Music NFTs could be the next breakthrough application in crypto
James Gardin, a musician for over 15 years, is used to changing with the tides. First, there was the likes of Spotify, which blew up in the early 2010s, then came Apple Music. These days, he’s busy minting his songs on music NFT marketplaces that ostensibly give more equity to musicians compared to more traditional platforms.
Earlier this month, the US-based musician won a live vote song battle to tokenize his latest track, “Parade,” as an NFT on Catalog. The NFT was sold four days later, on April 5, for 0.5 ether (US$1,635).
The musician eventually took home 0.3 ether — around US$900 — after paying gas fees of about US$80 and sharing a 15% cut to Phlote, the decentralized autonomous organization that conducted the weekly live vote song show. As a sweetener, he also stands to receive a cut of its reselling price — 20%, though it can vary between 0% to 100% — the next time the NFT is resold.
Gardin is one of many music artists that have turned to blockchain platforms to explore new sources of revenue in the age of streaming. Spotify is the most prominent player within this burgeoning sector, having set a record last year for the highest ever payout by a retailer to the music industry, which stood at US$7 billion.
Yet artists, including superstar rapper Kanye West, say that streaming platforms do not compensate them fairly for the cost and effort it takes to create songs. To be specific, an artist streaming on Spotify has to reach 250 listeners to make US$1, based on the average taking of US$0.004 per song after royalties are shared with record labels, distributors, and other third parties.
Amid that backdrop, music blockchain platforms like Catalog and Sound.xyz are positioning themselves as an attractive option for independent artists to share their songs, build a community, tokenize their music, and get paid in cryptocurrencies instantly. An artist’s take-home earnings are less of gas fees and, depending on the platform, commissions. Spotify, too, is experimenting with digital tokens linked to artist drops.
— ˗ˏˋ Chris Messina ˎˊ˗ (@chrismessina) April 19, 2022
Music publishing meets play-to-earn gaming
Artists have long struggled to pull their weight at the negotiating table with the publishers and record labels that distribute their music. But indie artists face an additional problem from the onset: It’s challenging to even get their songs published. And when they do, they’re often not featured as prominently as mainstream artists.
Best known for Magic Tile 3, a hyper-casual mobile game that plays similarly to Guitar Hero, Amanotes says that it has raked in over two billion downloads and over 120 million monthly active users across its various games to date.
In 2019, Data.ai ranked it among the top 20 mobile gaming publishers across all categories.
Amanotes’ expertise in mobile music gaming could set Cadenverse apart in the music NFT space, which is tipped to be a new breakout application for blockchain tech.
“It’s hard for indie artists to tap into revenue-generating channels like Spotify or Apple Music,” Cadenverse CEO Vincent Hoang tells Tech in Asia. Prior to Cadenverse, Hoang was the head of games and simulation at Amanotes.
He says that an important benefit of baking royalty contracts onto the blockchain is that it does away with the need for intermediaries such as lawyers and royalty administrators, which reduces the cost of licensing.
“With blockchain, we’re going to connect the artist to music consumers directly,” Hoang adds.
Artists on Cadenverse can tokenize their songs as “game song NFTs,” which govern royalty payments each time the song is used in one of its games, or as “collectible song NFTs,” which can be bought and sold on its NFT marketplace.
Both types of tokens complement each other. Game song NFTs provide utility for the music tracks and additional exposure for the indie artists who otherwise might find it difficult to be discovered by listeners. Meanwhile, collectible song NFTs are a way for Cadenverse users to support early-stage artists that they have chanced upon in the games.
As Cadenverse is built on Polygon, a layer 2 blockchain on Ethereum, gas fees are low.
Cadenverse has raised US$1 million to date and counts Kyber Network and Tomochain among its backers. It’s currently raising capital through private and strategic sales of its governance token, the Cadenverse token or CDV, which is set to be listed on decentralized exchanges in May.
The company’s first P2E game, Looper Band, is currently in its beta phase and available for download. Meanwhile, its marketplace for collectible song NFTs is slated to go live in the first quarter of next year, while the platform for game song NFTs will launch in Q2 2023.
The P2E advantage
Musicians like Gardin are hopping onto Web3 platforms to familiarize themselves with the NFT scene. But a bigger challenge is getting their existing fanbase to adopt crypto.
While hardcore fans may be incentivized to overcome the initial friction into the domain of NFTs because of the perks that come with it — such as access to front row concert seats, exclusive album art, and merchandise — a vast majority of listeners continue to use streaming services like Spotify due to their large catalog of songs from popular artists. Most users also prefer transacting in cash for concerts or merchandise.
Cadenverse’s approach to using P2E games could bridge that gap by tapping its active base of users worldwide, giving indie artists exposure to a fan base that they might not be able to reach otherwise.
As of December 2021, about 2.5 million people were playing the popular P2E game Axie Infinity on any given day. Hoang says Cadenverse will target Amanotes’ 120 million monthly active users through cross-platform promotions. It’s also working with guilds like Bountie Hunter to acquire users.
Hoang is betting that Cadenverse’s users who “enjoy the melody, the creation, the music” will stay engaged in the game over long periods. Users will also continually return to support their favorite artists by purchasing NFTs, he adds.
A long waiting list
As music NFT platforms have grown in popularity, so have their waiting lists. Some of that demand could spill over to newer platforms.
Catalog, which is currently in beta, says artists on its platform have sold over US$2.5 million worth of NFTs to date. Each month, it onboards just a small number of artists and is currently invite-only.
For many artists, reaching the “right” community of listeners is important. “No matter how big the community might be or no matter how ‘good’ your music is, if it falls into the wrong group, there is no room for development,” says Binh Le, a Vietnam-based musician.
Le, who also goes by the stage name Dozen Districts, is considering uploading his music onto Cadenverse once its music NFT marketplace opens to artists. It would be the first time he releases music on a Web3 platform.
That said, many artists aren’t picky about the platforms on which they publish. “I think the point of Web3 is to be decentralized, so platforms are just tools. I don’t need to be loyal or exclusive to any of them,” Gardin tells Tech in Asia.
Despite his successful exploits on Catalog, Gardin isn’t planning to forsake mainstream platforms altogether. “I love streaming platforms for ease of use and access to so much music. I would love to get paid for streams but I look at streaming as a tool for discoverability,” he explains.
Mainstream players, from streaming services to major record labels, are already looking to integrate Web3 capabilities into their platforms. Spotify is reportedly planning to add blockchain tech and NFTs to its streaming services to fend off competition from crypto startups. A Spotify spokesperson declined to comment on what its plans for NFTs and blockchain are.
Earlier this year, Warner Music Group partnered with blockchain developer Splinterlands to give select artists the opportunity to create arcade-style P2E blockchain games.
Full Articles here: https://www.techinasia.com/music-nfts-breakthrough-application-crypto
TIA Writer: Melissa Goh | Journalist at Tech in Asia.