The more I read and hear about NFTs the more sense it makes to me for artists to get in on the act and find a new way to broaden their revenues (here’s how artists can go about creating and selling an NFT). But what about the buyer’s perspective? Why should they get in on it too? Is it about having a collectible, a one-of-a-kind? Is it just about supporting a specific artist? Or, is it an investment? Moreover, and this is the focus of this article, what’s the potential for artist-fan relations in light of the functionalities and possibilities of the blockchain?
Screenshot of audiovisual NFT by Teebs & Yuma Kishi on Foundation
The buyer’s value
Just one month ago Bas spoke about NFTs in the context of Mike Shinoda‘s first sale. In that article he argued that buyers step into this world because they’re building a world, a metaverse. In that metaverse, we need items that will help us showcase our identities. An NFT is one way of expressing identity and there is value in that. Similarly, in her The state of music NFTs [paywall] article from 14 January, Cherie Hu argues that one way to look at the tokens is as a form of rare digital merch. This, again, relates to confirming your identity, this time as a fan. Continuing along those lines, Hu asserts in a follow up article [paywall] that we shouldn’t even be paying that much attention to the crazy bids driving the hype through auctions but on the potential of selling multiple NFTs at a fixed price point. That’s what will allow artists to tie their fans to them and open up new fan-to-artist interactions.
The buyer’s value, then, is much closer to what happens with certain membership platforms. One example is Hanging Out With Audiphiles, Jamie Lidell‘s podcast, which has a Patreon where he shares the sounds he makes for each episode. His patrons can then make music with those audiofiles. An alternative would be to mint each sound file as an NFT and in that sense give some extra ownership to those ‘superfans’. Even more exciting is when the NFT ownership provides access to more than just, in this example, the sound file. The NFT can then come with special access to the artist (kind of similar to 3Lau‘s recent auction where the highest bidder gets creative direction on a new song by the DJ).
From membership to equity
In a world where what’s called the creator, or passion, economy is growing the distance between artist and fan is shrinking at a similar pace. Livestreaming during the pandemic has provided access to artists in their private spaces and often without lights and make-up. Similarly, services like Cameo and Clubhouse allow the type of interaction between artists and fans that was often unthinkable just a few years ago. With greater access to your favorite artists through a variety of social media and the ability to support those artists directly through membership platforms the logical next step is to consider the artist as something you can have equity in. Jess Sloss from Seed Clubexplained this idea to Colin and Samir:
Viewed simply, this just looks like moving from paying a monthly subscription to support an artist to buying NFTs with the same result. Where this evolves, however, is when FTs come into play. Once an artists gets their own token, they can start playing around with various layers of access. Because this token represents real value – for example on the Ethereum blockchain, but there might be more potential with something like Polkadot – the investment changes. The point of a membership is that you can cancel it at any given time. Conversely, the only way to get rid of the equity you buy into an artist is by selling it. In other words, to shift it to another fan.
From equity to growing revenues together
There’s a bunch of start-ups working in what Rolling Stone dubbed ‘equity crowdfunding‘ back in 2019. The idea, roughly, is that based on future streaming royalties, fans can invest in their favorite artists to help them create new music. By investing in an NFT or, for example, a social token, the fan engages in the potential for revenue growth. Whether this is through a resale factor, which usually holds a percentage for the artist in the smart contract, or through a secondary right attached to the token (see Jacques Greene‘s publishing rights).
Besides the artist and the fan, there’s also a space here for the developer. As Bas argued in his article on NFTs, we should view the whole blockchain experience as a metaverse in itself. As artists and fans find their ways to connect within that metaverse, there’s also a lot to be gained by the developers that pave the roads that allows those connections to grow. Where these three levels find each other, is where we will see the most growth in this world. What’s more, those types of collaboration will hopefully advance mainstream adoption both for fans and artists throughout this year.
In short, NFTs are one logical next step in a world where the interaction and proximity between artist and fan respectively grows and shrinks and moves towards levels resembling collaboration.
Back in August, Bas argued that two of the key elements for the longevity of virtual concerts are interactivity and for the audience to have magical powers. One place to find these elements is in MILEs [massive interactive live events, a term I first came across with Jacob Navok, CEO of Genvid]. Such events are cloud-based and use only a single simulation to bring together large amounts of players who all interact and influence the game in real time. Most of these events so far have been game-based and serendipitous: Twitch Plays Pokémon, Reddit‘s Place, and more recently Facebook’s Rival Peak. Basically, organising a MILE means tapping into gaming culture and gamifying what you do if it’s not already a game. The closest we’ve come so far in music is Travis Scott‘s performance in Fortnite. Inside the game the performance was limited to 50 people per ‘room’ but millions watched the show via Twitch or YouTube streams, either live or afterwards. What this virtual concert lacked was the ability for the audience to affect what happened. To unleash true interactivity and provide magical powers to viewers that ability to affect is exactly what we need.
Lord, what fools these mortals be
Those of you who know your Shakespeare will recognise this quote from A Midsummer Night’s Dream. It’s not just fitting because within a MILE we can behave godlike, but also because the Royal Shakespeare Company (RSC) will perform a new play based on this wonderful story as an immersive event in March. It’s a great achievement that brings together a variety of disciplines from gaming, theatre and music to XR, motion capture and live performance. The RSC leads this multidisciplinary group as part of a UK government programme called Audience of the Future. This programme supports storytellers like the RSC to work with immersive technologies and tap into, hopefully, new audiences. Another supporter of this project is Epic Games, through its Megagrants. The idea for Dream goes back to before the pandemic, but as with so many things lockdowns and social distancing emphasizes its importance as an experiment.
If we shadows have offended
In Dream, the RSC welcomes the audience to interact with the performance in various ways. First of all, there’s the fireflies. All the actors perform in motion-capture suits and the viewers influence their movements through a virtual forest – rendered in Epic’s Unreal Engine. Through whichever input device the viewer uses – touchscreen or mouse, for example – they can guide Puck (if you’re new to A Midsummer Night’s Dream, Puck is the sprite, or fairy, who sets the story in motion through his magic) their moonlit travels through the forest.
Photo credit: Stuart Martin, RSC.
Each performance will last 50 minutes and will be a unique experience. Unique, simply because each audience will behave differently. What differentiates Dream from MILEs based on or within games is the element of live performance involving humans in motion-capture suits reacting to the viewers’ input. It’s this element of interaction, however, that sets Dream apart from game-based MILEs as an example for the music industry to take note of.
Photo credit: Stuart Martin, RSC.
While these visions did appear
It’s not just a visual spectacle though, the music is interactive too. The Philharmonia Orchestra performs the score composed by their music director Esa Pekka Salonen [who has developed a knack for pandemic-related performances that excite] and Jesper Nordin, whose Gestrument music software also powers the interactive soundtrack. The orchestra actually recorded the music pre-pandemic as this latest RSC performance of Dream should have been staged last year in the spring. Not only, then, do the viewers influence the movement of the fireflies as they guide Puck through the forest. Since the actors perform with Gestrument, those movements also influence the score in real time. Dream is thus a truly interactive music experience captured within a dynamic soundtrack.
I must go seek some dewdrops here
Dream‘s success starts with the story. To replicate the tech involved onto a concert experience leaves little room for play for the viewers. Travis Scott’s Fortnite performance worked because he took his viewers on a trip and told them a story within the gameplay which he supported by his songs. Going back to another piece by Navok, written with Matthew Ball, where they argue that cloud-gaming, of which MILEs are examples, spawns completely different experiences than, for example, console-based games. It requires a different set of expectations that involve interaction and participatory influence. In their words: “social experiences, not technical capability, drive engagement.” The same holds up for virtual concerts: we will need to come up with a narrative that will allow large groups of viewers to actively engage with the music and with each other while they collectively adapt that music as the story unfolds. This experience will contrast with the shared reality of enjoying a live gig with dozens, hundreds, or thousands of others at the same time. Hosting a music-driven MILE will convince people to stick to their screen for a unique experience unlike anything else in the real world.
2020 has turned a surging trend into a global reality: remote work. Spotify, which currently employs around 5,000 people globally, recently committed to staying remote-friendly beyond the pandemic. What other companies in music have the same intention?
Remote work has not taken off in the music business as it has in other industries. This can partially be attributed to some commonly held beliefs, some of which specific to creative industries:
“The music business is a people business.”
“Real collaboration can only be done in person.”
“It’s hard to maintain a coherent team culture remotely.”
These are all valid concerns. Being remote-friendly requires a shift in workflows to make asynchronous work easier, a shift in management, and a general shift in mindset.
Pros & cons to remote work
Buffer, a social media tool for scheduling posts, has been championing remote-first as a company. As such, they create a yearly ‘State of Remote Work‘ report to research how remote work is developing. Its latest report found that ‘not being able to unplug’ is the biggest concern among remote workers.
Switching off is a notorious topic in music, since it’s all too common for people to work deep into the evenings. I figured the pandemic might play a role in this, due to people being stuck at home and coworking spaces being closed, but people working remotely pre-COVID struggle with this as much as others.
On the flip side, remote work also has benefits. While the below chart focuses on the worker, there are also organisational upsides. Remote work benefits from maintaining workflows in which people won’t get blocked. People have to be able to work asynchronously as much as possible, so they don’t have to wait for people in other timezones or on other schedules.
While you don’t need to work remotely to clean up workflows, the friction might not have been visible to managers since people could resolve blockers by walking over to a desk. As such, remote work brings the benefit of forcing clarity, transparency, and focus to well-performing organisations.
We’ll be going live on Clubhouse on February 25, 8pm CET / 2pm EST to discuss remote work in music. I’m looking forward to hearing from leaders and workers in the music space about their learnings and plans for remote work going forward.
There’s a need to excel in human beings. If you go into music, you do it to be successful; if you set up a music/tech business, you do it to be successful. The hits you generate or the unicorn status you achieve subsequently measure your success. To focus on the artists for a moment, there’s a seemingly growing number of artists who make a living from streaming revenues: Spotify talks about 43,000 artists earning 90% of the revenues thus giving them a solid income and AWAL says that they see a 40% year-over-year growth of artists earning more than $100k a year from streaming. This sounds positive – and reminds me of the Hans Rosling TED talks that take a macro view and say overall life on our planet gets better over time – but still impacts only a very small amount of artists. As Mark Mulligan has recently argued, there’s no silver streaming bullet to fix this: equitable remuneration won’t; user-centric payment systems won’t. So what will work? And what does that mean in terms of that insatiable need to excel?
What will work? Or, what needs to be done?
I recently wrote that music is the catalyst of the creator economy. In this economy driven by passions it is connections, mainly between artists and fans, that create and amplify value. To succeed, artists need to engage directly with their fans which in turn means they need to gain access to those fans. This requires more than a ‘follow’ on Spotify or adding a song to a playlist. Fans need to do more and artists need to entice them to do so. Key to this is marketing and, to paraphrase Cristina Jerome, knowing who your fans are, being where your fans are and then creating content relevant to the platform they are on. Listening to Cristina speak during a recent recording of the Unsigned PodcastI realised how the marketing she does with artists through RnBae Collective follows one of the tenets of the passion economy: the benefit of focusing on a small group over scale.
Another key to success, and this relates back to the point about intimacy, is that having a dedicated fan base – and this doesn’t have to be big, sometimes it’s even better if it’s niche – is what will draw the brand in. The partnership should then focus on something the artist wants to create, an experience for the fans, and an opportunity for a brand to get involved and gain the recognition from being attached to a genuinely creative process or product.
Ownership
There’s a great quote by Tim Sweeney from Epic Games: “The worst term that’s ever been invented in the history of the internet is ‘own the customer’. ‘The customer owns themselves!” Lots of talk around the passion economy focuses on ‘owning your fan’ but what that really means is to have direct access to your fan. No ownership is involved there. If anything, the fan should end up feeling like they have some ownership in the creative process they support.
Where ownership does matter is when it comes to the music. Not just because cutting out middlemen ups the revenues that will end up in the artists’ pocket. Moreover, ownership gives freedom to pursue other lines of revenue. It’s important to think out of the box here as music can be used in all kinds of ancillary projects. There are, for example, great opportunities in synch licensing, but also more broadly there are opportunities to get involved with shows and films. This is a tip from Matt Levin, who works in this space through Endeavor Content. His point was to not just try and get – to stick to the example – a song or composition synched on a show, game, film, etc. but to see if you, as the artist, can get involved. That way, a deeper partnership establishes itself which in turn creates and more value.
The need to excel, or the pitfall of meritocracy
We love to think that we can do anything we set our minds to if we just show discipline and perseverance, but that’s not how it works (there is no 10,000 hour rule). Believing that it does, and that we live in a society where you are judged on merit only, specifically doesn’t work in music either. Music is always made as a collaborative effort: even the singer/songwriter needs a team. Furthermore, there’s so many great musicians and bands, that there’s many more that would deserve, on merit, to be successful than those 43,000.
The work necessary to achieve what I’ve described above – building relationships with your fans, retaining your rights and getting creative with revenue streams – takes a lot of work and a lot of people. The pitfall of the meritocracy means that when you fail it’s often your failure and yours alone. But it’s not, it’s part of a much broader discussion about value, of music and of production. To maximize the value of music, the best solution right now is to start talking directly to your fans and being open to the myriad options out there to further monetize what you create. Doing that is tough and takes a lot of energy. It means it’s not just about the music and making music, but, and perhaps even more so, about the many stories that surround the art and the creative process.
If you haven’t spent time on Clubhouse yet, you either didn’t get an invite yet (abundant now, so ask around), are on Android, or understandably chose not to believe the hype.
The new social media kid on the block has seen plenty of long-form analysis, especially considering it’s such a simple app (highly recommended reading: Clubhouse’s Inevitability by Ben Thompson). Its success can be explained by a simple dynamic too.
Clubhouse = podcasts + proximity
The audio part of the app is popular for many of the same reasons that podcasts are popular as a type of on-demand talk radio. They’re informative, entertaining, and people derive comfort from the connection they have with the podcast hosts & guests – or just hearing their voices.
Clubhouse adds a sense of proximity to the podcast effect. Instead of the distant creator-listener relation, listeners are on a more equal footing. Even if Clubhouse has concepts of session hosts, a stage and an audience, at least you’re in the same room. You can directly follow people. You can raise your hand to speak to them. You can connect to them afterwards.
The dynamic feels similar to the early days of Twitter. Suddenly you could use 140 characters to reach out to the world’s top thinkers and artists who had already signed up to the service (an early adopter of both platforms is deadmau5). You’d usually get a reply and sometimes even a follow. It was significantly easier to build up a following in those early days and by having an following early on, you’d automatically grow your following as the platform went through its growth phase and people looked for interesting people to follow.
While FOMO may be the reason why people flock to Clubhouse, proximity is the glue that makes the experience sticky.
👋 You can find me on Twitter and Clubhouse as @basgras.
❤ If you’re on the MUSIC x Patreon, give me a ping. I have a couple of Clubhouse invites to give away and I’d love to have more of the community on there.
While user-centric payments definitely make the landscape fairer and realign incentives by making sure the money generated by fans of certain artists actually end up in those pockets, it’s definitely not a silver bullet solution to make up for the difference between desired and actual revenue artists receive from streaming services. In other words: for the vast majority of artists, the immediate change in royalties from a shift to user-centric would be negligible.
Furthermore, it’s complex to negotiate, as SoundCloud’s VP of content partnerships Raoul Chatterjeepointed out during a recent session of the UK streaming inquiries:
“The whole investigation into user-centric is a very detailed and complex investigation that needs to be taken. It’s one potential path we’re exploring… and it would require industry-wide conversations and support to be impactful.”
SoundCloud is doing ok (especially compared to a few years ago), is reporting growing revenues, but it’s losing relevance. SoundCloud does not have time for lengthy negotiations. As a platform, they’ve lost their footing at the center of music subcultures and the longer it takes for SoundCloud to regain its position, the harder it will become.
Keep the lawyers at the (virtual) negotiation tables, but in the meantime, claw your way back.
Firstly, where do music scenes go to connect to stay connected with each other in 2021? I’ve argued that Instagram has usurped community building from SoundCloud. Of course it should be noted that TikTok is playing an increasingly important role there, especially for certain genres. To a lesser degree, groups on Facebook, Telegram, and Discord form places for people to share their latest tracks, get feedback, find people to do collabs or exchange remixes with, etc. As such, they’re also great places for fans to keep track of the latest developments in music.
Secondly, where did musicians turn when they struggled to make ends meet with just the income from Spotify, Apple Music, YouTube, etc.? They turned to Bandcamp in a massive way. SoundCloud, with its creator-centric roots, wasn’t well-positioned yet to accommodate these artists, because what it offers artists hasn’t changed much from its early beginnings. In 2020, being creator-centric meant helping creators make money – and SoundCloud didn’t have much to offer beyond what it offered artists since the service’s early days. That is: a place to upload your music and present it to other people. That addresses a pre-2015~ market need: making music easy to access. Access has been solved. Monetization hasn’t.
Another place that made music easy to access, YouTube, has been SoundCloud’s most important competitor. YouTube, since its early days, has offered social functionality similar to SoundCloud’s, in that one can follow creators (once innovative! Spotify only launched this 4+ years after launch), comment on tracks, and see other users’ profiles.
By 2021, YouTube’s suite has evolved to include membership clubs with monthly fees, monetization through content identification, and livestream monetization through social features that make fans more visible in the chat (similar to Twitch).
This is the landscape SoundCloud must address & find relevancy in.
SoundCloud was strongest when it catered to its early adopter users or users who exhibit that type of behaviour. Behaviour commonly associated with early adopter users is word of mouth, being a power user, and a willingness to overlook certain flaws as long as the product delivers exceedingly well on its core value proposition. These users are not well-addressed, since the value proposition has diluted over time in order to target wider audiences (e.g. through its Spotify-like subscription service). SoundCloud has made some great initiatives to woo creators in recent years, but the unifying aspect for all users on the platform is its listening experience – and that’s a social one.
People go to SoundCloud to discover new music. To find what’s ‘Next Up’ before it’s uploaded anywhere else. If you’re into a particular type of music, you’ll follow many of the same artists as other fans of that music and you’ll see some of those fans appear in the timeline comments on tracks.
Timed comments on Masayoshi Iimori’s track Alcohol.
On profiles, which have the same feature sets for fans and for artists, this social functionality is also present by displaying who someone follows and is followed by, as well as any tracks they’ve liked and comments they’ve left. For users who don’t upload any music, the main profile real estate consists of reposted tracks (similar to a Twitter user who only retweets). All of that is social.
Do the majority of users explicitly engage in social behaviour on the platform? Unlikely and it’s probable that a small minority of users create most of the (visible) activity, as on Twitter. SoundCloud is a community product where a minority of users create the value that the majority of users get off of the platform. Unlike Spotify, which tries to help users get as much value out of the catalogue as possible, SoundCloud should focus on the value users can get out of communities and the artist-fan relationship.
Lessons from gaming
This is not dissimilar to what fueled the success of games like Farmville or Clash of Clans. In free-to-play games, the majority of users will never spend any money. Instead, they create value for the ecosystem, so that a minority of users becomes willing to spend (big).
In order to leverage these dynamics, and create revenue for artists, SoundCloud must double down on social. How?
Step 1: Leaderboards on tracks and profiles. Show off the top fans of tracks and artists. Dedicated fans will want to earn their spot as the top fan. It’s not just fans: if you’re part of a certain music scene and want to make sure you’re ‘seen’, you’ll play new tracks on repeat, so you appear on the leaderboards on day 1. (just imagine K-pop stans, if you find it hard to imagine how fan communities would approach these types of dynamics)
This functionality already exists inside the stats dashboards artists have access to. All SoundCloud needs to do is make leaderboards visible on the various pages and perhaps create a setting so people can exclude themselves from public leaderboards.
Screenshot of the top listeners of a particular track in a 7-day time period (stats dashboard).
Step 2: Track and profile pages as real estate. Leaderboards create social competition and a way for fans to earn status. Now comes the monetization: let fans pay to claim pages in a non-obtrusive way, similar to how YouTube’s Super Chat feature lets you claim visibility in a chat during a livestream. You could let artists set prices or create some type of market dynamic for this.
Step 3: Place activity & payment on the same currency. As in gaming, certain users will spend more time creating value through activity and other users will fuel the economy through payments. By creating an on-platform currency, SoundCloud could reward active users with tokens that accrue value as people purchase tokens to spend on the platform with ‘real money’.
The tokens could then help artists mint their work as NFTs and create a more sophisticated dynamic for ‘tracks as real estate’. Basically, artists could earn money from playback, from selling tracks as NFTs, and by making commissions off of people speculating and reselling music NFTs (a commission percentage can be defined in the smart contracts associated with an NFT). From here, SoundCloud could come to function more as a protocol and create a metaverse-friendly version of its other early value proposition: music playback that embeds everywhere. This time with music as a vanity item that all can enjoy, but can only be owned by one person at a time while always staying associated with the creator – even when NFT ownership transfers from one person to another.
As the user-facing part of the platform shifts towards creating more value from the artist-fan relationship and the activity inside fan communities, subcultures, and scenes, lawyers can negotiate with industry gatekeepers to change royalty administration to a user-centric model.
Some of the above is actually what the Audius protocol is trying to accomplish. You could also go a lot further than what I’ve described, as Audius intends and as Mat Dryhurst explored in his essay SoundCrowd: Tokenizing & Collectivizing Soundcloud. Long term blockchain visions aside, for 2021, being a creator-centric company means being a company that helps monetize, so SoundCloud must focus on the short term and employ an “opportunities multiply as they are seized” type of strategy. That means: not standing still to evaluate distant forks in the road, because what you do along the way will determine the paths you can take from that fork.
User-centric is too slow for SoundCloud
Is user-centric streaming the right thing to do? Yes. Will it help SoundCloud in the short term? No, because artists will not see significant enough returns in order for them to drive more traffic to the platform.
Spotify is cool.. but @Bandcamp put double glazing on my house this year.
How can SoundCloud be as significant to artists as Bandcamp was in 2020?
SoundCloud must emphasize its community nature, since that’s how the type of value can be created that part of its core users will pay for. That won’t be most of the audience that SoundCloud has been marketing its music streaming subscription to (which can’t beat catalog-centric Spotify or value gap YouTube).
The platform must be selective about what type of behaviour it wants to cater to and the value it can create out of that. For that, it makes sense to use its DNA as a social music platform – something that Spotify, Apple (through Ping & Connect), and others have not been able to figure out. It needs to focus on the users that can amplify community excitement around significant monetization functionality and help make SoundCloud as culturally relevant as it was half a decade ago.
Signed,
A long term SoundCloud user with a 3-letter username: Bas (and more recently Viva Bas Vegas).
