Web3 Music: When Musicians No Longer Create Only for Love

The Web3 music sector is attracting attention from capital and the community. Since 2021, Web3 music projects have raised over $200 million, and the ecosystem continues to grow. This article starts with the traditional music industry and explores why Web3 music is needed, mainly because artists' compensation is too low and the industry chain is complex and opaque. The Web3 music industry chain includes: upstream creation and generation, midstream trading platforms, downstream streaming media, as well as copyright and record DAOs among other directions.

1. Why do we need Web3 music?

Traditional music models have the following issues:

• Artist royalty income is low. Artists earn $0.003-0.005 in royalties per play on Spotify.
• Income polarization is severe. 99.3% of musicians earn less than $10,000 a year.
• The industry chain is complex, and artists' actual income is low.
• Approximately $655 million in "black box royalties" cannot be traced annually.

Music NFTs can solve income and fan relationship issues for artists:

• NFT generates direct revenue, a 0.1 ETH NFT is equivalent to 67,000 plays on Spotify.
• Obtain follow-up startup funds.
• Establish positive interactions with fans and build one-on-one relationships.

2. Web3 Music Industry Chain

Mainly includes:

1. Upstream Creation
2. Midstream Trading Platform
3. Downstream Streaming Playback
4. Other ( music communities, record DAOs, copyrights, etc. )

2.1 Streaming Media

represented by Audius:

• Low user threshold, you can log in with just an email
• The content is mainly electronic music and hip-hop
• Monthly active users: 2.54 million, holding addresses: 25,000
• API call volume exceeds 100 million times/month
• The AUDIO token is primarily used for maintaining nodes and is insufficiently incentivized.

2.2 Trading Platform

Characteristics of each platform:

• Sound.xyz: Emphasizes social attributes, showcasing early supporters
• Catalog: 1/1 Music NFT, supports independent artists
• Pianity: Token Incentive Trading
• OneOf: Comes with traditional music resources
• Mint Songs: Strong Investor Background

2.3 Derivative Creation/Generated Music

• EulerBeats: Algorithm-generated music, innovative copyright gameplay
• Async.Art: Music composability, similar to PFP gameplay

2.4 royalties/fan economy

• Royal: Off-chain royalties distributed to fans through NFTs
• Opulous: Artist crowdfunding, fans share royalties
• Others: Fans receive exclusive benefits through NFTs.

2.5 Web3 music community

• Songcamp: a music creation experiment, similar to a hackathon
• Good Karma Records: Web3 Record DAO

3. Industry Financing Situation

Web3 music projects' financing is mostly concentrated in the seed round, indicating that the industry is still in its early stages.

IV. Considerations on Development Prospects

1. The relationship between fans and artists is closer, but the business chain is short.

2. The industry chain is more transparent, but the practical operation is complex.

3. Application scenarios are yet to be explored.

4. Traditional music resources should not be overlooked.

5. The innovation of the promotion and distribution model is worth exploring.

6. The token economic model needs to be improved.

Web3 music is still in its early stages, with vast potential for future development, but it also faces numerous challenges that require joint exploration from all parties.