At the beginning of the pandemic, musicians and producers used social media to survive, hosting drops and virtual concerts. Platforms like Spotify and Facebook quickly became aware of this.
These guard rails caused financial damage to DJs and musicians who relied on platforms such as Facebook during the pandemic when live shows weren't possible. This particularly affected indie artists. However, you can now use blockchain technology and crypto to catch up and make progress. Music-related NFTs are a promising new way for artists and fans to connect with one another.
Streaming accounts for more than four-fifths of the music industry's revenue, according to the lost RIAA's latest report . However, 90% of the streams come from the top one percent of the artists. Spotify's payouts to artists are far from impressive, averaging $ 0.004 per stream . Typical indie artist, Gilligan Moss, says his music was streamed around 90,000 times for which he received a check for $ 8.19.
With blockchain streaming platforms and NFTs offering a solution to this long-standing problem in the music industry, we wanted to investigate how much artists could have made compared to regular streaming services if their music was originally on a blockchain streaming site would have been hosted. We also spoke to Josh Katz, CEO and founder of NFT live ticketing and blockchain collector platform company YellowHeart, to hear his perspective on how these new tools could transform the future of the music industry.
NFTs can give indie artists a chance to compete
NFTs can empower indie artists to survive, compete and perform with top artists in the industry. Companies that put their artists and fans first can not only stay afloat, but also go way beyond what platforms like Spotify have established as a precedent in the industry. The blockchain can effectively help close the gap between artists and fans.
NFTs are unique in that they give listeners ownership of the work. The artist retains the copyright and the right to reproduce the work, as with material art. Anyone can buy a replica Mona Lisa, but only one entity owns the original.
NFTs benefit artists as the latter receive a percentage every time someone buys or trades their NFT . In this way, artists take advantage of their work increasing in popularity and value. At the very least, there's a chance that this will happen, which doesn't seem possible with regular streaming.
The gap between regular streaming and blockchain licensing fees
The infographic above compares the regular license fees for streaming platforms as a percentage of what Audius, a fully decentralized streaming platform, pays out. As you can see, artists at Audius make an average of $ 0.34 per stream. They only get a fraction of it on conventional streaming platforms such as Tidal, Napster, Apple Music and Amazon Music. Of these, Napster offers the highest amount – $ 0.019 per stream – but that's still about 300 times less than what they would get from Audius.
Audius has a vibrant community of fans, developers, and artists who share music and collaborate. Put simply, it's the blockchain alternative to SoundCloud or Spotify. After artists upload their content to Audius, the platform ensures that the work was recorded correctly by generating timestamps.
Audius connects artists and fans directly and eliminates the need for third-party platforms. In addition , it uses smart contracts to ensure musicians get a fair and quick payment.
Artists are already using NFTs to their advantage. Linkin Park's Mike Shinoda tweeted :
“Here's the crazy thing. Even if I uploaded the full version of the included song to DSPs worldwide (which I can still do), after fees from DSPs, labels, marketing, etc. I would never come close to $ 10,000. "
NFT's recent sales are impressive. In March of this year, DJ and record producer 3LAU sold music NFTs for $ 11.6 million in just 24 hours. Canadian musician and former partner of Elon Musk, Grimes, earned $ 5.8 million in 20 minutes.
All types of musicians can create NFTs to sell different types of digital media. Fans can pay in Bitcoin, Ethereum and other cryptocurrencies. Dallas rapper Rakim-Al Jabbaar makes the following prediction about the value of music:
“NFTs will provide another way for artists to create exclusive content for fans in a more artistic way. In the future we will see that songs are just as valuable as Basquiat paintings. "
Top artists lose billions through regular streaming
The infographic above shows the average revenue of Billboard's top 100 streaming artists on regular streaming platforms compared to Audius. The average revenue across all platforms in the previous section was calculated to give the estimated average revenue from regular streaming services. For Audius, the estimate quoted here was used by artists earning $ 0.35 per stream.
One look at the two top artists is enough to get an overall impression of the possible losses. Drake's average revenue from regular streaming is nearly $ 348 million, compared to a potential of $ 14.7 billion from blockchain streaming services . This translates into a loss of $ 14.3 billion. The second most streamed artist, Ed Sheeran, gets $ 258 million from regular streaming while he could have made an estimated $ 10.9 billion from blockchain streaming: a potential loss of $ 10.6 billion.
Today, most artists still make their living from merchandise, social media, and live shows rather than royalties. Blockchain technology can change this by ensuring fair license payments. Record labels can more easily follow music streams and instantly pay all musicians who contributed to albums and songs. Finally, venues can reduce the risk of fake tickets.
Blockchain's distributed ledger technology is a way to streamline royalty payments, provide a starting point for music creators, avoid costly middlemen, and publish music more efficiently. The blockchain and NFTs can transform the way music is sold, managed, produced and heard, making these processes fairer, more transparent, more enjoyable and more profitable for artists.
Q&A with YellowHeart CEO Josh Katz
We spoke to Josh Katz, CEO & Founder of NFT live ticketing and blockchain collector platform company YellowHeart. Below is a transcript of the interview that focuses on the executive's thoughts on how NFTs are likely to change the future of the music industry.
Q: What are the main benefits for musicians launching NFT collections?
NFTs can serve many purposes for musicians and the music industry at large. Many consumers seem to think that NFTs are little more than unique images and therefore assume that “music NFTs” are just images or visual art that are “connected” to music.
But NFTs and blockchain technology enable a lot more than just works of art. At YellowHeart we help musicians unlock "social tokens" and NFTs that act as "keys" to unlock and access content – such as unreleased and exclusive album covers, videos and bonus music tracks – but also to events and real-life opportunities.
A fan who owns a piece of an artist's NFT collection can gain access to after-parties, seat upgrades, or deals with artist sponsors. In addition to exclusive content and dynamic ticket sales, it also looks like NFTs could be used to store and control the rights of songwriters, publishers, and copyright holders.
Q: How do artists benefit from blockchain streaming services compared to mainstream services like Spotify? Do you think these platforms have the potential to replace regular streaming platforms in the future?
I'm a huge Audius fan in this area. You pay the artists direct, and that's something the music business needed. It will be difficult to dethrone Spotify, Apple and Amazon. However, these platforms still have the opportunity to develop further and to integrate blockchain and NFTs.
I see a world in which Audius is as big as Spotify, but also where new decentralized music streaming platforms are constantly emerging. Personally, I'm waiting for someone to create a decentralized version of SoundCloud.
Q: What are the main benefits, if any, of using blockchain streaming services for fans?
Fans can get massive benefits through blockchain. It is said that the Web 3.0, "The Internet of Value" brings with it, and the fact is that the fans provide as much value as they can get by an entertainer or content creators.
Blockchain technology can enable the “musical identity” of a fan to travel with them or to enable certain online or real accesses and interactions. Who knows where this could lead when it comes to better, more fulfilling music experiences.
Q: How do you think the music industry will adapt to the growing popularity of NFTs? Will NFTs become more mainstream for artists who publish music?
NFT becomes an additional format. Just as we have released music on tapes, CDs and MP3 files, new albums will also be released regularly as NFTs. And you won't see so many artists releasing downloadable MP3 files anymore. Ultimately, new formats will prevail.
At YellowHeart we released several albums that were exclusively NFT releases and both the artists and the fans loved it. At this point, I don't suppose NFTs will replace streaming, but they can improve the experience.
It will be more of a complement and fans who buy the NFT version of an album will get the best, most interactive (not to mention the most exclusive) music listening experience.
What I'm seeing right now is that the music industry is still trying to figure out how to use NFTs. There are many bright minds in the music industry, but it's not an industry known for driving technological innovation.
In the past, the industry has been slow to adapt to technology. The record labels and distributors have not adapted to Web 1 or Mobile and have been decimated for 20 years. The people who run labels today are far too smart to let that happen again.
Also, consumers are driving the adoption of NFTs, and more musicians than ever are actively involved in their own career management, album release plans, and so on.
We are confident that NFTs and blockchain technology will last. When it comes to what's possible with this technology, the industry is only just beginning. YellowHeart is the only company in North America that actively enables NFT ticketing, and that's just the beginning.
Once the key players in the industry get a real taste of what is possible with NFTs and blockchain technology, I believe this will be the biggest change in music consumption in both live and recorded music the industry has ever seen.
Q: What other applications of NFTs in the music industry show great potential and why?
Rights management is a huge opportunity that is only just gaining momentum. Publishers will move to blockchain to manage their data, and those who don't will not survive. Songwriters, artists, and producers just won't want to partner with companies that don't use this technology for transparency and payments. NFTs are reminiscent of property.
NFTs are trackable and traceable digital assets that can include built-in or “automatic” payment models. That fits too well not to offer the music industry real, tangible value at some point.
In addition, there are so many uses. At YellowHeart we focus on the interactive side of things. The involvement of fans and the creation of convincing content and experiences are the focus of our work. Right now we really believe in the power of NFT ticketing.
We are confident that an interactive and integrated live event / ticketing experience will ultimately benefit the entire industry.
Not only can fans get access to exclusive digital content by buying and holding an artist's NFT or token, but if the same artist then uses our NFT ticketing technology at a concert or festival, the fan can receive special treatment or access, Get discounts, offers. Or they are offered additional event-specific content based on the tokens they own.
One unique thing we started is to airdrop exclusive content, offers and downloads to fans when they leave an event.
The “stub” of the digital ticket can also change color or evolve in some way after being scanned or entering a specific geofenced area – not to mention the NFT technology keeping an immutable record on the blockchain that this individual Was a fan on that particular show. The possibilities are endless and we're just getting started.
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