Web3 Music: Roles of NFTs, Creator Economy & Metaverse
future of music, consumer audio & social apps
One way to look at the creator economy is to look at artists, musicians, and DJs. In the past, artists only make money from selling albums, earning royalties from streaming, and live performances. Web3, cryptos, and NFTs entered the music scene and rewrote the narrative of economic opportunities for music lovers.
Just ask your favorite artists. Snoop Dogg released the latest album on blockchain and made $44M in 5 days. DJ 3LAU made $11.6M of NFTs by tokenizing his debut album. Steve Aoki reported he made more money in one NFT drop than from his 10 years of music advances.
Today, fans collect audio NFTs to showcase their fandom, earn passive income through song investment, and get paid in cryptos for listening to music. Artists can tokenize their songs into NFTs, create multiple income streams through social tokens and receive funding through DAOs (decentralized autonomous organizations).
In this piece, we will examine top startups that are redefining the future of music, consumer audio & social apps. We will also cover untapped market opportunities, and how to build the next big things in music 3.0!
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Section 1: Key Market Trends
(1) Audio files are being tokenized:
In the past, people collect vinyl and CDs to show their support for their favorite artists. Today, fans can own NFTs as collectibles in the form of playable music, visual artwork, licenses, and gated “access pass” to content, communities, or interactions.
New platforms exist to provide tools for artists to convert sounds into music NFTs, release music in a new format (NFTs), and offer a distribution platform for audio collectibles.
Enjin allows you to tokenize every aspect of the music content such as album art, music videos, and concert tickets.
Sound help artist release new singles in NFTs, host listening parties, and allow fans to collect their favorite songs.
NFT Tone is where artists turn their songs and performance into limited NFTs. Fans can discover, invest and own these NFTs through the marketplace.
(2) NFT record labels put artists on the blockchain:
Artists want to become household names. Record labels exist to bring more fans to the artists by providing distribution, marketing, expertise, and partnership to help artists grow.
Unlike Web2 labels that pocket steep revenue cuts (about 80%) from artists’ earnings, Web3 labels are decentralized, community-owned, fans-first, and educational–and leverage NFTs to grant artists full ownership of their creation.
Jeremy Fall’s Probably A Label involves community members shaping the labels’ operations.
Snoop Dogg acquired 30-year-old Death Row Records and set out to be an NFT label.
Hume develops both virtual and physical artists through music NFTs.
Good Karma Records a record DAO is offering membership NFTs to grant access to special events, concerts, and signed artists’ music.
Dreams Never Die, a record DAO that provides incentivized ecosystem to help new artists thrive.
(3) Music superfans fandom:
Music fans found a new way to express fandom for their idols by owning NFTs to gain a unique fan experience. Artists found a new way to leverage earnings from superfans and build a deeper engagement by rewarding fans financially.
In the same way 1,000 true fans unlock profitability for many businesses (think 1,000 users paying $1000 per year to become a million-dollar business), the creators can also thrive on 1,000 superfans to make a full-time living.
New players seize the community-building needs and foster fan-artist relationships through NFTs. Artists earn, fans earn (when they sell that NFTs), win-win.
Vault is a Solana-based platform that allows creators to create multiformat content (music, videos, photos, messages, events) and offer NFTs for superfans to access gated content.
Medallion helps artists launch digital worlds to expand fan participation and economic potential.
Gigco is a live event discovery app. The platform tracks every event fans attended via Proof of Attendance and grant priority access to artists’ events. Fans earn a $GIG token which they can spend on event tickets.
(🔒 MEMBERS-ONLY) +7 more key trends, backed by real company examples:
🔑 (4/10) Latest platforms building for the music metaverse (3 company examples)
🔑 (5/10) How to verticalize NFT marketplaces? (4 company examples)
🔑 (6/10) How do fans invest in sound and artists? (4 company examples)
🔑 (7/10) Who’s creating Spotify but for Web3 (4 company examples)
🔑 (8/10) Music creators tools for Web3 (3 company examples)
🔑 (9/10) Tokenized event tickets and how to “value add” in event offerings (5 company examples)
🔑 (10/10) Music career is being virtualized and why it’s changing influencer economy (5 examples)
Section 2: Market Players & Databases
🏢 Total 85 market players
🔖 Total 10 market categories or segments
🗃 Company databases: value proposition, website, stage, total funding raised, year founded, company size, location and LinkedIn
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Section 3: Problems & Market Needs
(1) Lack of discovery:
Spotify has over 11 million artists as of September 2022. 28% of artists earned more than $10,000 per year. Only 7,000 artists made over $50,000 to $100,000 per year. The rest of the creators struggle to get their music heard, making it difficult to make a living wage through streaming income.
New music platforms are providing distribution networks for aspiring artists by using social, community-driven, and audience-building approaches.
Sound.xyz allows artists to host a listening party for new song releases with a series of limited edition NFTs.
Audius is the Web3 alternative of Soundcloud that allows new artists to share their work-in-progress tracks, build a fan base early on, grow their influence, and monetize streams directly from fans.
Current Media rewards users to listen to music created by their favorite artists by using the listen-to-earn model.
(🔒 MEMBERS-ONLY) +4 more market problems and how top players fill the gap:
🔑 (2/5) Help artists create multiple income streams (3 company examples)
🔑 (3/5) Building Ticketmaster alternatives for Web3.0 (4 company examples)
🔑 (4/5) Facilitate revenue sharing and distribution (5 company examples)
🔑 (5/5) Increase fans engagement & cater to community-building needs (4 company examples)
Section 4: Next Big Things + Untapped Opportunities
(1) Better tools for fans creation:
The creator economy has evolved from single-player mode (artists create fans consume) to multiplayer mode (fans can participate in the creative process). TikTok Duet and Instagram Reels Remix are already betting on this trend.
New music startups could provide tools that turn fans into creators by lowering the barrier to (re)create music. Help listeners create remixes, duets, and fans artwork. Allow fans to share their re-creation with their friends and idols.
DJ mashups: Imagine if Spotify allowed you to combine with another song to create a new song.
Mixtape: Imagine if YouTube music allowed you to curate a music playlists of multiple songs with features to adjust transition (fade in, fade out) between two songs that results in a long-form mixtape content.
Acapella: To extract vocal elements from a song and reuse them on your own creation.
Remix: To add new sonic elements to an original song (e.g. sound effects, samples, drums, vocal, bass, etc.)
(2) Content studio model:
The venture studio market has seen $625% growth in the past 7 years. This type of business model creates and validates multiple new startup ideas, launches the projects with an initial team, and invests capital to grow the products until they reach product-market fit.
Web3 music industry could apply the “content studio model” by gathering creators (artists, musicians, performers), and placing multiple small bets (albums, singles, NFT drops) to generate a maximum amount of shared returns.
CHAOS is a great example. A “headless” music band that consists of 45 musicians, 9 visual artists, 7 operatives, 6 devs, 5 radio producers, and 3 economists. This band released an NFT collection where members of the collective have shared ownership and earnings from sales.
(3) The future of music community is DAO:
The future of music community is decentralized and distributed. A community vehicle with a shared purpose, shared access, shared capital, and shared financial gain.
New startups could leverage this new structure to build better community experiences. The use cases are wide, including helping artists to raise capital, setting up a community fund to back new music startups, enabling co-investment from fans, shared governance, and so on.
Co-creation with artists: StemsDAO enables shared music production between fans and musicians.
Music funding: MusicFund is a music-centric Web3 community that fund up-and-coming artists to support their careers.
Community-owned creator monetization: Ampled is like Patreon for Web3 where artists and creators own the platform and get paid directly from their fans.
(🔒 MEMBERS-ONLY) +5 more untapped market opportunities:
🔑 (4/8) Niche music services using marketplace model (3 company examples)
🔑 (5/8) Solutions to help creators create 10x better content (4 company examples)
🔑 (6/8) Blockchain for music event funding (4 company examples)
🔑 (7/8) Hybrid NFTs and decentralized commerce opportunities (5 examples)
🔑 (8/8) Dynamic NFTs and new audio content creation (3 platform examples)
Section 5: Strategy & Recommendation
(1) How to break into music NFTs:
Become a collector: Depending on your favorite music genres, you can start collecting your first music NFT from marketplaces such as Sound.xyz (multiple genres), RCRDSHP (electronic music) and Catalog (for 1-of-1 unique NFT music releases).
Fund a music project or an artist: Use Opulous to invest in your favorite musicians and earn a share of their success. Join and participate in music DAOs such as MODA (allows members to invest in the Web3 music ecosystem) or Songcamp (an experimental hub, a creative studio for musicians to release music as a collective).
(🔒 MEMBERS-ONLY) 3 more action ideas and recommendations:
🔑 (2/4) 4 ways to find early adopters for Web3 music solutions
🔑 (3/4) 3 steps to build an online music communities
🔑 (4/4) 3 tools to set up your own music metaverse