The recent excitement around web3 technologies has calmed somewhat – and that’s a good thing, allowing time for the technology to breathe and mature. In this guest post, Vickie Nauman, founder of music consultancy CrossBorderWorks, argues that the $9.99/month all-you-can-eat paradigm is not allowing superfans to support artists as much as they could – and that web3 technology will invigorate the music industry by creating many more opportunities for fans to interact with artists – at a whole new series of price points.
At one point, having access to music in Web 2.0 was exhilarating. It’s hard to imagine now, but before digital music, we could only hear songs a radio DJ in our local community decided to play, and we could only buy whatever CDs, cassettes or vinyl were stocked in our corner record stores. We used to line up at Tower Records or the Electric Fetus to ensure we got the new Rolling Stones or Tom Waits album the first day it was available.
Though accessing and listening to songs now has no limits whatsoever, music fans still find ways to congregate around scarcity in collecting IRL. We buy T-shirts of our favorite bands, colored vinyl (even though only 50% of today’s vinyl buyers own a turntable), signed merch, limited editions, and save ticket stubs when it’s not a soulless QR code. Music fans are also tribal: we align around music tastes, we flex seeing a huge band early in their career, and we like to belong to a niche community of other fans.
This sensibility of scarcity and tribalism makes music culture ripe for web3.
Web3 business models orient around communities and undersupply—unlike Web 2.0 models that are volume and access-based.
Today, end users don’t even need to bother to create an account to hear every song ever created and platforms monetize this open access through volume of usage. Artists whose music resides in these platforms only make meaningful money when their music is streamed millions (and millions) of times. It’s difficult to express fandom in this world, and niche artists or music that doesn’t particularly lend itself to repeat listening do not fare well in a volume-based world.
Many small tents
In web3, we are not focused on volume of streams, but on niche interests and communities. If an artist has a core set of fans, even small but loyal groups, they can pull some into web3 and find a meaningful way to engage them, with the artist’s creativity at the center. Web3 isn’t a big tent, but many small tents, and music tends to do quite well in tents with limited space. These constraints can lead to better revenue models, supported by web3’s ability to support unique and scarce digital goods, experiences and tribes.
Web3 also provides the technological underpinning to monetize differently. NFTs for music culture will likely evolve into a wide range of interactive fan clubs, ranging from collectibility to co-creation to access. The metaverse may evolve into millions of virtual worlds in which we engage with artist performances and music in ways that extend beyond our current imagination.
Remember The Long Tail theory? In which the democratization of digital distribution would mean much greater opportunity for mid-tier to emerging artists? Instead, Web2 has delivered yet another hits-driven business through volume-based business models, but perhaps Web3 might ignite micro-fan communities all over the world with more diverse revenue models.
Building on the bargain of the century
Our dominant Web 2.0 revenue model of $9.99/month all-you-can-eat streaming was designed to be a low enough price to lure even casual listeners away from illegal file sharing and into legal models. This $120/year price point is high for those who only bought a few CDs a year, but the bargain of the century for superfans who bought 10 CDs/ month and spent $2000/year.
Web3 has the potential to rebuild the top of the pyramid of high-value, artist-centric scarce goods and experiences. Just a few examples are the band Kings of Leon and artist Zara Larsson. Kings of Leon were one of the first bands to embrace NFTs, in which they earned over $2M in sales for their new album as well as six Golden Ticket auctions, guaranteeing the owner four front-row seats to one show of every KOL headline tour for life – a project leveraging fandom, access and scarcity.
Swedish artist Zara Larsson sold over $1M in virtual merch in her Roblox concert, showing her performance as an avatar and her verch designs hit the sweet spot with twelve year olds in the Roblox metaverse. These are both early examples of artists using new tech to find high-value new revenue streams.
Will Web 2.0 streaming services or UGC platforms go away? No, they will co-exist with web3 for the foreseeable future. They will play off one another, and Web3 still has quite a few years before it reaches the masses. There will be bumps along the web3 road, but the metaverse and NFTs will co-exist with streaming in the same way that CDs co-existed with downloads, and digital access co-exists with vinyl.
We should all prepare for even broader and more diversified revenue streams, and a wide mix of business models, some on chain and some traditional. Volume alone doesn’t express fandom.
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