Music has been an integral part of humanity since the beginning. I'm not even going to look it up to confirm that's true because there is nothing that could convince me otherwise. Ants build ant piles, meerkats observe inquisitively, seals clap their fins together while saying "ar", and humans make music. The vast majority of that long musical history has been centered around live performance.

The first recording device, the phonograph, was invented in 1877. The only way to hear music before that was to see musicians play it live. The recording industry continued to grow from that point and evolved through different formats, starting with the wax cylinder, then vinyl, tape, cassettes, and CDs. CDs, with their high price as a physical item and low cost to produce, were the absolute pinnacle of the record business. The nineties, the CD era, were to the record business as the 2010s were to the software business, with record companies paying out huge advances to unproven artists.

This all came to an end around 2000 when digital file sharing allowed for the infinite replication of recorded music. In a few years, musicians went from making fifteen dollars per listener to fifteen dollars total from their records. This led to the creation of ways to monetize digital music in a more fair and legal way, first with iTunes and now with Spotify. Yet, recorded music revenues for musicians are still far lower on average than they were during any point when physical record sales were popular. This has led us back to the start, with live performance being the center point of most musicians' careers once again.

Zooming out, it almost seems like the natural order for music to be all about live performance again, as it has been for almost the entirety of human history. A real "nature is healing" moment.

But, I would argue that live performance being the only practical way to sustain a music career results in all of us missing out on some amazing musicians. Those who are not as focused on performing live. Those whose main fascination is diligently sculpting a pleasing combination of sound waves to be preserved forever. The main advantage of recording music being marketing for live concerts, as it is currently, results in mismatched incentives for the listener, who wants to listen to the best music possible, and the artist, who wants the listener to go to their concerts. Suppose the listener enjoys classical music while relaxing, but prefers to go to EDM concerts, does that mean the listener values classical music less than EDM? Not necessarily. To put it in basic terms, artists making less money from recorded music results in lower-quality records.

To most, this war seems over already. The streaming genie is out of the bottle and now all music is at our fingertips. Why would anyone pay more than ten dollars a month total for music when they don't need to? But there is one trend in particular that stands in opposition to that assumption: vinyl record sales.

2022 was the seventeenth straight year that vinyl sales grew in the U.S. Vinyl is purchased to be both consumed and collected. Many would argue that they like vinyl because the sound quality is better, but as a former professional sound engineer, I am extremely skeptical that most vinyl collectors could tell the difference between analog and digital music playback in a blind test. The main reason people are buying vinyl is because they want to own the music they love and for other people to see it. They want to have a physical connection with the music and artist. They want guests to see their collection and discuss it when they visit. They want everyone to know that they really care about the music and that they have good taste.

Music NFTS are digital vinyl. It is music whose ownership is recorded on a blockchain. They are a way to have that same sense of ownership that comes from vinyl in a digital context. Thinking like this makes it easy to see the potential value, since unlike vinyl, NFTs are not limited to people who own a record player and can afford expensive physical records. NFTs are accessible to everyone with an internet connection and are on average much less expensive while at the same time providing more income to the artist since there are no physical production costs.

There are two main disadvantages of NFTs as a means of collecting music when compared to physical records:

Terrible wallet user experience
Lack of tools to show off your collection

The wallet UX issue is being solved by many smart people. It is simply a matter of time and immense progress has been made in just the last year on things like account abstraction and layer 2(low-fee) blockchains.

The answer to number 2 is open social networking protocols. Social media platforms that integrate open blockchain-based protocols allow users to bring their digital property into a social context. Vinyl records bring friends together around a shared love of music. The digital equivalent of this is having on-chain music in place of physical records, and web3-enabled social profiles in place of the home. Music fans can show off their music collection to the whole world in a digitally native way rather than only those in physical proximity. Right now, music NFTs are like in-game items or skins that can be purchased for a game, but it is still to be decided what that game actually is. Decentralized open social protocols could be the game that unlocks the potential of on-chain music.

The Record Business is Back, and It’s Digitally Native