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UnitedMasters invests in YugaLabs

First shared by @daveedwards in #music-streaming

In what appears to be yet another instance of the traditional music industry claiming their piece of the Web3 pie, music distributor UnitedMasters have announced that they’ve invested in Yuga Labs — the company that created Bored Ape Yacht Club (BAYC) and recently became the owner of fellow PFP projects CryptoPunks and Meebits.

BAYC has been under the mainstream spotlight for months now, for reasons both positive and negative. Financially, the project surpassed $1B in total sales in January, and just raised a “seed” round at a $4B valuation led, of course, by Andreessen Horowitz. Culturally, BAYC’s laissez-faire approach to intellectual property (all BAYC NFT holders have full commercial rights to their respective artworks) has put the project at the center of high-profile Web3 experiments in the music industry, such as Universal Music Group’s new Web3-facing label 10:22PM.

At the same time, BAYC has become synonymous in some circles with ostentatious displays of wealth and celebrity (Post Malone, Steph Curry and Paris Hilton are all owners), and has not compensated their original designers with any sales royalties from the project. Even Ethereum co-founder Vitalik Buterin himself has called out BAYC for not embracing crypto’s fundamental political values. In an email to TIME Magazine, Buterin argued that “ultimately the goal of crypto is not to play games with million-dollar pictures of monkeys, it’s to do things that accomplish meaningful effects in the real world.”

Against this backdrop, many community members felt it was a little strange that UnitedMasters — a company that primarily exists to provide services to independent artists — would choose to invest in Yuga Labs. Perhaps what rankled members the most is the language the deal came couched in: UnitedMasters’ tweet claims that the agreement allows the company to “continue to lead the way for artistic independence.”

“The deep cynic in me is screaming “The future is independence… by joining a multitude of VCs including a16z in investing in this”. […] I hate to say it but IMO United Masters are not leading a way to artistic independence here. If they truly were, they’d maybe invest in something like RMRK instead. Too often people are just running toward the most high profile/newsworthy thing in Web3 and pinning their flag to it like that’s a victory. It isn’t.”
– @Mr Trick

As @daveedwards noted, it’s unclear how much (if any) of the potential profit from the Yuga Labs deal will make its way back to the artists it caters to. Last year, Yuga Labs racked up $138M in revenue with a 92% profit margin so there’s undoubtedly money sloshing around, even if it’s unclear how long it will stick around.

However, as @danfowler put forward, asking whether profit will trickle down to artists might be the wrong question. Pro-artist spin aside, UnitedMasters is ultimately beholden to its investors, rather than to the artists they serve. Instead of demanding equity from organizations that are structurally unprepared to provide it, it might be more productive to pour that energy into proving the worth of new models of ownership — and to view this deal as an exciting milestone in the traditional industry’s journey towards embracing Web3:

“Many of us are betting on new models of company ownership becoming dominant on the internet, but it’s on us to prove that they actually are a better way of doing things, rather than just moaning that older businesses work in the way that they do.”
– @danfowler

Further reading: The shape of Web3 music communities: Internet forums with shared bank accounts

Google Pay allows Spotify to trial third party billing options

First shared by @daveedwards in #music-streaming

For years, Spotify subscribers have been unable to sign up for Spotify through the mobile app. Spotify has refused to pay the exorbitant payment processing fees demanded by Google and Apple, often as high as 30%.

Now, Google Pay has announced that they’re trialing “user choice billing” with a small number of developers — including Spotify. This development effectively allows Spotify to offer third-party payment methods alongside Google Pay when Spotify is accessed using the Google App store, effectively ending Google’s payment monopoly within their apps.

While this feels like a definite step in the right direction, @daveedwards sums up the unanswered questions swirling around this announcement:

“The question here is what the terms are, which haven’t been disclosed. In other words, what cut of Spotify’s payment processor is Google going to insist on taking. In the Netherlands, where regulators told Apple their cut was unfair, Apple reduced their cut to 27% just to spite developers. When you add in Stripe’s fees plus the lower conversion rates of using a non app-store payment method, it was a non-starter.

But in theory if you reduce the App Store cut from 30% to 3% (or even 10%), that is a huge difference in margins for subscription businesses. It doesn’t apply to ad revenue though.”
– @daveedwards

Further, the fact that platform taxes like this even exist is a compelling argument for decentralization (although it is worth noting that gas fees can similarly dissuade business). If platform fees are permanently negotiated down, a boom in new, subscription-based business models could be on the cards:

“Also under discussed aspect of crypto that I really like. Bypassing platform troll tax. Was able to buy an nft for a decent amount of money on my phone all without touching the traditional “rails” and platform cuts. The business models that open up when that 30% is available again I think will be super interesting.”
– @aflores

As we’ve discussed in previous digests, despite the recent trend of platforms offering artists elements of label services, there’s little visibility around the quality of these offerings or whether they genuinely present artists with more equitable deals than traditional labels. Either way, it’ll be interesting to observe what kind of careers artists incubated by tech platforms ultimately have, and whether their partnerships with big tech turn out to be long-term.

So how much should streaming really pay?

First shared by @howyouspellthat in #music-streaming

While the music industry almost unanimously agrees that streaming rates are too low, there’s no consensus on what streaming rates should be.

@capopluggers suggested that around 35% of streaming income should go to the artist, and a recent Twitter thread by artist RAC suggested that users should be paying at least $150 per month for access to streaming services.

While $150 per month may seem high, it isn’t unrealistic when you compare music streaming to film and TV streaming, which tends to split over a multitude of different platforms:

“yeah it’s a really interesting point that film/tv streaming is split up between a number of different platforms which in total cost a pretty substantial chunk of change, whereas, “music” wise pretty much all of the existing services have minor differences and are driven by UX (ignoring the whole podcast situation).”
– @jake standley

As @sydmusic notes below, the fact that music subscription prices are so low to begin with arguably stems back to weak union representation. While Hollywood guilds tend to negotiate passionately on behalf of their professions, many artists are unaware of (or are unable to join) their local unions. In part this lack of awareness falls to unions like the AFM’s inability to keep up with the structural and technological changes posed by the rock & roll movement (this Rolling Stone article has a pretty great summary, if you’re curious).

“Been banging this drum for a thousand years – imo this relates back to artists having absolutely no representation via unions. Love em or hate em, the directors guild, writers guild and all the other guilds on the film side ensured that rates for visual artists on iTunes, the store named after music, were much higher and credits (gasp) were displayed on every film/tv episode page. Meanwhile we were gladly taking .99/track minus distribution fees and getting rug pulled by Spotify.”
– @sydmusic

Do you think it’s possible to find a solution under the $10 “all you can stream” model? Or, is a significant shift in consumer expectations necessary for streaming to present an equitable percentage for artists? We’d love to hear your perspective, jump in and join the conversation here!