The music industry culturally is one of the most important industries. Musicians shape culture in numerous ways: live entertainment, liquor, fashion, jewelry, cars, and lifestyle. For as much impact as artists have from a cultural and financial perspective (how much consumers spend because of them), music artists have been underpaid. The music industry generates about $43B in revenue a year. However, only 12 percent of that goes to artists. Artists receive the bulk of their income from streaming, touring, and merchandise sales. Unless you are a mid-tier to A list artist, gaining income from streaming is incredibly hard, which means most artists cannot be an artist full-time.
To make 100k from Spotify streaming, an artists needs to accumulate 22.9M streams, which the majority of artists cannot achieve. In addition, commanding a large audience is not an easy feat for touring post-covid. Merch sales are usually largely linked to touring. On top of that, artists usually have to pay their managers, agents, lawyers, and labels all a fee to operate their businesses. So how does the blockchain help artists in the music industry?
Blockchain technology allows artists to do what is most important…to go Direct-to-Consumer and monetize directly from an artist-to-fan relationship. In Web2, artists have used Spotify, YouTube, Apple Music, etc. as an intermediary to monetize their fan relationships. These marketplaces have been able to amass an enormous amount of daily active users. Thus, making it necessary for artists to place their music/art on these web2 platforms for compensation. Web3 decentralization, NFTs and streaming services, increase peer-to-peer transactions. These technologies help artists, in particular independent artists, regain control of their work/art and their compensation by removing middlemen who currently have the control such as the web2 platforms mentioned. Web3 platforms offer a new way for artists to create community, share music, and get paid in crypto on the blockchain.
Iman Europe was able to go from making $300 a month from streaming her music across streaming platforms to making $60k in 4 music singles NFT drops and one music video NFT drop since November of 2021. Despite having garnered 4 million listens across streaming platforms, she was only making about $300 a month with web2 streaming platforms.
According to Water & Music, an organization that researches digital music innovation, musicians gained took in $83M in primary sales through NFTs last year (2021). Two great examples of the power of web3.
Below are examples of Web3 Music platforms.
Audius - A fully decentralized music streaming protocol that was built with public blockchain infrastructure. This is intended to give artists better insights into who is steaming their music and better control over their tracks and how they are distributed.
Artists are able to distribute their music free of charge, and the team states that it will always be free for artists. Unlike most other music streaming services, Audius doesn’t take a cut of artists’ revenue. The platform has a rewards system that pays artists in $AUDIO for placing on the Audius charts. Musicians are able to receive 90 percent of the revenue in $AUDIO, and the other ten percent goes to stakers that support the Audius network. It’s free to create an account, and you can start uploading music immediately.
While this platform doesn’t allow artists to mint music NFTs, Audius is one of the main places the Web3 and NFT communities listen to music. You can display NFTs you own after collecting 100+ $AUDIO.
Music NFT Marketplaces
Sound.xyz - a service that combines streaming with minting and community listening. On Sound, artists can launch a listening party for new song releases with a series of limited edition NFTs. Listening parties happen daily, and nearly every collection has sold out since the platform initiated its first drop. Artists get to keep 100% of the proceeds generated by the sale. The platform is currently still in beta. It is currently invite-only.
Royal - 3LAU’s new music NFT marketplace that gives NFT owners the rights to songs sold on the platform. The platform is currently highly curated, with 3LAU and his team hand-picking each artist and song that is minted on the site. Fans earn royalties as the music accrues in value and Royal allows musicians to tokenize royalties and sell them directly to fans. Nas’ Royal drop sold out in minutes and so did Diplo’s on Royal.
Catalog - Musicians can release their songs as 1/1 NFTs directly to collectors.
Mirror - A Musician mints their Music NFTs into a DAO Treasury and decentralizes ownership of their content amongst their community via NFTs and Social Tokens. Mirror has become a place for musicians to create DAOs for themselves as an artist project, album, EP, single, etc.
Thomas Pipolo a.k.a. Pip’s Cotton Candy Backstage Passes, made a $20,000 (6.8 ETH) within 24 hours of his Mirror crowdfunding release. The Cotton Candy NFTs were launched on March 21, 2022, as part of the artist’s independent crowdfunding campaign. He wants to raise more than 35 ETH (about $109,660) for his upcoming EP NFT drop and to start his own label Cotton Candy Records.
I’ve worked as both a founder and talent manager in the music industry for close to 2 years in the past. Managing talent isn’t easy and building an artist’s career from the ground-up isn’t easy either. The music industry traditionally is not a champion for technology, ie: Napster and Spotify, and is it hard to break technology in music successfully at a mass scale. However, web3 is so beneficial to music artists that I believe this adoption curve will be the total opposite, once musicians are onboarded and understand the power of blockchain technology. Since I’ve worked in music and in venture capital/technology and now web3, I have been able to work on some projects and bridge the gap.
I’m looking forward to the space continuing to grow, and I’m looking forward to continuing to onboard musicians into web3 through investing directly into emerging platforms and working with musicians directly.