How to be an Artist in a Web3 World

Web3, with its decentralized concepts and focus on creator ownership, has the potential to transform the music industry in numerous, powerful ways.

First off, a short definition of what we mean by «Web3»: Web3 is an idea for a new iteration of the World Wide Web which incorporates concepts such as decentralization, blockchain technologies, and token-based economics. Some technologists and journalists have contrasted it with Web 2.0, wherein they say data and content are centralized in a small group of companies sometimes referred to as “Big Tech» (Wikipedia)

It might sound a little fairytale-ish, but investment trends (increased venture capital poured into web3 concepts), decentralized application development, and general adaptation of blockchain and cryptocurrencies all indicate that the transition to Web3 might not be that far off, or far out!

Today’s discourse around Web3 has been centered around the argument «turn your assets into Non-Fungible Tokens (NFTs)», but we need to dig a bit deeper than that.

Decentralization is the, ahem, central concept here. Decentralized infrastructure, technology, finance, products etc. So, what might this concept transform within the music industry? Let’s start with infrastructure, which in relation to music entails distribution, leading into finance, and product etc.

Blockchain-based Music Distribution

The challenge is creating a digital music distribution system that is 1. Transparent, 2.  Rights Management with accurate rights id’ing and distribution and 3. Profit Sharing based on a fair model. I will argue that a blockchain-based model could do all three.

The “not controlled by a single entity” is key here. For instance, manipulation of streaming data by the digital streaming provider itself or by third-party fraudsters would probably not be possible if all online streaming activity was tracked in blockchains. To accurately report and count streams, the model would need to be open and decentralized, thus preventing service providers the chance to do numbers manipulation.

Ever wondered why Spotify and its like took so long to adequately display songwriting data? Simply put, they didn’t develop any proprietary technology to track this. In fact, Spotify acquired the blockchain company Mediachain Labs, in 2017, with the stated purpose of improving this. With shared data in a decentralized system, it would be much easier to identify rights owners and have proper licensing management. The ledger (for each track) could contain a “rights management key” – a code that includes data on the rights owners including the percentage division between these.

Today, artists are basically at the mercy of streaming services when negotiating streaming fees. Only the multi-million-selling artists have any leverage to use. With a blockchain platform, the profit margins can increase substantially as it will cut out the middlemen needed to work on artists’ right management, payments, etc. It is also likely that the music industry would be very welcoming of additional players in the field to wrestle away some control from the tech giants that dominate today.

A Fair Compensation Model?

The blockchain model as described here could utilize smart contracts, which is one of the more powerful elements of blockchain technology.

A smart contract is a self-executing program that automates the actions required in a blockchain transaction. Once completed, the transactions are trackable and irreversible. (definition: investopedia.com)

Smart contracts on the blockchain can automate royalty payments, ensuring that artists receive their fair share for each use of their work in a transparent and efficient process. One small issue, though, what is a «fair share»? This question has been asked since the first monetization of an artistic act. And, perhaps, it is ironic with the advancement of digital technology that this question has grown more complex than ever before.

Today, the music industry revenue comes 84% from streaming. This means that 84% + of the revenue in the industry is in the hands of tech companies. Not much will get done as regards to fair compensation unless the control is wrested away from these players. And, Web3 could provide the infrastructure to this «road to independence».

Artist-to-Fan Transactions and Tokens

Web3 enables artists to sell music and merchandise directly to fans using blockchain technology, potentially bypassing intermediaries like record labels, retail and streaming platforms. Artists could tokenize their music rights, allowing fans to invest in their success and share in future royalties. This creates a more direct connection between artists and fans and provides artists with an alternative funding mechanism.

There is no shortage of examples of artists (Snoop Dogg, Bieber, Rhianna , etc.) who have released NFTs on the market. NFTs are unique digital assets that can represent music, artwork, or other forms of creative commodities. However, this is fine to experiment with as a mega-artist, but not a strategy that makes any sense for hundreds of thousands of emerging artists.

There are two main challenges, besides the technical, attention and adaptation. Educating artists and fans about Web3 technologies and their potential is a crucial yet complicated task. Without a whole promotional apparatus behind or stellar name recognition, it is nigh on impossible to create a new revenue stream from this type of transaction.

The fact is, this infrastructure we talk about, can be likened to a highway. You can build amazing cafés, motels and car garages, etc., along a route, but unless the road is actually completed, business is going to be…slow.

This is why, «Turn everything and anything into NFTs» is not a viable strategy for creatives.  However, a step-by-step approach to getting «Web3-ready» could be a game-changer, also for the non-maga-star artists on the scene. Smart implementation of Web3 technologies could both generate attention and spur easy adaptation among fans.

Show Me Your Data!

Let’s start with fan data ownership: Web3 platforms can give fans more control over their data, allowing them to decide how it is used and shared. This can lead to more personalized experiences and a greater sense of trust between artists and fans. Access and exclusivity can be «traded» in return for fans signing up for newsletters, a community , etc.

Naturally, one doesn’t need «Web3» technology to do this, and an artist like David Bowie was already experimenting with the online relationship with fans and artist when he launched BowieNet in 1998 (!).

In a Web3 environment, though, user data consent takes on a new dimension due to the decentralized and often pseudonymous nature of interactions. Technology solutions like Decentralized Identifiers (DIDs), Verifiable Credentials (VCs) and Zero-Knowledge Proofs (ZKPs) give both parties in an online interaction much more detailed date control.

DIDs offer unique and verifiable identifiers that are not tied to a centralized authority. This allows users to selectively share information with platforms and services without revealing their entire identity. VCs are used to verify necessary data regarding age etc. without sharing unnecessary personal data. And, ZKPs are cryptographic protocols that allow users to prove the validity of a statement without revealing the underlying data.

Artists can leverage tokens to incentivize users to share their data by rewarding them with tokens or other forms of value. This enables a more equitable exchange where users are compensated for their data contributions. Notice, we’re circling back to NFTs now? I’d argue that the fundamental changes that a standardized Web3 within an updated regulatory framework must be in place, before NFT exchanges can bring real value to artists and fans.

Gotsta Get Paid!

Remember that 84% of the industry revenue comes from streaming? Is this a fair compensation model? On Spotify artists earn $3 to $5 for every 1,000 streams. The company has a Co-Founder/CEO, Daniel Ek, who never fails to show a complete disregard for the product that is his company’s bread and butter. Whether stating that «musicians must release more music to increase their streaming pay» or that «the cost of creating content is close to zero,,” Ek really knows how to provoke those who generate the revenue for his company!

If the vast majority of musicians are to be fairly compensated, the music streaming services’ chokehold on the industry has to be loosened. And, Decentralized Music Platforms that facilitate artists to interact directly with fans, fostering community building and creating a more personal experience can be an alternative.

Fans could interact in decision-making processes and access exclusive content through token-gated communities. There are initiatives in play, like, for instance, Audius – an artist-led platform, where artists upload their music for free and are rewarded via tokens.

The main issue is, that for music streaming services, the revenue share model is, by and large, decided by the platforms, whereas artist-led initiatives or artist-centric platforms (like Bandcamp) are ensuring a fair revenue model for the artist.

With other channels, whether retail or online (like Internet radio), the model is decided upon through negotiations with performance rights organizations — the «old-fashioned way». The music streaming services have a complex «streamshare» model, also subject to negotiations, but ultimately favorable only to Spotify shareholders.

The Artist in the Age of Web3

We are not anti-labels or anti-music streaming services, however, if artistic expression is to avoid being leveled into pure consumption and left to Artificial Intelligence, a new industry model is needed, and all the players need to adapt.

It’s a testament to the current state of affairs that to claim that the industry should be artist, and fan-centric sounds a bit «fairytale-ish,» but, ironically, technology might be the solution to give more control to the artist.

As outlined in this article, there is no need to hesitate in experimenting with new ways of interacting with listeners, and new ways of distributing music and new channels to find an audience even though we are not in this new «decentralized reality» yet.

Don’t be an algorithm!

We believe that the «Web3 artist» is not necessarily on a label but works with a MarTech partner, like notefornote, to optimize the business side of things to be able to focus on the artistic. In an increasingly artificial industry with digital audio workstations, auto-tuning, generative AI etc. it is easy to erase the flaws of a performer and to standardize and normalize all expression.  Artists with the guts to not conform will stand out in the «static and sanitized sound».

We also believe that the labels that flourish in a Web3 environment will have adapted to new promotion and distribution paradigms and taking full advantage of AI and automation technology when finding audiences for their artists.

To end on a somber note, we have been promised Tech-Utopias on the World Wide Web before, and things have turned out differently. There are challenges with scalability; Blockchain technology needs to handle a vast volume of transactions and data associated with the music industry.  New regulatory frameworks that address the unique challenges of Web3, such as intellectual property rights and taxation will need to be authored. Educating artists and fans about Web3 technologies and their potential benefits is naturally crucial for widespread adoption.

There is, without a doubt, though, a potential to democratize the music industry by empowering artists, fostering closer connections with fans, and creating new economic models that are more equitable and transparent with Web3.

And, there is no reason to wait for a Utopia, to start being artistic with your career and embrace new technology and a new praxis!