as crowdfunding for your next album or used to allow the NFT holder special access to concerts or Discord channels, it must have a purpose. For example an artist might issue their demo as an NFT and give the NFT holders a cut in the proceeds of the album. Artists might want to use NFTs as an extension of their persona in the virtual world and create content that holders can collect and trade almost like baseball cards. All in all artists can use NFTs as a Verified member access card which allows holders access into the community built around your music where the fans can have direct input and decision making power or receive perks like merch and access into real life spaces based on ownership.”
“Everyone is still trying to figure out how to issue a successful NFT. Fansi approaches this process with the artist in a curation role.”
What does Fansi want to accomplish in the music NFT space?
“Fansi wants to build a web 3 music industry. There are two main products that Fansi specializes in, Fansi which is a Music NFT issuing platform and Metaboom a de-centralized music distribution protocol. Fansi helps artists to issue music as an NFT as well as provide a consultancy service to help guide artists through the process of taking their idea to fruition. Fansi also helps to provide market insights and give advice on pricing, along with how many NFTs to issue. The kind of model an artist should release with is also important. Open editions, limited editions or even free giveaways. So every artist looking to do a drop with Fansi has a team guiding them through to process. Everyone is still trying to figure out how to issue a successful NFT. Fansi approaches this process with the artist in a curation role.”
And how does the artist and NFT owner monetize the asset?
“For most buyers the incentive is not strong enough for NFTs to reach the mainstream because the practicality of what to do with a NFT is still lost on most. Metaboom acts as a NFT music player set in the metaverse. NFTs purchased from any platform can be played and shared to your friends and by doing so you can earn tokens. This gives the holders
with a great music collection the ability to be their own DJ earning rewards for sharing their collection to their network. DJ to earn. The more people who listen to your collection the more tokens you’ll earn. Music in WEB 3 is a new class of asset that you can earn passive income from. For the buyers the music NFT itself can raise in price and the token economy behind it can drive incentive to purchase NFTs as a source of passive income. These two products help to complete a full ecosystem within Web 3 and are the main focus of what Fansi wants to create in the web 3 music space.”
“Most artists compare one drop with Fansi equal to or close to 1 or 2 years worth of streaming income.”
How do Music NFTs compare to the already widely available streaming or DSP services available?
“This model is the first step to eventually becoming a competitor to the streaming model. In the future, artists will use streaming platforms for marketing themselves to mainstream consumers, but the majority of their content will only be available through the NFT format. Most artists compare one drop with Fansi equal to or close to 1 or 2 years worth of streaming income. Steve Aoki, in an interview said that last year his proceeds from his NFT drops equaled more than the last 10 years of his streaming income. 1 year equals 10 years. In many cases some free versions of the music may be available on streaming but the valued versions will only be available through NFT.”
What are the components of a successful NFT drop?
“Probably one of the most important factors is how familiar you are with NFTs. Are you just here for a money grab or do you have a thoughtful plan to roll out to your fans? Will you offer some kind of utility function, redeemable give away, or access to discord server? In other words, do you have a long term goal for the proceeds? Education on the potential of NFT is also important. Educating the artist and the fans about NFTs is difficult. Education includes making sure buyers are using official links and understand how to watch out for scammers, and understanding that some offers in the metaverse may be too good to be true so it’s important not to get greedy when it comes to claims or offers. With headlines of scams and a general mistrust or adaption to what many believe is just a fad, Fansi looks to be one of the trusted curators in the space We want to build credibility in the space by being a trusted source for NFT drops. This means we make sure our artists are 100% real, so we are screening the artists and checking for IP infringement. By putting that responsibility on ourselves we hope to gain the trust of the users and put our reputation on the line to make sure every piece of content we drop is authentic.”
“It boils down to treating the fans with respect and like a partner on your journey.”
What is an example of one of your more successful NFT drops?
“Multiverse is a popular rap group from Taiwan that we did a drop for in September of 2021. They sold 400 NFTs at 50usd in about a week. Part of the success of this drop was that Multiverse was very active with the community they have built. They spent considerable time with their fans educating them on what Music NFTs are and why they
wanted to do a drop. They did more than 5 live stream Q&As and explained to their fans how NFTs can help artists. Fans respond to being genuine and transparent. It boils down to treating the fans with respect and like a partner on your journey.”
What advice can you give to people who want to start investing in Music NFTs?
“Everyone should try it out and at least purchase one NFT to get a better understanding of how it works. Many artists might be afraid to do a drop because of fear of trying new things or think it might hurt their branding. But artists can always just give away a drop just to see what it does. The NFT community is definitely not built top down. It is a community built from the bottom up. Working together to grow the community is how the artist and fans can grow. listening to the fans’ voices is one of the most important strategies.”