The embrace of NFTs by Kings of Leon was a wake-up call for their record label—and the music industry, which is now racing to avoid the same mistake that almost killed it 20 years ago.

More than two decades after it released its first album, Kings of Leon was honored at the Rock & Roll Hall of Fame. But what got the southern-inflected rock band to Cleveland last April was not its music; it was its non-fungible token (NFT) called “NFT Yourself.”

The digital tokens went on sale in March for the Ethereum equivalent of $50 a pop, and included a copy of the band’s latest album, a unique piece of artwork, a one-off gold record and musical outtakes. Over the two weeks it was available, KoL moved 6,500 copies of “NFT Yourself” for a total of $2.2 million, including six “Golden Tickets” that sold at an average price of $100,000. Those extra-special NFTs included lifetime VIP concert access to one show per tour, complete with a chauffeur. Since the original two-week offer, the NFTs have generated another $246,000 in aftermarket sales, with the band collecting 10% of that.

While the financial performance wasn’t revolutionary, the ripple effects are being felt throughout the music industry.

“Record deals have lost their value, in a way,” says Nathan Followill, Kings of Leon’s 42-year-old drummer. “Nowadays a kid can make a record on GarageBand and put it out on TikTok or put it out as an NFT or put it out in any form. It’s almost like they don’t need to rely on the record industry as much as they used to, which in turn, I think, is making the record industry kind of panic.”

Most people know about NFTs because of the mania this spring surrounding a few auctions of digital art. In March, the lowbrow Wisconsin artist Beeple (real name: Mike Winkelmann) captured the world’s imagination when he sold a collage of 5,000 JPEGs at Christie’s for a jaw-dropping $64.9 million. Musical NFTs are no different, except that in addition to any artwork, they come with audio files like the MP4s sold by Kings of Leon.

“NFT Yourself” wasn’t a massive financial success for the Kings of Leon: At its peak in 2008 the band, which consists of three brothers and a cousin, made an estimated $10 million off its multiplatinum Only by the Night album. But “NFT Yourself” marked the first time a mainstream act fully embraced NFTs and, depending on your point of view, it’s either a revolution, a lucrative publicity stunt or the latest gasp in the decades-long undoing of the traditional music industry.

Other acts have done much better with NFTs. Superstar DJ Justin Blau (a.k.a. 3lau) sold $20 million worth of NFTs since he started issuing them last fall, after teaming up with the surrealist artist Mike Parisella (a.k.a. SlimeSunday) and selling 33 limited-edition NFTs of his latest album, Ultraviolet, which included animated videos by the artist synced with Blau’s music.

“The model that I’m working on is meant to be a reverse record deal,” says Blau, who is 30 and has worked with acts like Rihanna, Katy Perry and Ariana Grande. Instead of what he called the “predatory” 80% that most labels take, he plans to fund production costs by selling directly to fans. His team is now in conversations with Billie Eilish, Madonna and Metallica and preparing for what he hopes will be the first blockchain music auction to be hosted at Christie’s, the London auction house.

Beyond the cash directly earned by selling the NFTs, the digital tokens—each unique and like cryptocurrency, tradable on a blockchain—also provide a direct and permanent link to the super fans who hold on to them. Even though the buyers are just anonymous numbers floating in the blockchain ether, musical acts can use them to market—and sell—new music, fresh artwork, concert tickets and merchandise. Done right, NFTs offer the ease and ubiquity of internet distribution (think Napster), but with digital rights protection built in (think iTunes).

That’s triggered a growing effort to capitalize on the opportunity. Kings of Leon used Yellowheart, a New York-based blockchain startup founded by Josh Katz, a veteran New York music professional, to sell “NFT Yourself.” But the band had other options. Andrew Gertler, who represents singer Shawn Mendez, recently joined Jay-Z and Andreessen Horowitz in a $19 million investment in Bitski, which is building a new NFT platform for music. In May, Miami-based OneOf raised the largest NFT music rounds to date, $63 million, to build an energy-efficient marketplace to sell rare music by the likes of Whitney Houston, Quincy Jones and John Legend. Celebrity investors are piling in. Mark Cuban and Ashton Kutcher joined a $4 million investment in music marketplace NFT Genius in June.

It’s perked up the record companies, too, who are eyeing the rise of NFTs as possibly more dangerous than the pirated MP3 files that sent the industry into a death spiral 20 years ago, but also potentially as miraculous as the streaming technology that has since revived it: Since 2007, revenue from recorded music has surged 35% to almost $40 billion, right where it was at the CD-fueled peak it hit in 1999, according to entertainment research firm, Midia. Weeks after “NFT Yourself”’ was released, executives at Kings Of Leon’s label, Sony/RCA set up a task force to get educated on NFTs, with similar efforts taking root at each of the three major music companies, including Sony Music, Warner Music Group and Universal Music Group.

“One of the things that has been the downfall of the music industry is that we compete very heavily against each other,” says Oana Ruxandra, chief digital officer for WMG. “And then tech comes and they eat our lunch, and we're still competing with each other and won't talk.” Noting the obvious shift in power dynamics NFTs represent, she added: “Any evolution justifies an assessment and evolution of artists’ contracts.”

As long as they can work out the kinks. Yellowheart took a fraction of what a label would have charged to handle the Kings of Leon NFT, but it had hiccups with its tech. Yellowheart didn’t have a music player and no way to support the NFT’s encrypted audio files. Instead it distributed unprotected MP4 files of the band’s new music that can now be easily pirated and shared. Then there were the fees common to Ethereum transactions that cost some fans an additional $90 on top of the $50 cost of the NFT. All this was amidst a broader NFT market experiencing extreme volatility. After hitting a peak in May, when $294 million of Ethereum NFTs were sold in a single week, the market for them dropped 75% by June, according to data site NonFungible.com, before recovering to $302 million in July.

“I would say within the next ten years 70% of albums will be released in NFT form,” says Kings of Leon’s Followill, who describes himself as the band’s resident cryptogeek. Speaking to the press at the Hall of Fame unveiling of the NFTs, a digital image of himself flickering in the background, he shrugged: “Any time you’re just up the road from Jimi Hendrix and the Beatles, you must be doing something right.”