There’s been a change in the music industry as it begins to crossover and integrate into the growing Web3 industry. But will this development be able to appease artists, labels and consumers?
Regardless of the industry, it is widely accepted that artists and those who create content should be the ones who benefit the most from consuming that content. But in reality, the biggest piece of the pie goes to the platforms that host this content.
The music industry is one of the most obvious examples of this. This is why many music artists are now trying to regain control through the integration of blockchain and decentralization. These are the main cornerstones of the web3 movement.
The topic of paying a music artist for their work is quite controversial and opinions vary widely. Numerous reports and surveys have been carried out to try to shed light on this subject. For example, a 2018 study based in the United States found that on average, musicians only collect 12% of the total amount generated by streaming. Meanwhile, a UK-based poll by the Ivors Academy and the Musicians’ Union find that 80% of music creators earned less than £200 a year from streaming.
Surprisingly, even major streaming services like Spotify make no profit. But with the advent of Web3, music artists have new avenues and tools to monetize their hard work.
Different eras of the music industry
Before and in the early 2000s, the music industry still relied heavily on physical media. CDs and DVDs dominated the market. But soon after, companies like Napster (which found itself in a difficult situation due to piracy issues) unblocked digital age and changed its business model to allow artists to get paid for downloads of their music.
Soon after, with the arrival of smartphones in everyone’s daily life, streaming services became the new trend. And while streaming is an extremely convenient and quick way to share your music with the world, the services themselves take the lion’s share, paying artists only ~$0.004. by flow.
The Web3 movement is making great strides in promoting decentralization. And this could be the perfect time to innovate and create a new economy that empowers fans and artists. Blockchain seems to be the ideal solution to facilitate this type of system.
Web3 also enables faster payments, resolves payer fragmentation, and opens revenue streams to all levels of artists.
Why should artists care about Web3?
Musician 3LAU earned over $11 million in a single day after selling his first-ever album NFT in 2021, while Don Diablo sold a concert NFT for $1.2 million that same year.
Smaller artists have also made significant revenue from streaming their songs on platforms like Sound.xyz.
One of the leading music companies, Warner Music Group, collaborated with Polygon last year to create a web3 music platform. Partnerships like these have brought the industry closer to mainstream adoption.
Another web3 platform, Humefounded by former executives of Universal, Sony, Nike and Warner Music, acquired Blocks, a large-scale NFT music platform. It is mainly used to publish and acquire full instrumentals as NFTs. The holders of these NFTs then own the IP associated with the tracks.
This will help create new avenues for artists and creators to develop open source music.
Web3 music still in its infancy
Despite innovations in the industry, Web3 music companies lag behind when it comes to financing. For example, similar sectors like Web3 gaming reached a market capitalization of $4 billion in 2021, while the NFT music market is only valued at around $87 million.
Jon Vlassopulos, the CEO of Napster, told BeInCrypto:
“All the artists support us; the labels support the web3 industry and have been very welcoming to Napster as we come on board with our new investors. The time is now, the technology is here and all stakeholders are ready to support this innovation. However, I think over the past couple of years, the Web3 music industry is in its infancy.
Overall, to reach critical adoption levels, the industry needs successful collaborations and funding. Meanwhile, regulators are closely monitoring the rise of Web3.