Music NFT aggregators challenge the streaming status quo

Today’s music streaming landscape arose in the late 2000s in the context of an industry that saw its revenue streams wiped out by piracy. The problem that the landscape — now dominated by the likes of Spotify and Apple Music — had to solve was how to make a maximally complete music catalog as conveniently available to the masses as possible. The price point had to be pragmatic from the start, and still faces downward pressures today as paid streaming continues to compete with free options like YouTube around the world.

As the COVID pandemic increasingly funneled previously “IRL” music experiences into our private homes, grassroots campaigns and governmental reports alike highlighted the shortcomings of the dominant streaming model for artists’ incomes. Across the music industry, we saw an increase in calls for better compensation from streaming services, and a new appetite for alternative monetization models for digital music experiences at large.

Web3 has arguably been a beneficiary of this newfound penchant for experimentation. Hundreds of thousands of music NFTs have been sold and dozens of music DAOs have been launched in the last two years, with their instigators exploring how blockchain technology can help rethink traditional financial flows and fan relationships in the music industry. While two years ago all music NFTs could have likely been listed on a single sheet of paper, that amount has since exploded to numbers that can be difficult to sift through or make sense of without the right interfaces or curatorial north stars.

This brings us to what could be framed as the next phase of music/Web3’s growth: A new generation of alternative streaming and curation services built on top of music NFTs. The rate of music NFT releases today can now sustain a whole network of additional apps and services built on top to help artists, collectors, and fans navigate this burgeoning catalog, providing a crucial contextual and social layer on top of the wider music/Web3 ecosystem as it scales. Key examples include Future Tape, Spinamp, Ooh La La, and BPM Bot — each of which presents a radically different vision from that which gave emergence to streaming’s contemporary status quo.

Before diving into these visions and what today’s music/Web3 founders, artists, and builders believe about the future of streaming, it’s worth zooming out and examining the unique technical capabilities of the medium that has given platform to these models in the first place.

Importantly, NFTs are not a monolith. As we’ve covered in our previous research, there are a lot of use cases around NFTs — just as there are many use cases for files on your computer, ranging from simply displaying an image to running a complex program.

This base-level framework of NFTs as blockchain-native files (i.e. collections of data) helps explain their inherently emergent and open properties. Writer and consultant Venkatesh Rao proposes the imaginative yet pragmatic mental model of “magic beans” to understand how NFTs inherently enable emergence. He refers to the fairy tale of Jack and the Beanstalk, particularly how something unexpectedly magical sprouts from one of Jack’s beans, and explains how it relates to NFTs (emphasis added):

“An NFT represents an access pass to an unspecified, generative possible future associated with an object. It is a key to a possible world. A key that is distinguishable from other keys. A key to a world that may or may not open up.”

This also touches upon the topic of “permissionlessness” in Web3: Once something is on a public blockchain like Ethereum, it may be accessed by all. This has created a Super API dynamic — a.k.a a public, global database containing all kinds of information ranging from art to finance to games to social interactions, on top of which anyone can build without worrying that their access will be revoked (as has been the case with apps built on Facebook or Spotify’s APIs, for example).

In the world of blockchain analytics, this level of permissionlessness has led to the growth of several open tools like Dune and Graph Protocol that run almost entirely on crowdsourced data curation and synthesis. For music, the blockchain-native use cases that are emerging are made possible by music that is made irrevocably, publicly available, with high relevance to the specific subcultural context that is “Web3.”

This allows for the creation of “composable communities” to bring people together based on criteria that can be queried on the blockchain. For instance, the wallet addresses of NFT owners are public on the blockchain; anyone can look these addresses up and transfer anything to them, from NFTs to worthless tokens to valuable cryptocurrencies. While someone might not be allowed to use the IP associated with said NFT, they can use the public token address to build new experiences on top — such as creating a private group chat for everyone who holds that NFT through tools like Guild and Collab.Land, or making holders of that NFT eligible to claim free items (e.g. Water & Music’s token holders got free entrance to online and IRL events hosted by fellow DAOs Songcamp and Chaos).

Aidan Musnitzkiy, creator of Spinamp, cites permissionlessness as one of the appeals to creating a music streaming service in Web3:

“As a builder [Web3’s] permissionless, open culture and technology is really enabling. It makes it very easy to prototype and put product ideas together quickly and release them, experiment, iterate and get feedback in a quick cycle that leads to faster evolution. The composability that these open systems allow for also lets you more easily tap into things other people have done, collaborating and supporting each other’s projects to build out the ecosystem together.”

Rao’s suggestion of NFTs as “magic beans” takes a more individual-level view on what each token is capable of by itself. But in the spirit of composability, when loads of beans get planted on a blockchain, they can unlock magic collectively. Think of it like the Transformers merging into Megatron, or the Power Rangers becoming Megazord.

Well, it’s morphin’ time: Music NFTs have created a new, more collective-driven base layer for music streaming. These services aggregate music published as NFTs into a single interface, by extracting links to the music files from the public NFT metadata. Since there are no established metadata standards for music NFTs yet, this requires some manual work resulting in the different aggregators offering slightly different catalogs. While all aggregators mentioned in this article can stream music minted to Ethereum through popular platforms like Sound.xyz and Catalog, only Future Tape and Nina support music minted on the Solana blockchain through Nina.

Their differences don’t stop there. Future Tape offers a fast interface optimized for sorting and exploring music NFTs by variables such as genre and BPM. Spinamp places more emphasis on organizing personal collections through playlists. Ooh La La places the strongest accent on curation through playlists, moods, trending tracks, and other types of contexts to navigate music. Each of these service’s catalogs range from roughly 2,000 to 3,000 tracks, with currently about two dozen tracks added per week across all NFT platforms covered.

Permissionlessness technically implies doing without asking, but it would be a fallacy to assume that this means services are built without involvement of the artists whose works are featured. Anthony Volodkin, founder of Hype Machine and now Web3 aggregator Future Tape, explains why he sees collaboration as a necessity due to the relatively small catalog of music NFTs available:

“It’s really exciting to think about an app that interacts with a finite amount of music (~2,300 tracks by 820 artists). You can do all kinds of awesome, meaningful (but maybe not scalable) stuff. I’m also excited to build in public, in direct conversation with the community: artists, collectors, and listeners. Traditional streaming is in the hands of large teams where this type of work is impossible.”

To name just two recent examples of how Volodkin builds in public: When Web3 artistic collective Songcamp released their Chaos NFTs, they minted them on their own smart contract, so they were not automatically available through Future Tape. He added support, scraping the NFT metadata to aggregate them, and promptly made the songs available. After a chat with Friends With Benefits co-founder Raihan, Volodkin promptly launched a feature allowing listeners to sort through tracks by BPM ranges.

Volodkin draws parallels to the blogosphere for which he originally built Hype Machine in order to make it easier to explore music on blogs. “Hype Machine at its core adds a new layer to a distributed system — blogs hosted on a variety of different publishing platforms, sharing music from another set of music platforms — so the music NFT space felt new yet familiar,” he says.

To tie these concepts back to the magic beans mental model: The permissionlessness of publicly available data makes it easy to iterate and add magic (utility) to beans (NFTs). Collaborating with artists and other builders in the space is like watering the beans, so the magic can come out.

Changhwan Lee and Hyug Bin Kwon, founders of Ooh La La, explain their approach in clear terms in the face of ambiguity: “We’ve come to acknowledge that things change at a rapid pace in this space. So we have a simple strategy: focus on the artists and listeners, execute fast, learn and grow.” Changwan and Hyug, as well as all other builders interviewed for this piece, actively participate in various creative Web3 communities’ Discord servers, which allows them to understand sentiment, problems artists and fans are facing, potential use cases that are unaddressed, as well as make connections to other builders.

The generation of music services that was launched in the 2000s had to deal with the reality of the near-entirety of all music ever recorded being available for free on unlicensed services. In order to compete, they needed to have catalogs that are as complete as possible for a simple monthly price and then add functionality on top of that. In short, music streaming’s status quo has optimized for catalog expansion and algorithms underpinning these services often reward novelty, thus incentivizing even more music being added. Spotify founder Daniel Ek himself commented on this himself in a 2020 interview with Music Ally, when he made the following statement:

“You can’t record music once every three to four years and think that’s going to be enough. The artists today that are making it realize that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans.”

Of course through the paradigm popularized by Spotify, success is measured in streams, and is rewarded via a pro rata payout model, i.e. one that incentivizes market share. The type of landscape that emerges from these types of incentives is visible to us now. As Spotify pays out based on how many streams artists collect as a proportion of total streams on the platform, fans’ level of involvement with artists is rewarded to a lower degree than just racking up streams from potentially ambivalent listeners through playlist placements. Since both Spotify as a service as well as the marketing departments of record labels around the world focus on this listener-catalog value dynamic, streaming services look into optimizing the user experience that stems from it, prioritizing companies and rights holders with immense catalogs and market share, to offer as complete a catalog as possible and set listeners up with music for every possible moment.

NFTs and Web3 music aggregators solve for a different set of problems, and deal with a different landscape as a departure point. At present, the entirety of the Music NFT landscape represents but a fraction of the 60,000 tracks that are added to Spotify daily. While platforms that facilitate minting are actively trying to get more music minted as NFTs, aggregators have to solve for problems elsewhere in the value chain, and thus have to take their relatively small catalogs as a design constraint. This leads them to solve problems that are either unique or specific to the space or problems that can be addressed by Web3 in ways that are clearly superior to prior solutions.

In particular, Web3 has a fragmentation problem — introduced by the fact that people will mint through different platforms and smart contracts, on different blockchains, resulting in a landscape where you could only listen to the full catalog of songs through each of the respective platforms. That issue is being addressed by the above aggregators. In the words of the Ooh La La founders:

“If you want to listen to music NFTs, you would have to move from one platform to another depending on which platform your preferred tracks are. Even then, you wouldn’t be able to make a playlist of those tracks you’ve come across Sound, Catalog, Mint Songs, and Zora to come back and listen to or share them with friends.”

NFTs themselves are often priced in ways which will make them unappealing for the casual listener. Collectors and committed fans may find reasons to justify the cost — so is there a role aggregators can play beyond the surface-level discovery that today’s dominant streaming services focus on? Can they help deepen the relationship between the art and collector? Can they create an environment which excites people to start collecting? Future Tape founder Volodkin thinks so:

“I am interested in building an experience focused on collectors and intense listeners (that can eventually become collectors). Most of the major music apps are built with a casual listener in mind – I want to encourage focus, obsessiveness and intensity.

Part of this experimentation is also visual. In May, it was fun to collaborate with Holly [Herndon] & Mat [Dryhurst] to make their release really stand out in this mobile experience. I also recently stumbled into (Not Boring)’s set of playful apps, and it’s the clearest example of the direction I am thinking about – imagine applying this enthusiasm to a music app!”

Asked to reflect further on Hype Machine, Volodkin mentions two leading principles for Future Tape. Firstly, “Future Tape must immediately add value to the space without anyone having to do anything (nobody has to sign up or mint anything on Future Tape for everyone to benefit).” Secondly, “this space is growing but it will benefit from a product that is not in a hurry to get huge numbers. Hype Machine has been running since 2005, and I am happy to work on Future Tape for a long time too, beyond the typical VC timeline.”

All of the above aggregators are currently available free of charge to everyone, regardless of whether they own music NFTs. So, the question begs: Long-term, what are the incentives for these services? How will they make money?

There are various schools of thought about value distribution in Web3, all of which try to address at least one of two questions: What exactly is the real source of value in music, and how should that value be distributed across stakeholders? Prevailing for the first question is the Mona Lisa school of thought, which argues: The more free copies of Mona Lisa there are, the more value the original Mona Lisa accrues, which results in higher ticket revenues from visitors, and a bigger payday if the painting ever gets sold. These principles underpin the open-source and public-domain experimentation in Web3. For creative domains, this implies the value is generated by leveraging artist brands as a whole more so than the copyright of the work itself.

When musicians demanded that Spotify pay them more, industry experts pointed out that the solution is not necessarily all in Spotify’s hands. The way money flows through the music industry is notoriously opaque, yet for Web3 financial transparency is all but built-in by default. When NFTs are created, data can be added to them to indicate where the primary and secondary (i.e. resale) royalties should go. This data is publicly recorded, so that the smart contract knows which wallet addresses are eligible to claim a split from the revenues collected.

ZORA, an NFT marketplace protocol, introduced automated “finder’s fees” earlier this year to incentivize curation, allowing artists to mint NFTs that allocate a cut to curators if they help find a buyer for the NFT. The mechanism adds a curatorial component to the traditional royalty split models of NFTs, and inherently makes a statement about the value of curation in the modern music industry that might otherwise go unnoticed. Drawing a parallel to the current landscape: Playlist curators typically earn revenues by establishing a brand and then leveraging revenue streams in other domains (e.g. merch or events). Since music NFT aggregators are building upon a more vibrant, albeit still smaller, type of economy, different types of multi-stakeholder incentives and value flows can be pioneered.

Fees, splits, and rock & roll

With new use cases and layers of imagination, of course, comes new complexity.

When Songcamp built BPM Bot, a Discord bot that plays music NFTs, ideas emerged from their community about how the bot could be used to throw virtual events and split revenue among multiple stakeholders involved. Tickets could be sold and the NFT creators, and potentially even collectors, could be paid according to the NFTs’ publicly available split data. Let’s say, for instance, that 10 music NFTs would be played during the event. Each NFT would get 10% of the revenue; if there is an NFT with a 50/50 creator split, then each of those creators would be sent 5% of the total revenue from the event.

But what about collectors? What is their place in this configuration? Should they be sent funds since they own the NFT? Is the NFT being played or is it actually the music?

Debate ensued about whether collectors should be included in the picture. One of the more vocal artists in that discussion was Thys, a producer and member of the genre-defining drum & bass group Noisia. Water & Music caught up with him to collect his current perspective on the matter:

“I like that NFT technology asks a lot of questions about publishing and ownership, and promises/imagines new models of collectors co-owning the rights to further proceeds of the work.

I prefer to own my own rights though. These models are like crowd-funded publishing advances (cash buy-ins to a portion/all of the rights). I think in general artists should try to keep the rights to their work themselves, if they can afford to.”

This perspective was also shared by singer and songwriter VÉRITÉ, who was asked whether collectors should deserve a cut from these types of payments:

“Not unless explicitly stated. NFTs don’t inherently grant IP or master share of revenue. That would be a totally different scale of offering and would need to be explicit at the time of purchase.”

Opinions differ on this issue. Prolific music NFT artist Dutchyyy mentioned collectors should deserve a 50% split, emphasizing the symbiotic relation between artists and their early supporters:

Generally, there seems to be agreement that this should be left up to the artists — with another suggestion from multimedia artist Ture of Studio Nouveau being to simply distribute funds to artists, and let them redistribute to collectors if they want.

What is the purpose of compensating collectors from the aggregator’s perspective? NFT platforms might do so to populate their marketplace, as having more incentivized collectors will draw better artists. Aggregators, though, fulfill a different function. One concept that came up in conversation with Spinamp founder Musnitzkiy is similar to Zora’s finder’s fee:

“We have musicians going CC0 (or close to it) with an open culture around listening and usage rights and monetization coming from a nascent NFT market that aspires to become something like the real world art market, or other digital collectable markets in which value accrues as something becomes more popular. In this case, if Spinamp can be a gateway for people to discover and ignite the market, some kind of finders-fee or secondary marketplace model could be applicable.”

Legal obstacles

There’s a principle baked deep in the blockchain ecosystem that says “code is law.” It means that you should be able to see in the code how value gets distributed across a system. When people refer to “smart contracts,” they refer to such automated scripts composed of code; if you participate or interact with these smart contracts, you do so according to the rules contained in that code.

Unfortunately for those wanting to have a blank slate, what is law to a larger degree than code is actual law. Websites offering access to music — whether that comes from music NFTs or not — likely cannot escape certain types of licensing fees, such as those for public performances. This means that, regardless of how value is distributed on the blockchain, a more traditional type of value distribution will have to happen in parallel.

VÉRITÉ, when asked if she expects royalties from NFT streamers if this use case blows up and they develop their own revenue models, answered:

“Yes. It doesn’t have to be a massive fee, but there needs to be compensation for licensing music for use to a platform. As artists, we’re adding value to the business of a platform and should be paid for that value creation.”

That is not the only challenge these services will have to deal with. When asked to speculate about revenue models, Future Tape’s Volodkin highlighted another obstacle: “The Apple App Store really limits my ability to experiment with revenue models, especially if crypto is involved.”Apple charges a 30% fee on sales generated through its platform and is inconsistent in how it approaches crypto-based experiences, according to VC and author Matthew Ball. (This highlights a key takeaway from our Season 2 research on music metaverse experiences — namely that even if you have decentralized ownership of consumer-facing platforms, the extent of true user control remains elusive if there are still massive, Web2 tech companies who still control the hardware and access side for platform distribution.)

Regardless of the above challenges, the sentiments of the founders involved are reflective of the general optimism that continues to pervade Web3. Considering the vast amounts of opinions about this topic, and the feasibility to quickly and permissionlessly spin up new projects or services that trial these opinions as hypotheses, we should expect the landscape to rapidly evolve and grow in various directions.

“Core to the project, and I believe Web3 in general, is that repeated experimentation will be necessary to build something that scales and sticks,” says Spinamp founder Musnitzkiy, adding “many artists want to experiment with more utility and things like token-gated, limited access, or use blockchains and NFTs as better infrastructure than the existing legal and rights infrastructure for this. Facilitating that could lead to potential revenue streams too. Having said that, we’re hoping that with further experimentation, weirder potential revenue models can also emerge.”

Core to the emerging Web3 aggregation layer is identifying specific use cases to cater to that are not well-addressed by music streaming’s status quo. The fact that it all sits on a public blockchain, with smart contract data, provenance, wallet addresses, and metadata all publicly available, gives smart builders an enormous advantage to create new types of value alignment and incentives. It allows for founders to think long-term, build differently, and build experiences innately different from what we’ve seen in the past decade.

Given the early stage this landscape is in, it only feels apt to conclude by taking the concluding statement from our interview with Volodkin, and interpret it as a generative prompt: “Imagine what this all could be like in 10 years!”

Author Bas Grasmayer holds a BPM Bot collectible, a free Zora Zorb NFT, and small amounts of various cryptocurrencies and tokens, which can be viewed here.

Editor Cherie Hu owns a Songcamp Chaos Festival Pack and several other NFTs for projects and brands outside of music. Her wallet holdings and activity can be viewed here.