MARK CONWAY20 December 2022
STREAMING ISN'T THE PROBLEM, IT'S PART OF THE SOLUTION
“I remember thinking that nobody had the right to control music”
This is a line from the fictional version of Spotify CEO Daniel Ek, in Netflix’s new show The Playlist, which charts the dramatic rise of Spotify from plucky start-up into the behemoth it is today.
While initially heralded, Spotify and other streaming services are now accused of doing the very thing they said they wouldn’t - controlling music.
But what the show brilliantly demonstrates and is easy to forget, is that Spotify’s emergence came about as a solution to the trend of bootleg songs, albums and performances being downloaded for free at large scale across Pirate Bay, Napster and Limewire.
The poor economics around streaming now are well known - with artists needing anywhere from 75,000 to 700,000 streams of a song just to earn $1000. As a result, many understandably claim that streaming is a major problem for artists, arguing it devalues music and makes it difficult for artists to make a living.
While not wrong, it's important to recognise that streaming was a response to a changing market dynamic, not the catalyst for it. The rise of streaming platforms was a result of the widespread availability of illegal downloads and high-speed internet in the early 2000s. These changes in technology and consumer behaviour led to a shift in how people consume music, and streaming was simply a response to this shift. Not the cause of it.
And while there’s been repeated calls to improve the economics for artists, It also bears mentioning that Spotify, though the global market leader in music streaming, has yet to turn a profit.
To play devil’s advocate further, unlike the pirates the streaming giants offer a transparent business that the industry can work with, while also respecting copyright regulations and allowing artists to reach a global audience and grow their fan base.
This reality means most artists will have to adapt and take advantage of the opportunities provided by streaming, while looking outside for the ability to generate a self-sustaining income.
Enter Web3, and its familiar poster child - NFTs.
NFTs can be looked at much like a digital version of vinyl, an add-on to an album or single release that generates better returns for the artists while fostering a stronger sense of belonging and fandom from music lovers.
Much like vinyl, where 100 sales equal the same returns for an artist as 450,000 streams, NFTs provide a more direct channel for artists to earn an extra income stream while strengthening their connection with fans. Don’t believe us? Here’s a couple quotes from independent artists we know:
“I earned more in an afternoon from my first NFT drop than I had in 5 years of playing and releasing music.” - Swaré.
“I released a song in 2020 that now has 800,000 streams, which earned me around $3000. It cost me $1500 to record and release it, so I made $1500 in 2 years, but when I put the track out as a digital collectible, I made that amount in a week and could immediately fund my next song.
“I focus on my top fans who buy most of my NFTs. I have 4 million plays on Spotify and I have no idea who is listening. I have built a community through my NFTs. Now if I am doing a show in their town I can message them and say 'Hey I'm doing a show, bring some mates.” - High Tropics.
Web3 doesn’t end at NFTs, with more opportunities emerging to earn and connect as technology develops and more people embrace Web3 tech that enables things like our Crowd product and the metaverse. Already we’ve seen more than 12 million people watch Travis Scott’s live performance in Fortnite.
Web3 might mean artists need to provide additional value to their fans in order to stand out and succeed. This could be in the form of unique and engaging experiences for fans, such as special concerts in a virtual world, or attaching VIP packages as an add-on to their NFTs. Understandably it’s not everyone’s cup of tea, but those that accept there’s a new industry and playbook emerging within music and embrace Web3 will benefit most.
Much like streaming services were a response to a changing market, Web3 heralds a new era in the economics of the music industry, as well as a change in distribution and promotion.
But this time, the artists are the ones in control.
©Ocean Floor Labs Pty Ltd 2023