Spotify and Apple Music took a 75 percent cut from performers’ earnings, in addition to the cut given to labels.
NFTs are one-of-a-kind digital assets that may be produced and kept on a digital ledger using blockchain technology. And 2021 was the year of the rise of NFTs, which sprang out of nowhere. Uniquely created character graphics from CryptoPunks and artworks by the former unknown artist Beeple, one of which sold for a record $69 million in March, were hugely popular among investors.
While the early days of NFTs were chaotic and perilous for asset purchasers, the technology’s future seems bright. An NFT-based platform not only provides a new mechanism to verify rights ownership, but also a way to distribute rights without the need of intermediaries. For example a truly decentralized system that eliminates the need for a centralised platform.
The application case for NFTs for content creators in the music business might be particularly attractive in the next stage for the technology. Since musicians feel unfairly treated by present revenue sharing methods on streaming services like Spotify and Apple Music. Individual subscription costs are not directed to the music that each subscriber listens to in these models. Instead, all subscription fee income are combined and divided according to each artist’s portion of total streams. Furthermore, the platforms take a sizable cut. When combined with the cut given to labels, amounts to about 75% or more of the overall income.
As popular music streaming services like Spotify slash musicians’ earnings, emerging technologies like as nonfungible tokens (NFT) are expected to help artists reclaim their due share, according to Saxo Bank.
Music composers would gain from NFT-based streaming services, according to one of Saxo Bank’s “Outrageous Predictions 2022: Revolution”. They allow them to distribute music directly to listeners without paying a charge to centralized middlemen.
Mads Eberhardt, an analyst at Saxo Bank, claims that music streaming companies like Spotify and Apple take a significant cut. The cut accounts for 75 percent or more of overall income when combined with the cut given to labels.
Traditional streaming services like Spotify, on the other hand, have a “bleak” future, according to Saxo Bank. Spotify’s stock is expected to fall 33% in 2022, according to the firm. According to TradingView statistics, SPOT has been falling in 2021, starting the year around $300 and decreasing as low as $204 in August. SPOT is now trading at $229 at the time of writing.
Meanwhile, Spotify’s earnings have been continuously increasing over time, indicating that NFT-based music services have a lot of potential to disrupt. Spotify earned 7.85 billion euros ($9.5 billion) in sales last year, up 16 percent from the previous year, according to the company’s official 2020 financial figures. Spotify’s financials improved in 2021, with the overall number of monthly active users increasing 19 percent year over year to 381 million in the third quarter.
In 2022, an NFT-based service gains traction and begins to provide music from well-known artists, such as Katy Perry, The Chainsmokers, and Jason Derulo. They have all just endorsed a new blockchain-powered streaming platform. Well-known musicians began to remove their songs from what are now regarded as “conventional” streaming networks, which have been severely disrupted. Podcasts, movies, and other types of digitisable material are also on the horizon, according to investors.
According to the analyst, NFT-based music streaming projects, such as Audius, a blockchain music platform funded by Katy Perry, The Chainsmokers, and Jason Derulo, are expected to launch in 2022.
The Audius platform is a decentralized music-sharing and streaming system based on blockchain technology that aims to remove intermediaries from the music business and allow fans and producers to communicate directly.
Spotify has been paying attention to the cryptocurrency business, as previously reported, and will be searching for individuals with a crypto experience in late 2021. The company is also aware of the emergence of NFTs, as it addressed them in its Spotify Wrapped 2021 report, which was released on Wednesday.