The following opinion piece comes from vicky Nauman, Founder and CEO of CrossBorderWorks, a boutique music technology consulting and advisory firm based in Los Angeles, where she has been working with a portfolio of streaming platforms, games, apps, experiences, start-ups, and industry consortia since 2014. Nauman He has experience in all aspects of digital music: licensing, product, business development, music technology, strategy and international technology, Web3 and emerging. His experience spans from the early days of the 2000 disruption at MusicNet (RealNetworks) to KEXP Seattle, global platform 7digital and connected device pioneer Sonos.

In 1999, Napster, the original music disruptor, illegally burst onto the scene with its gray interface displaying millions of songs and file-sharing people. I was working in old school radio at the time, and I knew right away that all music and all entertainment had just changed as a result of this technology.

I recognized that it wouldn’t be an easy path, but I was so enthralled by the possibilities of digitally distributed music—not just local record store inventory, but ALL music—that I knew this was what I wanted to do. I went to work at one of the first legally licensed digital music companies, Musicnet, a joint venture between RealNetworks and three of the major record labels at the time.

My initial belief was that everyone would make a lot more money as a result of the digitization of music. While that didn’t seem remotely possible in the early years, I never stopped believing it. Now, 22 years later, as I look at Web3’s decentralized technologies and the experiences that come with them, I feel the same level of excitement and limitless opportunity for how music can benefit from this next iteration of the Internet.

While it’s easy to get bogged down in the details of currencies and cryptocurrencies, smart contracts, metaverse worlds, and emerging applications running on decentralized technology, if we go 50,000 feet higher, there are three significant differentiators in Web3 that have the potential. to transform music. .

One of the biggest differentiators is that Web3’s products and experiences are artist-centric, as opposed to Web2’s, which are catalog-centric.

On Web2, artists have had a very passive role in how they engage with digital services. Labels and publishers license their catalogues, and voila, the artist has a presence in a world driven by the algorithms of centrally operated and massive streaming platforms. If an artist disapproves of a particular service or its economics, the artist is generally not empowered to make any changes without explicit support and action from the label or publisher.

If an artist wants to reach their fans, they do so through the platform’s intermediary. In our early world of Web3, most initiatives are being led by artists, a reversal of the passive role in Web2. This is a paradigm shift for record labels and publishers who must now follow the interests of their artists and collaborate, rather than lead and control digital initiatives.

The Web3 vs Web2 value propositions for artists are also dramatically different. Web2 products and experiences are most commonly about accessing a vast catalog of music in one place, be it a streaming service, UGC platform, or social media site. Users have been trained to find the artists they love in a mix of millions of songs and then customize (or have the algorithm do it for them) where they focus on a smaller set of songs they love. Live streaming, which has flourished during the pandemic, is an exception to this Web2 rule, with artists presenting a variety of live performances directly to their fans.

For Web3, it doesn’t really matter if there are millions and millions of songs or artists. In fact, I would say that less is much better. Does anyone really want a metaverse with hundreds of millions of songs? No, what matters at Web3 is a genuine connection to an artist, participatory and immersive art and music, and communities with shared interests. Web3 products and experiences commonly have an end-user value proposition of getting closer to an artist, participating in an artist-specific user experience, and being part of a community of fans who also appreciate a particular artist. Metaverse worlds are still early days and will continue to evolve, but are much more likely to offer small boutique combinations of artists, initiatives, and background music to accompany the immersive experience.

“For Web3, it doesn’t really matter if there are millions and millions of songs or artists.”

Early artist monetization is very different on Web2 and Web3. On Web2, the artist is bound by whatever catalog deal their label, distributor, or publisher has subscribed to, no matter how long it takes those pennies to get the advance back from them. On Web3, virtual merchandise, skins, and small in-app purchases will be essential core monetization strategies, with artists and their teams offering special experiences and communities closely revolving around the artist. These tactics have proven to be highly effective monetization and engagement tools in the gaming industry and will transfer to Web3 seamlessly, meaning potentially more valuable uses for artist name, image and image rights separate from video recording. sound.

But it’s not as simple as an artist submitting an NFT and assuming fans will jump in and pay millions for that artist’s meager good. Web3 fans are looking for authentic and unique ways to support and interact with artists, and cash-in will be nothing more than a short-term strategy without something more sustainable and valuable to fans, which can include music or video. of an artist, but also his non-musical passions, his personality and insights into his creativity, and certainly creative output beyond a sound recording.

And finally, the additional rights required for Web3 are not catalog-centric but artist-centric. This constellation of rights includes image and likeness of artist name (NIL), sound recording, publication, and artist branding. We are not very well prepared for this at the moment. The closest thing we have is the sync license, which has issues at scale. Whoever has those artist NIL rights will be at the center of bringing web3 artist initiatives to life. This also poses challenges for traditional licensors who have aggregate rights in their own vertical (sound recording, publishing, performance) but are not used to licensing very small selections of those rights, or negotiating deals around a handful of activations of artists.

“Web3 is a natural extension of the creator economy, with almost all Web3 platforms building creator tools directly into their technology, assuming that a music creator can be as nimble as a non-music creator and bring everything they need to activate an experience. .”

Web3 is a natural extension of the creator economy, with almost all Web3 platforms building tools for creators directly into their technology, assuming that a music creator can be just as agile as a non-music creator and bring everything they need to power an experience. . Of course, those troublesome music rights now complicate the matter. Independent and emerging artists who control all their own rights, as well as big artists who can get their hands on using Web3, have a clear advantage in exploiting these tools. Established artists and those whose songwriting is highly fragmented have a much more complex set of partners, co-writers, and stakeholders who must be aligned around their music, their needs, and their creative expression.

The custom nature of most artist deals further complicates platform-artist integration because every artist deal is unique; Web3 platforms and metaverse worlds cannot assume that just because one artist is configured a particular way that they can easily replicate the approach for all artists.

The founders of Web3, like all techies who clash with the music industry, are often stumped by how music rights and relationships work, and often end up offering solutions to the wrong problems. While there is enormous potential in the way artists can use technology to express themselves creatively, the utopian vision that decentralized technology will solve all problems is seriously flawed. For example, Web3 technologists often imagine that all music rights and licensing issues will be solved by blockchain and smart contracts, thus the old inefficient licensing, rights management models will disappear. , opacity and payment structures. Indeed, our Web2 rights issues will continue and coexist for many years to come with new Web3 rights issues. I am convinced that some of our problems can be solved with powerful, decentralized technology, but only if humans agree to participate.

Many in the industry are intentionally on the sidelines at this point, waiting to see what holds up and happy to jump in once the models are established and Web3 is less murky. I encourage everyone to experiment right now, because that’s not what it’s about, it’s about when the metaverse and Web3 are being built, artist initiatives are happening, and the transformation of the Internet is underway. Music stakeholders will benefit from gaining first-hand knowledge. I also believe that there is room for everyone in Web3. It’s not really about disintermediation, but more about changing roles and adapting to an artist-centric world. It’s going to be a wild ride, but certainly fun.Music business around the world