How web3 is changing music distribution in favor of creators
0x7F04
November 30th, 2022

The music NFT landscape has changed dramatically over the past year. Collecting music NFTs has gotten fun, there’s plenty of ways to listen, and creators have the tools they need to experiment with their new drops.

Just to name a few platforms that are playing a role in this

  • Protocols: Decent, Sound, Catalog, stemsDAO

  • Aggregators / Music Players: Spinamp, Ooh La La, Future Tape

We believe there is a missing layer - one that helps creators with discoverability, marketing, and reach - social. With decentralized social media, creators will have even more ways to amplify their creative work and reach new fans.

But in order to look towards the future, it might help to understand how the internet and the democratization of data caused a dramatic change in the relationships between record labels, creators, and consumers.

The internet forced the music industry to change

In the early 2000s the internet was beginning to change the way people obtained information, and applications such as The Pirate Bay and Napster were giving the music industry serious problems. Audio was no longer confined to physical storage such as vinyl records and CDs. People could rip audio files and share them with anyone in the world, and the concept of paying for music was beginning to fade.

To combat the streaming services that distributed music freely, record labels would deploy legal teams to sue these services or demand high costs to continue operations. The music rights still belonged to the record labels, and the pre-internet laws favored them. Of course, Spotify was the breakout streaming service, due primarily to the fact that they worked with record labels on a revenue and data-sharing agreement.

So what did Spotify offer that made it so successful?

Although anyone could illegally download music, it was not a great user experience. The process of choosing a torrent, downloading the file, and organizing it yourself was not ideal.

With Spotify, anyone could use it to browse and listen to music like a jukebox. It was instant - no buffering. They also introduced their playlist feature; you could curate a list of songs that you liked, play it back whenever you wanted, and share it with your friends.

Spotify gave its users a tailored experience. This is what web2 was all about - user-generated content with feedback loops built in. The more you used Spotify, the more it knew about your preferences, creating an experience that you could not live without.

Let’s take a step back and observe how the internet changed the music industry

  • democratized access to data, making it easy to find and share music

  • downloading music was deemed illegal (ie: The Pirate Bay)

  • streaming services like Spotify partnered with record labels, making music streaming as ubiquitous as running water

In the 2010’s the new landscape of social media created opportunities and destroyed outdated models letting a different generation of artists take over. Web3 social and distribution is opening the door for the next wave of artists to change the game once again.

What has the potential to change music distribution?

At the core of the argument for blockchain technology is the concept of consensus. A decentralized network can attest to the fact that a piece of information online is legitimate. If you layer complex software on top of that, you have programs that can run on verifiable datasets. Finally, for secure access control we have client-side encryption via crypto wallets.

This is how you can buy a music NFT on the internet and truly own it.

And what is a music NFT? It’s just an NFT that references a song (ie: an mp3 or wav file) and some cover art (ie: a png file). So it’s a file that is distributed on the internet, yet its ownership can be traced to one wallet. Not only that, but its creation and history of owners can also be traced. It’s also interoperable, meaning it plays well with other programs on blockchains.

When an artist distributes music through a record label - the music rights belong to the record label. When an artist distributed music through web3 - there are no music rights. Only the rights that are programmed into the NFT.

This means that - assuming we have applications that provide the same streaming experience and global reach as Spotify - an artist can skip the traditional model altogether and release music in a format that benefits them. By format, I mean a music NFT. For each goal that the artist has in their creative journey, they can issue their work as an NFT with different functionality. For example

  • an NFT with a limited supply and royalties baked in

  • a special edition NFT only available to super fans

  • a rentable NFT that trades hands on streamable cash flows

Imagine the internet in 5-10 years when digital items (NFTs) can be moved around and used in applications and experiences seamlessly. These digital items have monetary value, and there are markets with people willing to pay for them. Every sale brings a percentage in royalties for the original creator. If someone wants to use it for a commercial production, they must actually own the item (ie own the NFT) or have access to it. One could also rent the NFT from the current owner by streaming money directly to their wallet.

It’s tough to say what a future version of Spotify looks like, or which combination of these (or not-yet-thought-of) features will be used. Maybe there won’t be just one. The interoperability of web3 enables an infinite amount of experiences using the same underlying protocols.

Introducing ClubSpace - a new way for creators to market their music NFTs

Think about how the internet enabled file sharing and how record labels evolved to not only help artists with distribution, but also with amplifying their music, reaching a wider audience, and discovering their “super fans”.

What if artists had to the tools to amplify themselves? What if the interoperability of web3 took care of the distribution and discoverability for them? Artists would no longer need to rely on a single platform or record label deal.

This is the reason we built ClubSpace.

Promote your music NFTs with a live listening party
Promote your music NFTs with a live listening party

ClubSpace is like Twitter Spaces meets radio stations - but with music NFTs and on web3 social.

When an artist creates a new song on any open protocol (ie Decent) and wants to spread the word on web3 social (ie Lens), they can host a live listening party with a curated music NFT playlist. Anyone that tunes in is listening to the same live audio stream, can engage with any of the connected Lens profiles, and decide to purchase the host’s new music NFT then and there.

There are a few other features to maximize the earning potential of anyone that wants to host their own ClubSpace - and we cannot wait to share them over the coming weeks.

ClubSpace will soon be available in closed beta while we improve the software. Anyone can join a live space, but creating one requires you to have our Sismo ZK badge - ClubSpace by Mad Finance.

For updates - follow us on Twitter or Lens.

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