Currents: New investments in AI music tools and music NFT platforms (despite the market slump)

This article is a web version of our biweekly, member-exclusive digest dedicated to our editorial and database updates. We break down and connect the dots among announcements of funding rounds, acquisitions, NFT drops, and other highlights in the music/tech ecosystem that we track as part of updating our suite of databases.

As of this week, we’re rebranding these editorial and database updates into a new vertical called Currents (thanks to our visual designer Ana Carolina for the fancy new banner). The rebrand is in line with the eponymous, read-only channel we launched in our private Discord server last month — in which our research team curates links to news announcements that shed light on the latest music/tech trends, often tying news to ongoing community discussions in the server. If you’re not already in our Discord server, please click here to authorize the Memberful Discord bot, which should give you access.

We’ve identified a few themes over the last two weeks in our research and additions to our Music/Audio Tech Investment Dashboards and Music Web3 Dashboards worth a connective look, including:

New cash infusion for AI-powered music tools

We’ve seen elevated activity around AI tools for musicians in 2022, including through direct investments, acquisitions, and new product development. From generative AI tools that create music based on mood or genre, to categorization tools that spot patterns in large databases, or mixing and mastering tools for artists, the range of investment highlights the broad impact these technologies have on music as a whole.

• All in all, we’ve tracked nearly $100M worth of private investments in AI music tools in 2022, including AI-powered listening platform Endel’s $15M raise in April and LifeScore’s $14.5M in March. Further, Soundful, a generative music platform that uses AI to create royalty-free music using genre and template settings raised $3.8M in seed funding, according to their late April press release.
• Social media music platform BandLab closed a Series B funding round last week, raising $65M to bring the company’s value to $315M. BandLab’s range of products includes AI-powered mastering and SongStarter, an AI-driven generative music tool that creates royalty-free music.
• SoundCloud acquired AI-powered music curation company Musiio for an undisclosed fee. Based in Singapore, Musiio uses AI and machine learning to find patterns in music and categorize it appropriately. This acquisition follows SoundCloud’s partnership with Mixonsetannounced last week, an AI-driven DJ mix platform that ‘smart mixes’ using SoundCloud’s 200m-strong song catalog. Musiio gives those songs context and allows SoundCloud to diversify its recommendation and discovery tools, similar to Spotify’s acquisition of The Echo Nest and Apple’s acquisition of MusicMetric in 2015.
• Splice, a sound marketplace for producers and songwriters with over 2.5 million samples, launched a new app called CoSo that uses AI to quickly search its entire catalog for sounds that work well together. Splice says this is just the beginning of their development of what’s possible with CoSo, hinting at further AI and ML investment, product launches, and implementations.

At large, artificial intelligence and machine learning technology have recently garnered high-profile attention — notably the hugely impressive DALL-E 2 from OpenAI, an AI/ML-driven system that can create realistic images from simple text inputs. While DALL-E 2 is not explicitly music-related, it highlights how fast the tech is moving, and experimental musicians such as Holly Herndon and Mat Dryhurst are also already playing around with DALL-E in their creative work.

To keep track of this fast-moving space, we’re launching a new AI Tools for Artists database which will be published alongside an exclusive article next week. Stay tuned!

Even more investments in music NFT platforms — bucking wider market trends

We’ve seen growing investment in music NFT marketplaces in recent months:

• Mintbase aims to lower the technical barrier to entry for NFT minting, and has raised $7.5M in Series A funding. Backers include Coinbase Ventures and Animoca Brands.
• John Legend’s Our Happy Company has raised $7.5M to fund its NFT music platform,OurSong, which launched officially in February 2022. Animoca Brands is also investing in the venture, co-founded by Legend and Twitter co-founder Kevin Lin.
• Afterparty has raised $4M as part of a community-led funding round. Investors included Paris Hilton’s 11:11 Media. Afterparty also announced it is introducing NFT ticketing, saying it will create in-person experiences with NFT sales. As we discussed in our last digest, the company already hosted an IRL event in Las Vegas in March.
• SoundMint, an NFT platform focusing on generative music based on stems provided by artists, raised $1.7m, also led by Animoca Brands.

Through the first quarter of 2022, investments in music NFT marketplaces appeared to be slowing: We tracked just $6.5M from funding rounds in the category from January until the end of March. Since then, though, investments have more than doubled, with $15.9M invested in the past five weeks.

Importantly, this pickup in activity bucks wider market trends, with overall NFT sales down 92% since September 2021, per some reports.

On a wider view, you may have noticed that The Sandbox’s parent company Animoca Brands — which last raised $358M in January 2022 — appears as an investor in several of the above rounds. Their investments are consistent with their mission to “grow the open metaverse,” and mirror a broader theme we’ve noted in the continued convergence of Web3 and the metaverse in firms’ investment theses around the role of emerging tech in entertainment.

Read our 2021 Music NFT Sales Analysis for more context on music NFT market activity, particularly the role of newer music NFT platforms.

More eco-friendly music-tech solutions

For years, sustainability and environmental impact have been part of the music-industry discourse, and has particularly impacted fan sentiment around music/Web3 projects. Recent investments and momentum from both Web2 and Web3 companies indicate an ongoing interest in addressing environmental sustainability from various angles:

• Evolution Music has launched the world’s first bioplastic vinyl record product, released last month in conjunction with Earth Day alongside the Music Declares Emergency “Turn Up the Volume” climate week. Vinyl sales have risen dramatically over the last decade ($47.1M in 2021 alone, according to MRC, accounting for 38 percent of album sales), but the industry has been criticized for its use of petroleum/plastic products and waste disposal practices.
• As we covered in our last research digest and our retro NFT sales analysis, there has been a rise in alternative blockchains for NFTs, with artists such as Ashanti, Doja Cat, G-Eazy, and TLC releasing collections on new platforms like EQ Exchange and OneOf. These platforms rely on proof-of-stake blockchains like Tezos over the much more popular Ethereum blockchain, which accounted for the 90% of the music NFTs we tracked in our database last year. And while cost might be a more significant motivation for the protocol switch than environmental concerns (Ethereum gas fees topped $181M during last weekend’s Otherside sale, and some analysts predict it will only continue to rise considerably in the next two years), it is nonetheless a further move toward a greener Web3 future.

Bonus: Music & the metaverse

Given our $STREAM Season 2 focus on music and the metaverse, we are dedicating a section of this digest to activity and updates we are seeing related to the topic. Here are a few related stories that have crossed our radar over the past couple of weeks:

• Spotify enters the metaverse with its new realm on Roblox, “Spotify Island,” becoming the first streaming service to have a presence in the game (and reminding us of SoundCloud’s Fortnite partnership from 2021).
• Live Nation and Snapchat partner to provide AR experiences at concerts.
• Crypto Blockchain Industries (CBI, Euro Nextgrowth Paris) will acquire Xave World, a metaverse devoted to music.

If you’re interested in contributing to our Season 2 research, let us know in the #season-2 channel in our server and someone on our team will point you in the right direction!