https://www.waterandmusic.com/the-state-of-music-web3-tools-for-artists/
tl;dr: The shape of music/Web3 tooling is more exciting and diverse than ever before. New platforms are launching weekly to help artists leverage NFTs, social tokens and DAO infrastructure to create new economic models around creativity and fan engagement. However, there is an urgent need to address imbalances in music/Web3 capital flows, plus gaps in the foundational metadata and community-building models required to make the next stage of this ecosystem healthy and sustainable for artists of all career stages.
This is Part III of a five-part, collaborative research report that the Water & Music community has put together over the last two months on the state of music and Web3. Contributors to this research thread on music/Web3 startups are listed at the bottom of this page, sorted by role.
Part I focused on the burgeoning market for generative music NFTs; Part II focused on legal and contractual issues around music NFTs, especially those that promise a share of streaming revenue or royalties. You can view the current state of our report rollout, and a full list of our member-contributors, by visiting stream.waterandmusic.com.
For most of 2021, the mainstream music industry’s view of Web3 suffered heavily from NFT tunnel vision. Seeing the likes of 3LAU and Grimes pull off seven- to eight-figure sales in a matter of hours for their respective collections, hordes of celebrities jumped on the music NFT bandwagon in early spring, driving the market to a peak of $27 million in monthly primary sales in March. The frenzy triggered waves of scams and fan backlash regarding the perceived financial exclusivity and environmental concerns of NFTs as a format.
The subsequent bear market for music NFTs has also woken up many people in the music industry to the importance of looking beyond just one-off cash-grabs for headlines and instead embracing more holistic, thoughtful strategies for integrating NFTs into artists’ long-term marketing strategies and business models. In August 2021, Cherie Hu and Brooke Jackson from our team wrote a guest article for NFT Now that framed this shift as going “from collectibles to communities.” Emerging use cases for NFTs at the time included portable fan identities, on-chain ticketing solutions and crypto-native album rollouts.
Four months later, these longer-term use cases for Web3 are starting to come into sharper view as more artists start to experiment with the technology. In particular, artists are looking far beyond just NFTs into other implementations of crypto — such as social tokens and DAOs — to experiment with new models of interoperable fan patronage, collective pooling of financial resources, community-driven creative collaborations and much more. In turn, this experimental ethos is creating fertile ground for a new crop of music/Web3 startups to address a more diverse set of problems for artists in the products they build.
To that end, we thought it was time to reevaluate the shape of music and Web3 today, far beyond just NFTs. We’re thrilled to introduce our market map of music/Web3 tools — which features nearly 80 different startups putting NFTs, social tokens, DAOs in a music- and creator-centric context. Most of these tools launched this year — a testament to the momentum of developing Web3-native solutions for artists moving into 2022.
Please note that this market map is likely not exhaustive, nor is it meant to be; rather, the purpose of this map is to present our starting mental model for the shape of the music/Web3 landscape as a whole. If you notice any startups missing from this map or our overall crypto dashboard, you can fill out our database submission form.
Alongside this market map, we’ve entirely revamped the tooling section of our members-only music/crypto dashboard. We’ve been tracking music NFT sales since summer 2020, but have not diversified further on tracking music/Web3 tools until now. Today, our once singular tab has expanded into two new tabs:
While this underlying data (which we will continue to update weekly long after this report is published) is only available to paid members, we wanted to distill a handful of critical trends and clear asks for today’s music/Web3 builders. We hope this resource ensures that future Web3 infrastructure remains sustainable and ethical for artists and fans, and acts as a deterrent from recreating Web2 industry problems.
To build this market map, we crowdsourced suggestions for music/Web3 tools from our community over two months. We captured data including product type (e.g., general NFTs, music NFTs, social tokens), core utility (e.g., music/audio collectibles, fan/community rewards, royalty investments, event ticketing), network (e.g., Ethereum, Flow, Polygon) and publicly available funding information (pulling primarily from Crunchbase). We also held several weekly brainstorming and feedback calls in our Discord server over this period to determine the scope of the database and the higher-level story we were trying to tell through the data.
A few disclaimers: