How Web3 technology is reshaping the landscape of music streaming platforms
By Andrew Antar, Founder & CEO — Tune.FM
Music streaming platforms have revolutionized the way we access and listen to our favorite music. But when we think about them on a larger scale, they have disrupted the entire music industry.
Streaming music began as a novelty, but has since evolved into an essential service for many listeners. While giants like Spotify and Apple Music once dominated the industry, Web3 technology is now reshaping the landscape of music streaming.
The history of music streaming platforms
Streaming platforms are typically subscription-based services furnishing listeners with a digital library of copyrighted songs and allowing them to listen on demand. Free levels incorporate ads to generate revenue and impose limitations on the songs listeners can stream. Streaming platforms enable users to discover new songs by recommending tunes based on a user’s listening history, allowing fans to create and share custom playlists based on mood, artist, or genre.
In the early 2000s, the music streaming industry was in its infancy. In 2005, Pandora Radio allowed users to stream online radio stations based on preferences, such as genre or artist. Listeners could personalize their experience by awarding songs and artists with a thumbs up or a thumbs down. Pandora did not allow users to hear specific songs, and users could only skip a few songs each hour.
Soon after, YouTube emerged as a popular platform for streaming music videos. In fact, the song “Gangnam Style” achieved unprecedented viral popularity as the first video with 1 billion views. In fact, the song earned over $8 million USD solely through streaming.
Then, in 2008, Spotify launched as a platform that allows listeners to stream music on demand through peer-to-peer sharing technology. The platform claimed to compensate musicians and offer a legal alternative to pirating platforms such as Napster and Kazaa.
Online streaming quickly surpassed the commercial importance of radio in the music industry. After Spotify’s US launch in 2011, Billboard offered streaming services to listeners, and by 2013, the revenue of on-demand streaming began to overtake online music stores. Competing platforms such as Beats Music, Groove Music Pass, Amazon Music Unlimited, and Google Play Music All-Access quickly joined Spotify in the on-demand streaming space.
Streaming platforms expand musicians’ revenue options
Before the digital revolution, musicians primarily had to sell physical copies of their work in record stores. However, the advent of music streaming offered freedom from traditional record contracts and greater control over how music was distributed.
Despite this, these streaming services were not in the game to benefit musicians alone. They claimed the coveted role of intermediary between musicians and fans, and their profits soared. Until recently, musicians had little choice but to go through these middlemen.
In 2022, streaming services accounted for 83 percent of the US music industry’s revenue, and artists are no longer receiving equitable compensation for their work. To understand why this is true, it is necessary to look at how streaming platforms pay musicians.
These platforms gave artists access to a global audience, but disrupted the traditional structure of royalties. Typically, they divide out royalties based on the percentage of total streams in a model called the “pro-rata” system. Artists with higher percentages of downloads are paid more for each stream, but this puts musicians with smaller audiences at a distinct disadvantage, and the streaming services take a cut of the revenue for themselves, reducing earnings even further.
A user-centric payment model could solve some of the royalty distribution problems. In contrast to the system above, the user-centric payment model bases revenue on the total number of a musician’s streams and gives artists with smaller fan bases more fairly. This model gives individual listeners the power to promote the artists they enjoy because it creates a direct link between fans and artists, allowing niche artists to earn equitable compensation for their work.
Another solution to the dilemma of royalty distribution lies in blockchain technology. Integrating this new technology into streaming platforms introduces the ability to track and distribute royalties with more transparency and accountability than ever before. Blockchain technology creates a record of transactions that provides proof of fair compensation, mitigates disputes, and eliminates middlemen.
How Web3 technology is revolutionizing music streaming platforms
Music streaming platforms have changed the way we listen to music, but they are still a work in progress. Fortunately for musicians, we stand on the cusp of yet another revolution.
Web3 technology has the potential to transform the industry by giving artists more control over their content and more compensation for their work. Web3 is a decentralized network — built on the existing web infrastructure — that allows people to store information and share content without relying on third parties like Facebook or Google. This blockchain-based protocol for the next generation of online music streaming cuts out middlemen like record labels and big online platforms.
The technology behind Web3 is currently reshaping the music streaming landscape, making it a fair, transparent, and engaging experience for both the artists and the fans. The new generation of streaming platforms makes it easier for emerging artists to get their music to larger audiences, leading to increased opportunities for artists. In addition, these platforms enable new revenue streams for musicians who want to monetize their work using blockchain technology or cryptocurrencies.
Web3 technology allows singers, bands, and other musical artists to sell their content directly to fans — and get paid immediately, without having to go through record labels or distributors to do so. Now, instead of intermediaries taking commissions, more profits can go straight into artists’ pockets.
Musicians can also get paid directly whenever they sell merchandise or tickets through a new Web3 platform. Any time fans make a transaction, direct-payment options transfer money in real time.
Because artists no longer have to wait for a label to pay them, they can focus on creating music. This is a win-win for independent artists who want control over their careers and fans who want access to exclusive content.
Web 3 streaming platforms also integrate musical NFTs. Non-fungible tokens (NFTs) are best known as quirky pieces of digital art, but they have much greater potential as records of ownership for digital items on the blockchain.
Music NFTs empower emerging artists who lack traditional funding and distribution channels. On Web3 platforms, these artists can take control of their own revenue stream by creating and selling NFTs. They can design tokens that grant their fans exclusive access to online communities, events, and promotions. Limited tokens transform songs that stream for a fraction of a penny into sought-after and collectible commodities.
In short, NFTs allow musicians to build a direct bridge with their fans. Musicians create exclusive and interactive online communities to interact with individual fans, and fans invest in the artists they admire and participate in their musical success.
Web3 technology has the potential to transform the way we listen to music
Web3 technology gives users more control over their listening experience and makes it easier for them to find the new music they love. As a result, platforms that use this technology allow users to interact without central servers or third parties controlling user data.
In the context of artists and fans, this translates to increased fairness in royalty distribution and more opportunities for community engagement. Artists can build followings on social media channels like YouTube, SoundCloud, and Instagram, and interact with listeners directly at any time.
While Web3 music streaming platforms offer fair compensation to musicians, fans also share the financial benefit. Blockchain-powered apps ensure fans can listen without paying extra fees or subscriptions.
The music industry has been in flux since the 1990s, but streaming platforms continue to make up more and more of the market share for musicians. To survive, artists need ways to get paid fairly and gain access to new audiences.
The future of music streaming is bright, and it is powered by Web3 technology.
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.