This is the latest issue of Sidechain, our dedicated newsletter for music and Web3. The overarching goal of the newsletter is to capture the W&M community’s unique, early-adopter, critical pulse on the music/Web3 landscape, backed by ongoing reporting from our Web3 research team that you won’t find elsewhere. BlackDave (@BlackDave) curates community discussions and news, while Brooke Jackson (@brookejaxon) curates database and sales updates.

You can read more about the motivations behind launching this new vertical in the inaugural issue of Sidechain, which was published last month. If you have any feedback on this new format, please reply directly to this email or reach out to us at members@waterandmusic.com — we’d love to hear from you.

OUR LATEST WEB3 RESEARCH

This section recaps our latest music/Web3 research activity. Dashboard updates are maintained by W&M core team member Brooke Jackson.

Since our last update on Sidechain Issue #2, we’ve added more than 600 entries of new music NFT drops, accounting for over $400K in primary sales, to our music/Web3 dashboard. We’ve also added 3 additional Web3 startups and platforms to their respective tables.

Highlights include:

• 448 new one-of-onedrops from Catalog’s platform, for approximately $142K in additional sales tracked in our records.
• 72 new one-of-one drops for a total equivalent of $132K in additional sales in our database from artists using Sound.
• Over 200 music NFT units sold (across 18 new drops) on Nina’s low-cost Solana-based NFT marketplace, for a little over $1K total in earnings.
• A new collection from the SM Entertainment K-Pop groupaespa, hosted on the Sotheby’s metaverse auction site.
• OneOf’s release of a charitable NFT collection from reggae artist Ziggy Marley.
• Additions of music NFT startup Dancing Seahorse, and tools Ultradrop and Phonogram.

As a reminder, you can submit any music NFT drops or platforms we may be missing from our database, from any point in time, by filling out this Airtable form. All accepted submissions are eligible for 10 $STREAM as contributions to our research, with token allocations distributed on a roughly quarterly basis.

NEW ARTICLES

Water & Music tells the tale of DevCon 2022

A few weeks ago, 12 community members and staff at Water & Music came together to write a collaborative recap of key takeaways, highlights, and concerns from DevCon, one of the largest Ethereum developer conferences in the world. Our goal was to connect the dots between the more technical, cutting-edge discussions taking place among Ethereum devs, and what artists and the music industry can expect (and how they can best prepare) in terms of potential upcoming changes to music/Web3 apps and use cases. Major themes included the importance of new privacy and security measures in Web3 (including zero-knowledge proofs and account abstraction), the persistent scaling challenge for the music/Web3 landscape (growing the pool of both artists and collectors), and the opportunity to close the gap between technical and cultural practitioners in the Ethereum ecosystem.

New pathways: Analyzing music NFT release strategies from underrepresented genres

To date, music NFT sales have largely been concentrated in Electronic and Hip-Hop genres, accounting for nearly 75% of all primary sales revenue. How do artists in other genres like pop, rock, and Latin — which are much better represented in other verticals of the music industry, including streaming and touring — deal with smaller representation in Web3? Do these genre differences even matter when it comes to making an impact? Building off of our Season 1 and Season 1.5 research, we interviewed nearly 20 different artists and leaders from underrepresented genres in Web3, to learn about the role of genre in shaping long-term branding strategies as well as artist sentiment around the technology. Interestingly, we found that while being from an underrepresented genre or scene certainly helps early on as an artist new to Web3, key tactics for long-term success in the ecosystem — including 1:1 collector relations, frequent communication and public speaking, and narrative-building — are ultimately genre-agnostic.

COMMUNITY PULSE: The death of FWB Local and the importance of influencer disclosures

This section synthesizes conversations happening in the #web3 channel in our Discord server, and is written and curated by @BlackDave.

Soundtrack for writing this section: Windswept Adan by Ichiko Aoba and Continua by Nosaj Thing.

THE NEWS: Media/culture DAO Friends With Benefits officially voted on Snapshot to end FWB Local, a more affordable tier that opened up a portion of their Discord server as well as IRL event access to members who couldn’t afford the 75 FWB Global membership price. The proposal sparked a lot of internal debate within FWB (much of which spilled over into Water & Music), in part because nearly one-third of FWB’s member base was on the Local tier. A Google Doc titled Counterpoints was written to present counter-arguments to the perceived good of ending the local tier, citing a lack of data proving the positive impact of the change and claiming that the switch would create more problems than it actually solves. Nonetheless, 500+ FWB token holders almost unanimously voted in favor of the Local removal.

COMMUNITY PULSE: As more niche membership communities show up in Web3, there will be many times where communities will need to make tradeoffs between their fundamental values, such as inclusivity and access, and other values that are important for sustainability, such as brand growth and financial gain.

As a user of the FWB local tier, FSQ/Chuck is disappointed to see the tier ending, causing “the small amount of $FWB I hold [to] becomes useless” while also stating a need for “more avenues to connect with people, not less.” @brodieconley, while not an FWB member, claims that “it is actually going to hurt the organization in the long term in terms of its overall diversity (this is the big one for me!) and membership expansion (it really messes with the natural, organic pipeline that they seem to have produced), in order to solve a short term logistical problem … Seems like the resources are there, so maybe just solve the logistical problem using those resources, rather than potentially doing long-term damage to the org.” @BlackDave recognizes that the overarching issue that needs to be addressed is: “How do you be exclusive, while being inclusive?”

Disclosure: Several W&M core team members hold FWB tokens.

THE NEWS: Conversation around disclosures for writers and influencers opened up in our server, after Cooper Turley published an article on the Bankless newsletter titled “Finding the XCOPY of Music NFTs.” In the article, he put together a list of 10 artists who could be the next Web3 music superstar — except all the artists are ones whom Cooper has heavily invested in or is personally involved with.

Billboard Web3 reporter Benjamin James also published a lengthy Twitter thread featuring a new market map of music/Web3 companies and tools, across labels, live events, fan communities, and other verticals. While the thread was quite comprehensive and welcomed by the wider Web3 community, the launch also sparked a constructive discussion in our server about the role of VC funding and recency bias in potentially skewing these market maps moving forward.

COMMUNITY PULSE: As more published media is created around Web3, it will be important to know if writers and their sources are simply pushing projects they’re already invested in — i.e. whether their goal is to promote the fair exchange of knowledge, or just to get their bag. In traditional journalism, disclosure is a critical, nonnegotiable ethical issue that many understand and follow. But we don’t see it as much outside of the journalism community, for example with influencers, who *ahem* influence many people’s understanding of Web3 on social media. As @blairexyz wrote on Twitter, “we need to be more honest about conflict of interest in web3.”

@Henry Chatfield says he “would love to see some more disclosures from Coop. ie for the Bankless post he’s pretty invested in most of his list of Top 10 artists, dating one of them, etc.” While most people lack the skillset to benefit from the transparency of the blockchain in the context of keeping people accountable, as pointed out by @brodieconley, solutions that ease this process will need to be created to simplify this for the everyday user (and researcher) of web3.

Other community writings

• Dan Fowler (@danfowler) on music NFTs as productive assets
• Vaughn McKenzie-Landell (@noturhandle) on why you should keep music out of your music NFTs

IN OTHER NEWS

This section compiles and contextualizes music/Web3 news you may have missed, and is written and curated by BlackDave.

• Web3 Spotify pre-saves are on the rise. The next frontier of how to bridge Web2 and Web3 seems to be happening in the form of using Spotify’s API to offer Web3-related benefits in exchange for pre-saving a song on Spotify. Both Showtime, an NFT social marketplace, and Kids of the Apocalypse, a Solana-based music project, have taken a dive into this feature. Showtime’s new “Music Drop” features gifts you an NFT in exchange for a Spotify presave, first tested with artist Ameet Kanon, while Kids of the Apocalypse has built PR3SAVE, a custom presave-for-allowlist tool on top of HeyMint and Feature.fm.
• Reddit explodes into Web3 with their own avatar NFTs and their own custodial crypto wallet setup, known as Vault. It has been reported that 2.5 million wallets were created using Vault to purchase these NFTs. While many are unsure if this will be a giant step toward mass onboarding into Web3, the Reddit avatar NFTs have been exploding on the secondary market. @s a r a h points out that Reddit’s language used does not mention NFTs anywhere in the process to acquire the avatar, and that many likely have no clue they purchased an NFT.
• Instagram officially gets into NFTs with its own marketplace. Starting out launching with select artists partners, and on the Polygon blockchain, this is the first large move for Meta into NFT creation. Following the success of the Reddit NFTs, this development signals the possibility that mass adoption of Web3 is closer than we may think.

• More NFT platforms are moving towards optional secondary royalties for creators, including Magic Eden and LooksRare. This decision has understandably annoyed many creators, who argue that the long-tail secondary earnings opportunity is among the primary reasons to invest in an NFT strategy in the first place. W&M member @l_julien points out that “NFT are just technological tools that don’t necessarily come with all the promises of fairness and transparency.” Even though you’re able to “force royalties by overriding the transfer function to include payment per transfer” (as presented by @roylegato), these are the things that your everyday creators aren’t necessarily going to do.
• Meanwhile, OpenSea will allow new collections created with the OpenSea Shared Storefront contract to enforce royalties — blocking them from being traded on sites that don’t enforce them. With this announcement, OpenSea doesn’t have a plan in place for pre-existing NFTs on their platform, citing that it will take drastic changes to allow secondary royalties to be enforced across the board, as far as moving every NFT to a new smart contract. The broader Web3 community is taking a stand against OpenSea not creating a solution for older smart contracts, and OpenSea will be listening to the community for feedback until December 8.
• Sound launches their own secondary marketplace, Sound Market. This comes shortly after the announcement of Sound Protocol (which we covered in a previous issue of Sidechain), and aligns with their aspirations for all users of that protocol to appear within the Sound ecosystem.

• Chiru Labs, the team behind Azuki, announces Physical Backed Tokens (PBT), a new token model used to represent physical items. The PBT is set up so that NFT ownership is transferred through scanning the physical item. Azuki released 9 golden skateboards implementing this technology at launch, bringing in 1,898.06 ETH (~US$3M at time of writing). This could be a large opening for those looking to start presenting physical items represented by NFTs, a utility we’ve already explored in our previous analysis of the music NFT market.
• Audius buys virtual concert platform SoundStage.fm. The acquisition potentially brings Audius into competition for metaverse performances, which was not their previous area of focus and which already has an established Web3 community culture around it, as we covered in Season 2 through platforms like Decentraland and Voxels.

• Is Bad Bunny a long-tail artist?