Why Invest in Local Music/Artist and what’s in it for you?

Diversifying your investments isn’t always about wisely weighing your portfolio between stocks, bonds, and metals. Alternative assets are increasingly finding their way into many investor portfolios like fine art, music, and cultural productions.

Music production and collection are no longer limited to big labels, many artists have funded their own productions by setting up their own studios and now are looking at developing web3 assets to connect at a deeper level with their fans. If you have an interest in music, you can diversify your assets and even find an artist who you might enjoy listening to. At the very least, your investment will only grow over time as the artist gets famous and grows.

Is music a good investment?

Despite the high costs often associated with investing in music, it still could deserve a spot in your portfolio.

The music market is not highly correlated with the stock market or bond market. That’s exactly what investors should be looking for when diversifying their assets. No matter what the financial markets are doing — moving up or trending down — the music market isn’t affected much.

In 2020, the music market faced a challenging environment as live events, studio recordings were canceled due to the COVID-19 pandemic. Consequently, many live events shifted online, like our project with ill-esha, Cryptowaves. The average music producer/investor increased their interest in music, and the shift online brought more young investors into the market as well. That trend bodes well for the future of music as an investment.

But investors should be wary of being enticed by the high returns they could theoretically earn by investing in web 3 music.

It’s possible to generate positive returns from investing in music by being selective, diversifying your collection, and holding pieces long-term. The same guidance for your stock portfolio applies to web3 music investing: Do your research, and don’t put all your eggs into one basket. Web 3 investors should expect returns more comparable to those of bonds, not the stock-market-beating returns touted by the web3 music influencers on Twitter. Of course, if you are here for a quick buck, you could always look to flip an NFT drop, but that’s a whole different conversation.

What to know before investing in web3 music?

When you invest in web3 music, you’re buying it with the expectation that the artist is streamed online, copyrights are sold to TV shows/movies, sells more tickets to live events, and increases their fan base. If that happens, then depending on the type of web3 asset you’ve invested in you will get access to a part of each of these revenue streams.

That’s easier said than done.

• Choosing an artist can be difficult. You’re unlikely to discover the next big artist before they’ve made a hit song and start seeing viral streaming stats for their work. And, sad as it may be, not every genre of music achieves the same level of success that others do.
• Your initial investment can be huge. If you are serious about backing a local artist, you would want to invest higher to receive higher benefits in the long run and this can be a huge investment as most local artists are looking for funds to produce their work.
• You may have to hold your web3 asset for a while. Most smart contracts, like the ones we work with our artists, involve revenue sharing from their online streaming revenues, copyrights sales, ticket sales, depending on what the artist is willing to share, and since the growth of a local artist is a process, you will have to hold on to these assets for a while before realizing huge gains.
• Music is an acquired taste. No matter how good the artist is, if there are few fans of the genre it becomes increasingly difficult to find more listeners and fans. Local artists work extensively in building their voice and representing their local cultures, and this makes it an acquired taste.

How to make your first investment in web3 music?

You can find multiple web3 music assets online by following the artists you like as most of the web3 artists are digital natives and are very outspoken about their foray into web3. You might also be interested in checking our projects, we work closely with artists and creatives helping them with funding their projects through web3. Online magazines and social media channels such as Instagram can help you discover artists you like, and you can find various platforms like Staxe on Twitter and other such web3 music influencers.

There are several ways to invest in web3 music, each with varying degrees of risk and reward.

3 things must know before investing in web3 music

High risk and high price tag: You can buy tokens of NFTs of upcoming artists that have a high cost of entry; however, doing so comes with the highest price tag and the highest amount of risk. You can try to buy works by an up-and-coming artist, hoping that you’ve found the next Shakira. A one-of-a-kind music track could probably give you instant returns on what you are investing, or it might not take off and you probably won’t realize the returns you were expecting in the same short amount of time.

Low risk and low price tag: Instead of looking at tokens or NFTs that you could flip for a high return immediately, you could invest in some projects, like the Clemm — Amigx token on our portal, that involves a very low price, indicative of being low risk. Clemm is a breakout star from MUSIC BUS in the Spanish pop music scene and over the course of the year will be releasing more music and growing steadily on the streaming charts.

Low risk and high price tag: You can buy NFTs or tokens by “blue-chip” artists such as Snoop Dogg, which generally hold their value better but offer less capital appreciation or upside. Blue-chip artists are those whose works have the most stable value and are not subject to fashions and speculation. Many first-time investors can’t afford to buy blue-chip NFTs or tokens, but several DAOs have popped up enabling investors to buy into a bigger pool or treasury that will buy these blue-chip NFTs. (The Staxe team is working on something similar, Subscribe to our Newsletter to stay updated)

Importantly, if you’re going to invest in music, you probably want to buy works that make you happy. If you invest €10,000 on an artist that you think is terrible just because you expect its value to rise, then you’re missing out on the fun part of investing in local artists versus other assets.

Check out the local artists on the Staxe Dapp to find the latest artists venturing into web3 and support them.

Who should (and shouldn’t) invest in Web3 Music?

If you are interested in decentralized finance and investing in a greater pool of options like cultural events or NFTs, you may want to check out Staxe to find out more. You can join our Discord channel here to get updated about the new investment opportunities for cultural production.

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