Record streaming music profits highlight how NFTs will empower content creators

According to the Global Music Report of the International Federation of the Phonographic Industry (IFPI), the music industry's revenue will hit a record $25.9 billion in 2021, an increase of 18.5% over 2020. Of that nearly $26 billion, streaming drove most of the growth, up 24.3% from 2020. These patterns are good news for the emerging class of NFT musicians and highlight the demand for audio and video content.

Even as the modus operandi of streaming has changed — moving from centralized platforms like Spotify to decentralized NFT marketplaces — streaming still exists. The rise of streaming is part of a broader transition to digital content in media and entertainment -- print media is in rapid decline. A few years ago, digital media began to replace print media, which had a profound impact on the industry. Economists have found that the shift to national digital media is linked to the decline of local newspapers, which partly explains the increased focus on and politicization of national topics.

However, in the emerging Web3 era, we have the opportunity to do something different. Now, we’re starting to see some musicians emerge who make and sell NFTs themselves and keep most of the revenue instead of giving it to record labels or other intermediaries.

building community

Many commenters have already pointed out that community building is very important to a successful NFT project. Without a centralized platform to help disseminate content at scale, NFT artists had to rely on their own networks and personal connections to spread the word. In many ways, this requires a different set of skills than making music, namely a lot of soft skills and some financial savvy - at least enough to know when to say yes or no to an opportunity.

However, traditional music classes do not teach these skills. Instead, they focus on vocal technique and musical history, which are useful to varying degrees but not enough to be a successful musician. This is part of what makes record labels and centralized entities so useful — they help fill in a gap that many musicians lack, through no fault of their own.

But community building isn’t just a vehicle for the eventual sale of NFTs — it’s also a highly interactive and dynamic process that feeds artists’ potential art. Unfortunately, the usual centralized model of media and entertainment companies requires musicians to give up not only a large portion of their potential revenue, but also their rights and management. They can't even moderate their own music without the approval of the controlling entity.

While some may still be okay with it, all artists are loathe to give up that kind of creative autonomy and control—especially when they're not well compensated. Performing artist salaries are projected to see limited growth over the next few years, suggesting that unless we alter our current trajectory, little will change.

Music was never designed for centralization. Artists create experiences for others to enjoy together. While labels talk about building community, the answer is obvious—musicians struggle, often not from a lack of talent, but from a lack of financial and business knowledge that causes their contracts with labels to not serve their interests. Fortunately, we see decentralized options, including the recently announced MuseDAO. It aims to bring together classical musicians, spearheading local gatherings with the goal of enjoying and developing culture.

Immersive Digital Experience

Previous coverage by Cointelegraph has highlighted the financial benefits music NFTs bring to artists through initial sales. We won't have to wait long to see the windfall from talented musicians. Most notably Justin Blau, better known by his show name 3LAU. He is one of the pioneers of music NFT, and successfully launched the "Ultraviolet" NFT album last year.

However, the latest streaming data highlights the growing adoption of music NFTs in addition to streaming - if streaming alone grows then we would expect to see steady rather than exponential growth. Instead, we see this momentum continuing as consumers look for more audio and video content to consume and enrich their lives in place of traditional print media.

NFTs have the potential to open an exciting new market in the creative economy. If we think of artists — and content creators more broadly — as people who help others build experiences, then NFTs become a tool for disseminating and authenticating unique artistic content.

While there has been some talk of buying music-related NFTs in the Metaverse — most notably for fashion — imagine if creators came together in the Metaverse to create immersive digital experiences that combined Audio, visual and potentially other forms of content. The creative options are limitless, and NFTs can be used not only to facilitate leisure activities – this immersive experience can directly contribute to educational and training needs as well.

We’ve seen several examples of this, such as Arizona State University partnering with Dreamscape Immersive to launch the Dreamscape Learn program in 2020. As ASU President Michael Crow put it:

"We've always known that empowering at the educational and social levels by combining virtual reality technology with advanced adaptive educational experiences can open up new areas of learning for students."

The latest streaming revenue and expansion in the music space is good news for all content creators. The data shows that demand is greater than supply, so NFTs and Web3 tools will help creators capitalize on these trends and not only become financially sustainable, but also create more compelling and immersive Metaverse experiences for society at large.