Reflections on the music industry at NFT.NYC
Photo: Shubham Dhage
At the fourth annual NFT.NYC conference in New York, the sentiment fell somewhere between faint excitement and “so this is still a thing, right?” Unlike this time last year, when the music industry was hooked on crypto, this year’s event arrives at a time when the crypto market, like much of the economy, is in decline. However, the conference was a chance to take the pulse on the space (and there still is one). Three reflections:
1. The attention recession — and potential economic recession — loom
Of course, the market decline is not specific to crypto. It is also likely that part of the crypto ‘downturn’ is simply an expected return to normal from the inflated peak. However, there are fears that the music Web 3.0 space will lose momentum as consumers are more picky with how they spend both their attention and their money. Education remains one of the biggest barriers. For a music fan to even be interested in buying an NFT, they must first understand what an NFT is, why they should consider it valuable, and how to purchase one. While it may feel as if everyone in the music industry gets the gist by now, consumer understanding remains pretty niche. As of Q3 2021, about 20% of global consumers understood what NFTs were, and a similar number were interested in buying scarce digital collectibles from their favorite music artists. It is not just a question of getting consumers to pay attention, but artists and their teams as well. Major labels that have invested in Web 3.0 are still educating their own teams on the space, and trying to drum up excitement from artists — at a time when many have just returned attention to in-person activities, like touring.
2. But the bear market has benefits
Even so, there are a number of potential benefits to the bear market. A crypto winter would help weed out the currently overcrowded space, separating the serious companies and projects from the money grabs. For those who are serious, a bear market will be a good time to focus and begin the hard work of solving the many issues and obstacles that became clear during the hype phase. One attendee from a music NFT startup noted how it was nearly impossible to focus during the crypto hype of 2021, and felt that they are far more productive in their work now. The bear market may actually be easier on fans as well, many of whom were priced out when crypto was hot, and are now able to purchase their first NFTs for lower prices. Despite the market downturn, investment continues to flow into the music Web 3.0 space. Recently, record label DAO Dreams Never Die raised $2.5 million in seed funding, blockchain-based music rights marketplace anotherblock raised $1.2 million, and NFT startup Highlight raised $11 million. From the vantage point of NYC.NFT, at least, there also seems to be no shortage of recent graduates who are excited about beginning careers in music and Web 3.0.
3. There are still diverging schools of thought
We have previously noted two diverging schools of thought in the Web 3.0 music space. While one side is building music-crypto projects atop incumbent frameworks (and often adopting the still unsolved issues with those frameworks), another side is scrapping those frameworks almost entirely, and building a new, blockchain-based music business in parallel to the traditional one (MIDiA explores how these startups contribute to a ‘counterculture’ music business in a forthcoming report on the future of the industry, which will be published next week). While the former space is occupied by major labels and other traditional stakeholders, the latter is led by independents and music industry outsiders.
This division still exists, and was evident even in the attendance at different events (i.e., the label folks and indie startup folks did not, for the most part, seem to mix). There were also still far more panels and talks about how NFTs can be used as a new product to sell to people than there were ones about using NFTs to solve fundamental — but less sexy — problems, like streamlining royalty payments. In the grand scheme of things, the music crypto space is still quite nascent anyways. But, hopefully, the bear market will also be a time to focus on those less sexy (but potentially revolutionary) projects, and for these two diverging schools of thought to pay attention to and learn from each other.