The music industry is notoriously extractive.

Top streaming platforms often offer musicians only a fraction of the value their music creates, leaving independent artists missing out. But what if it didn’t have to be that way?

Thanks to smart contracts, NFTs can help more returns make their way to the artist. This means no one in the music scene should ignore music NFTs, since they represent one of the most intriguing opportunities to ever hit the industry.

The music business has radically changed from the days of rock ‘n roll — and not just in the types of tunes playing over the airwaves. Before the days of being extremely online, sales mostly depended on physical album sales, which meant that record labels and artists had to rely on brick-and-mortar retailers to sell their music (and as a result, record labels had a lot of control over the distribution and promotion of music).

The arrival of streaming platforms like Spotify and Apple Music allowed listeners to access a wide range of music for a relatively low monthly fee, disrupting the traditional music industry business model.

While that has allowed artists to reach more people than ever before, it has also resulted in lower earnings for many artists, as they receive only a small fraction of a penny per stream — for instance, Spotify takes between $0.003 to $0.005 per stream on average, leading to a roughly 70/30 split between the artists (or rights holders) and Spotify.

NFT streaming networks are optimized to return more value for creators and fans. For one, programmatic solutions are cheaper to use than traditional streaming models like Spotify, which require a lot of investment capital to launch upfront that must later be paid back, while also carrying heavy costs for core staff. By storing music ownership and streaming rights on the blockchain, much of those costs can be replaced by smart contracts. Those savings can then be passed on to the musicians through lower fees.

Music NFTs also harness communities to create a better experience. Artists can communicate with their fans more directly, who can, in turn, lend their support.

Plus, NFT holders can often vote on decisions within their network. Imagine a streaming platform where the musicians and the fans own the NFTs, and thus, a say over how it is operated. By using tokens to align incentives, NFT streaming platforms are more likely to make decisions that benefit their artists and listeners.

In addition to community-focused NFTs that allow users to have control over the streaming platform they use, there are two types of music NFTs directly tied to the music itself.

The first consists of “ownership-based NFTs,” which The Mint podcast host Adam Levy said were “basically tied to IP [intellectual property] rights and royalties. So, when you buy the NFT, you now are entitled to the accrual of revenue that is produced from Web2 audio streaming platforms like Spotify, Apple Music, etc," in a report from Cointelegraph.

The second are “patronage-based NFTs,” which don’t include ownership but are essentially a way to directly support an artist you love – similar to, say, Patreon – while also having the opportunity to potentially sell that NFT for a gain if it increases in value.

You can always buy music NFTs, which lend support to artists and the communities they're building on Web3 platforms. But you can also invest your time into music NFTs by contributing time to NFT music streamers, whether it’s as an active participant in Discords, voting on changes that make these networks better, or creating and posting music NFTs yourself.

You can find music NFTs on several sites. For example, Sound.XYZ is a streaming service that aims to create a platform directly driven by the relationship between listeners and artists, allowing for “a more collaborative music movement, built on web3 technology and values.” Listeners are rewarded for “discovering” a band, with numbered NFTs that prove they were among an artist’s earliest supporters, and also get special access to a Discord community where they can hang out with other listeners and their favorite artists.

Story.XYZ is an NFT marketplace that sells music NFTs offering fans exclusive access to creators, using token-gated communities to help artists better monetize their brand and to provide better experiences for NFT holders, who may be rewarded with first dibs on tickets to high-demand shows, signed memorabilia, or exclusive meet-ups.

One of the biggest web3 competitors to Spotify is Audius, which offers free streaming to listeners while paying artists in its $AUDIO token. The streaming service launched its own “Audius Collectibles” NFTs that allow artists to sell music NFTs to their loyal fanbases. It's collaborated with a number of artists including Odesza, Oshi, and 3LAU, who famously sold his 33 unique NFTs in the first NFT album auction for more than $11 million in February 2021.

The Musical app is founded by and built for creators, allowing their biggest supporters to collaborate directly and earn rewards (including the NOTE tokens and music collectibles). It's one of the most community-centric music NFT streamers in the space, and has worked to foster community clubs and special events.

Built on the Binance blockchain, AirNFTs allows you to create music and music videos for less than a dollar, and even supports the common .mp4 file format. It also lets users stake its tokens, which you can use to play games.

The audio space is not just about music. The popularity of podcasts and videos across web3 platforms is growing, and, as dynamic NFTs and other innovations emerge, even more opportunities will follow across mediums.

Early adopters of music NFTs will benefit most — whether from bragging rights to being some of the earliest of the next great band, or simply by learning how to grow communities, and portfolios, with music NFTs before others.