NFTs will boost revenue and mitigate issues related to royalties for industry professionals and music artists by 2035
Just 20 years removed from the infamous Napster court proceedings, well-known Tech enterprises offering streaming services such as Google, Apple, and Spotify have yet to solve nagging issues related to settlement and equity for music creators.
Despite expansion into international markets, and even with the newfound success of Tencent and Aspiro, some of the world’s most renowned artists continue to suffer poor royalties from popular streaming services, sometimes negotiated by the artist’s record labels themselves. Sky News reports that 2017 Ivor Novello Award winner Gary Numan, had a track clock over a million streams… resulting in a meager profit of only £37 for Numan.
With Research & Markets reporting that
the Global Music Streaming Market size is expected to reach $60.5 billion by 2026, rising at a market growth of 16% CAGR during the forecast period
and the onset of macro data analysis, one can’t help ask, when and how might streaming services begin to pay creators based on listener habits, playlists, and saved albums? The information from Research & Markets is fantastic and I encourage readers to take a peek at this blossoming industry. Due to the advent of Non-Fungible-Tokens or NFTs, artists in the visual art space have re-claimed the value of their work, and with the simple implementation of a staking model similar to Don’t Buy Meme or the newer Unifty. These models allow for a transparent, automated system that artists and business professionals seek when it comes to efficient settlement. Additionally, these models can be tweaked to implement unique benefits for users interacting with on the platform. I believe that within the next decade, record labels will be partnering with major tech enterprises to negotiate deals with artists to exclusively offer music on their platform alone, in turn causing a shift in platform popularity, thus engendering the modernization of streaming.
What might this staking model look like for a streaming platform such as Spotify?
For both previously mentioned projects: Unifty and MEME, users are incentivized to send their tokens to specific pools which generate additional points for future redemption. The amount of points is generated according to the allocation point set within the staking contract, and depending on the complexity of its design, multiple points could be distributed to multiple entities at dynamic rates depending on user interaction. Since the possibilities for how this could play out on a platform such as Spotify are endless, it’s vital to note that Spotify’s balance sheet shows an in-depth calculation for artist royalties according to their advertisement model. I believe that the willingness of Spotify to onboard opensource projects to inform their similar artist’s algorithm, as well as their historic precedent to include independent artists, puts Spotify in the most likely position to be the first major streaming entity to modernize royalty settlement and intertwine it with user metrics and possibly a form of social media, further guiding recommended music and incentivizing platform participation.
On Spotify, there are two types of users: Free and Premium. Each month their ability to utilize the platform is granted on the basis of money settlement from both premium users and the platform’s advertisers. It wouldn’t be difficult to pool the money from these two entities into two separate liquidity pools. This settled money could be placed in two separate pools, with each artist possessing an address to receive a portion of the rewards for the user’s staked tokens, while at the same time providing points to users for each meaningful interaction on the platform.
Every action that listeners make is cached for monthly payments to artists already, so it will not be difficult to automate this type of transparent system. Another method to do this would be through a permission-less issuance of datatokens each time a user interacts with anything a musician offers (songs, albums, playlists, etc). As users navigate the platform, these datatokens, will be automatically staked into the artist’s staking contract, which can also grant users points over-time to redeem for artist merch or perks on the platform. This not only incentivizes users to adopt the platform, but artists are too, through improved interaction with fans, as well as industry professionals, who are now able to show more transparency, issue points to users for, while also staking revenue from both premium users and advertisers to further platform adoption and improve the bottom line.
So yes, this is truly a win for every party involved and even though I could see initial push-back to hand over autonomous privacy, transparent platforms will prevail in the end, as users flock to platforms that best navigate future privacy laws surrounding data ownership in the United States. This future innovation will revolutionize artist marketing with little overhead cost, as streaming platforms will simply provide the substrate for artists to incentivize users to stream artist content for merchandise and other collectibles. In terms of the pros for Spotify: placing everything on a transparent ledger where artists can assess bonus royalties flooding in from a staking contract, would spur artist adoption and encourage users to flock to the platform.
A major concession to this article is that this model is far too premature from a technology standpoint. Why use a resource-intensive public ledger when a private database can do the same job cheaper and easier? The only reason would be to allow for cross-platform consistency, but what advantage does transparency offer a company like Spotify? Tap that follow button, cause I will address these concerns and more in a follow-up article.