Web3 is attracting billions of dollars worth of investment.
Prominent VC firm Andreessen Horowitz, for example, pledged a long-term and multi-billion dollar commitment to the Web3 sector in May, announcing that it had raised $4.5 billion to back Web3 startups, bringing its total crypto/web3 funds raised to over $7.6 billion.
In a blog post announcing the news, Chris Dixon, who leads a16z Crypto, wrote that the firm thinks “we are now entering the golden era of web3”.
Following Andreessen Horowitz’s announcement, Binance Labs, the venture capital and incubation arm of Binance, announced its own $500 million Web3 investment fund, supported by institutional investors like DST Global Partners, and Breyer Capital.
To put the value of Binance and a16z’s combined $5 billion into context for you, $5 billion is the sum of money MBW estimates was spent on catalog acquisitions across the entirety of 2021.
Web3 is also of course becoming increasingly intertwined with the music industry, with prominent music companies hiring Web3 specialists and investing in Web3 ventures.
With activity ramping up in the space, one question many in the music industry are asking is, what will a post Web2 world look like for music streaming services, with some even suggesting that DSPs are positioned to lead the mainstream adoption of Web3.
Indeed, as the music industry doubles down on Web3, optimism around the Web3 sector and the future possibilities within the space could be heard from a panel of Web3 experts at the Sandbox Music Summit in London last week.
During the Web3 Music Services panel discussion, Roneil Rumburg, Co-Founder and CEO of tech startup Audius, which has raised around $10 million for its blockchain-based music streaming service, defined a Web3 music service as a “set of tools for artists to use, [in order] to engage their fans and allow them to have sovereignty over that audience”.
He added: “That can mean a number of things, but primarily that the artist is able to exfiltrate their data if they choose to, and use that in different experiences, different products and different contexts.”
Con Raso, Co-Founder and MD of specialist B2B music technology firm Tuned Global, cited licensing as one of the biggest challenges for the growth of the Web3 music service sector, but also highlighted opportunities in the space for artists and rightsholders, and revealed where the company’s Web3 growth is coming from.
Raso previously told MBW in April that Tuned Global, which has powered streaming platforms worldwide, is accelerating its growth in the Web3 space, including NFTs and the metaverse
Speaking on the panel in London, Raso pointed to a growing client base in emerging markets in Africa, Southeast Asia, and South America that are using Tuned Global’s licensing and music tech expertise to power Web3 experience-enabled services.
“Often [entities in] those markets come to us wanting to put more dollars in local artists’ pocket, rather than all that money going offshore,” explained Raso. “Web3 is a really interesting way for music services to give more autonomy to the artist.”
Raso added that Tuned Global is launching tests with a few clients in the coming weeks that will let artists mint NFTs.
“Those NFTs can actually come into a Web2 streaming platform and be consumed alongside normal audio,” explained Raso. “And then the revenue will flow through the smart contract back to the rightsholders in that space”.
Another point raised by Raso during the discussion is the issue of interoperability as the industry transitions to Web3, noting that Tuned Global is “seeing clients trying to do something in the metaverse, but [working out] how do they take that experience to a Web2 experience, so people can take that with them throughout the day”.
Looking to the future of Web3 adoption for music uses, Raso also noted that it will be interesting to see how tech companies in the fitness, wellness, and gaming sectors – all spaces that need music and in which Tuned Global is active – incorporate Web3 features into their services or translate their business into a metaverse environment.
“Web3 is a really interesting way for music services to give more autonomy to the artist.”
Con Raso, Tuned Global
Elsewhere, during the discussion, the panellists were asked about how token ownership is starting “to blur the line between fan and investor”.
MBW has been reporting on the development of fans investing in music for some time now, with Justin Blau’s Royal being a prominent example of a company that allows fans to invest music via the sale of fractional music ownership in the form of NFTs.
Tokens are also being used to allow fans to participate in platforms such as music services, like Blockchain music service Audius for example, which claims to be “owned and run by artists, fans, and developers”.
In a white paper published in October 2020, CEO Roneil Rumburg, explained that “Audius allows artists to distribute to and get paid directly from their fans” by using a “token economy powered by the Audius platform token ($AUDIO), 3rd-party stablecoins, and artist tokens”.
During last week’s panel discussion, Rumberg explained that, “This token is earned by and leveraged by users for the network, be those folks who are helping to host content, or folks who are sharing content.” He added: “All of those behaviours can be done to earn some control of the network in the form of the token.”
“It’s scary for people that are building that profile of a fan investor, because they have to get their head around a gigantic amount of pre-existing regulation.”
Sophie Goosens, Reed Smith
Commenting on the legal issues around the fan investor space, Sophie Goosens, a media lawyer and Partner at law firm Reed Smith, noted, “It’s scary for people that are building a profile of a fan investor because they have to get their head around a gigantic amount of pre-existing regulation. It requires a willingness to learn new things.”
Goosens said that “there’s definitely a speculative angle at the moment around NFTs and tokens” but noted that “if you are talking about being an investor in the sense that you own, or you are able to make decisions about a platform through governance tokens, that doesn’t necessarily mean that you will be looking at [buying tokens] in a speculative way, it just means you are participating. That’s super exciting.”Music Business Worldwide