A key takeaway from our Sandbox Summit Web3 Special at the end of June includes that NFTs sit alongside physical merch and music in appeal rather than superseding them. And that another good way to think about the opportunities of web3 is to think of it as a technology that serves your niche community – unlike Web 2.0 which is about serving customers at volume.
While we’re still in the process of figuring out what the most promising NFT use cases for music might look like, we’re starting to see D2C companies embracing the technology. Single Music, a whitelabel app that allows artists and their teams to add additional functionalities to their Shopify stores, has just announced a new “tokengated commerce” feature – which enables fans to use an NFT as a “digital key” to gain access to exclusive offerings from the artist. These could be merchandise, audio, or video content – a bit like exclusive fan club content.
Tommy Stalnecht, CEO of Single Music, explains: “Web 3.0 is having a huge impact on the broader creator ecosystem, especially in the music space, but the feedback I hear most often is that NFTs don’t inherently have value on their own. A better way to think about tokengating is to compare it to a fan club. A fan purchases an NFT through a creator’s Shopify storefront, which gives them access to exclusive offerings and experiences that only fellow NFT owners have access to. Put simply, we’re letting artists create NFTs that actually do things… that unlock specific tangible value.”
From music sales to livestreaming to NFTs
The company originally started by enabling artists to sell their digital music on their Shopify stores whilst still having these digital sales counting towards the charts in major markets like the US, Canada, France, Ireland, UK, and Australia. Stalknecht tells us how Single further evolved during the pandemic: “we very quickly put together the ability to do ticketed livestreams and video on demand within the Shopify storefront, so you can sell your own tickets and use that storefront as the place for it. And we actually are one of the biggest livestreaming companies that no one really knew about. We sold over 1m tickets and did over 500 different events (for example, for KORN) but they were all white-labelled, and behind the scenes.”
Single Music was involved in Kings of Leon’s standard album release, when they were also selling an NFT version of the album through OpenSea and Yellowheart. Curious about the possibilities of NFTs, the company was entered into Shopify’s NFT Beta program: and now are one of the first companies that can sell NFTs through Shopify. Fans can thus take those NFTs, and unlock access to content or products within an artist’s Shopify store.
Single has now secured a strategic investment from Shopify to “continue its mission of empowering creators to retain control over their art, audience, and revenue.” Stalknecht says: “we are a digital content layer that sits on top of Shopify. With that you’re able to monetise that content however you would like. You can sell it as a download, which is what we started with, you can ticket it as a pay-per-view or a video on demand transactional – and now you can do gating with an NFT: selling somebody an NFT, then using it to gate [that digital content]. And very soon, we will be adding in subscriptions so you could create a subscription recurring model on top of Shopify as well. That’s effectively where Single is headed. Digital content on top of Shopify, next to your physical merch, monetised however the creator or artist wants to.”
“Tokengating” an artist’s Shopify
Music Ally tried a demo of this NFT functionality, and it’s very easy to set up. The artist’s NFT in-platform app is first associated with their current Shopify storefront. Single is a completely white-labelled product – it’s used in Adele and Dua Lipa’s storefront, but the average user would never know. So adding an NFT to the mix happens in a similar way to any other product.
From the NFT section within the backend, you can choose either ‘Create NFT’ or ‘Tokengate Existing Collection’. To create an NFT on Single Music, you upload artwork to use for that NFT (which, at the moment, can be an image or animated GIF – video will be possible soon.) Add a title, associate it with the artist’s account, provide a description, and an external URL. This latter detail defines where you want to send the fan after they’ve transferred their NFT into their wallet – it could be an exclusive product that you have gated access to.
After setting the price, total supply, and release date, you’re good to go. The NFTs are randomised automatically –or you can make them sequential if you wanted it to be a numbered fanclub pass for instance – giving fans bragging rights of being a fan with an early fanclub membership number.
Once you’ve connected a crypto wallet (one that supports the Solana blockchain, like Phantom wallet), you will also be able to assume royalties from the secondary market – for instance, taking a percentage of any re-sales of the NFT. You can also connect multiple wallets – letting you create automatic splits.
NOTE: If you’re unsure about these web3 and NFT terms or you’d like to brush up on your understanding of the NFT ecosystem, here’s our Sandbox Guide to creating NFTs!
The “gating” part is where users can get creative. You’ll then define what you want this NFT to do: for example, a NFT could be defined to unlock access to a specific T-shirt or any other merch product. You can also define how many NFTs someone needs to own in order to buy an item – and how many of the items they are allowed to buy. Stahlknecht says that, “the beauty of the way the system works is you can add utility any time. You can come back and say everybody that’s a holder of this, now you have access to this new t-shirt.”
The fan experience
One of the friction points around NFTs is making it as easy as possible for fans – here, the NFT checkout process is just like any other merch product: fans can use Paypal, credit card – or, if they want to, they can pay with crypto.
Fans can buy albums, t-shirts, NFTs and everything else, all on the same transaction. This arguably moves NFTs more into a space that is already familiar with music fans, rather than sending them onto new platforms they might be wary of. We think this will play a key part in making NFTs more popular and accessible. On the backend, Single is handling the blockchain portion: it mints the NFT, and then delivers a claim link to the fan, and walks them through the steps to claim the NFT, such as creating a Solana wallet if they don’t have one yet.
Once the fan has claimed their NFT possession, you can direct them to a destination of your choice. If it’s to purchase an exclusive gated piece of merch, once the item is bought, Single marks the NFT, so that the fan can only purchase the item once. Stalknecht thinks this simplicity is important: “The only way to ever get to the t-shirt is by coming in and connecting your wallet and now you have access to that. We aggregate everything you have access to to make it very clean for the fan. A fan can have 10 different NFTs and these 10 NFTs give access to 10 different things. It all lives in one place.”
There are no fees for the initial creation of the NFT, as Single’s business model is based on sales in the backend – which is $5 per NFT that is sold. That price covers the minting and sale of the NFT, as well as the utility, content hosting and use of the gating software. There is no separate subscription needed. As Single is using a mint-on-demand system, also called lazy minting, there are no hidden gas fees involved either – these are baked into the price the fan pays. (The Solana blockchain has very low gas fees – fractions of a penny – per transaction.)
This is not too dissimilar, Stalknecht says, to an artist selling merchandise that bundles access to an exclusive livestream: “the value proposition to a fan is: I pay 10 bucks for a ticket, or I pay 25 bucks for a t-shirt and then I get something for free. NFTs effectively can operate the same way. I get the t-shirt and then I get this fanclub pass that’s going to grant me access to stuff over time.”
And that’s where Stalknecht and his team see the huge potential for NFTs.“For a fanclub pass, proof of fandom, that makes a ton of sense, and for a marketing campaign around a specific album I think it makes a ton of sense. You can have a NFT comes for free with a t-shirt and that grants early access to the music video or something like that – limited-release stuff.”
Music Ally is excited to see how music marketers will incorporate tokengating into their upcoming campaigns, both to upsell physical products but potentially even to provide exclusive access to teaser content to their most engaged fans.
Want to see the fan experience in action? Visit this link to purchase a free NFT then use it to unlock a special prize: https://sn.gl/gating-demo.