Temp check: The state of Web3 sentiment across the music industry
tl;dr — As a follow-up to our myriad studies of fan sentiment around music/Web3 projects in Season 1, we embarked on a survey analysis of how artists and music-industry professionals were feeling about Web3 across its numerous forms, including NFTs, DAOs and social tokens. Our survey collected responses from over 250 unique individuals across multiple industry roles, from artists, artist managers and record label execs to freelance marketers and startup founders. We found that regardless of their level of involvement with Web3 projects, music-industry professionals share many of the same concerns as music fans about how the landscape will evolve in the future, especially when it comes to educational and financial barriers as well as legal and environmental issues. Moreover, as we’re seeing with the persistent polarization of discussions around music NFTs, familiarity with certain implementations of Web3 does not automatically translate to positive sentiment around those applications.
This is Part IV of a five-part, collaborative research report that the Water & Music community has put together over the last two months on the state of music and Web3, as a follow-up to our Season 1 report in December. You can view the current state of our report rollout and a full list of our contributors by visiting stream.waterandmusic.com, or navigate directly to previous parts of our report here:
- Part I — The state of music DAOs
- Part II — From protocols to people: A study of music NFT platforms’ onboarding strategies
- Part III — Structuring the law around Web3 music: A new modular music NFT contract framework
Contributors to this research thread on legal music/Web3 issues are listed at the bottom of this page, sorted by role. To support our work on-chain, you can purchase an NFT cover of this study, which will grant you lifetime membership access to Water & Music.
In our last collaborative research season, it became clear that the future of music and Web3 hangs as much on the marketing, culture and public perception of the ecosystem as it does on the underlying technology itself.
We built much of our emergent research agenda around this thesis, highlighting the central role of influencers and the impact of their actions in advancing (or stalling) music/Web3 development. We pored over press releases for flagship drops in our artist NFT database and interviewed artists and startups behind notable music NFT projects to highlight their strategies for onboarding fans. We surveyed over 150 music fans about their perception of music and Web3, and established a framework of four fan personas ranging from those who had not engaged with Web3 at all to those who were engaging with the technology in multiple ways. We analyzed fans’ reactions to hundreds of music NFT announcements on Twitter, developing a more objective, big-picture understanding of fan sentiment especially as it relates to key themes such as the environment and financial accessibility.
As a follow up to this review of fan sentiment of Web3, our community questioned what sentiment might be like on the other side — namely, for artists and music industry professionals themselves.
Our ultimate goal: To get a better understanding — both quantitative and qualitative — of how the music industry at large feels about Web3 in its numerous forms.
Recent music/Web3 headlines, from the fearmongering tactics of NFT platforms like Hitpiece to major NFT ambitions from celebrities like Snoop Dogg, can often depict the music industry’s relationship with Web3 as a precarious emotional rollercoaster, driven by hype more than substance. At the same time, if you follow the money, major music companies have been investing more seriously in Web3 startups and hiring more in-house Web3 talent, sending a signal that they see this technology as an important component of their long-term business strategies.
In February of 2022, we ran a survey measuring Web3 sentiment from a wide range of artists and music-industry professionals. The survey asked for respondents’ familiarity, hopes and concerns about Web3 and music, across applications including NFTs, DAOs and social tokens. We hope our findings are valuable and actionable for a wide audience — from software developers looking to understand the music-industry perspective, to artists and their teams looking for a temperature check on what the rest of the industry thinks about Web3.
The methodology for this project was based on a series of community research calls. Water & Music members brainstormed questions and formatted a survey for both artists and music industry professionals. We built the survey on Tally and ultimately collected responses from 252 individuals. To encourage participation, we incentivized respondents with access to the raw and anonymized survey data if they chose to provide their email address. Much of the survey data that will be sent out after the post-season launch is reflected in this article and featured in our dashboards.
After the survey closed, we looked for general trends across the basic survey responses, and tested hypotheses we had developed based on our prior knowledge and work in the area (e.g. our previous fan survey) via data analysis and qualitative coding of write-in responses to draw out key themes.
We chose to present data in interactive dashboards via Tableau Public. Readers can explore the data of their own accord via the visualizations provided below. This report will take you through the dashboards, highlight key trends, and include relevant quotes from written-in responses to the survey.
A note on interacting with our dashboards
Filters: All of our dashboards can be filtered by Role, Genre and Web3 Profiles. Click around the dashboard to apply filters or use the filter drop-down at the top line of the dashboard. To reset filters, either re-select the filter that you had clicked on or click “Reset Filter” in the upper righthand corner.
Views: Most of our dashboards have alternate color views available, where you can view by Role and Web3 Profiles. Utilize this feature by selecting “View” in the upper lefthand corner.
We suggest viewing this article on a laptop, desktop or tablet for optimized view and interaction with the dashboards.
Disclaimers and limitations
We want to address various biases that are likely to have impacted our research. First, we acknowledge that due to the DAO-leaning nature of our organization, many of our members at Water & Music are both professionally and personally interested in Web3. There may be an inherent bias in the data captured given that many of our own members filled out the survey.
We also want to acknowledge that we deliberately chose not to include definitions for terms like Web3, NFTs, DAOs or social tokens in our survey. This choice was made to allow the survey taker to operate assuming their own personal definitions of these terms, rather than influence them top-down with our own. We discuss the nebulousness of some of these terms elsewhere in our Season 1.5 report.
Roles and genres
We asked respondents to choose one role in the music industry that most accurately described them. The most common role selected was artists, representing just over a quarter of the respondents (26%), followed by individuals who worked in music-tech (18%), and then record labels (14%). 11% of our respondents wrote in “other” roles – including but not limited to music marketers, music strategists, music supervisors, DSPs, distributors/label services, consulting and PR.
For artists, we asked if they released music through a major or independent label or self-released. The majority of artists taking our survey chose Self-Release (65%), followed by Independent Label (32%) and Major Label (3%). While we now realize that many artists release under more than one of these choices, we can say with confidence that our survey responses from artists represent independent and DIY rather than major-label perspectives. Notably, this is consistent with our historical findings that the vast majority of sales and commercial activity in the music/Web3 ecosystem are coming from independent and unsigned artists.
We asked those who selected roles other than artists and producers to self-report their level of seniority in their current positions. Most survey takers who work in the music industry classified themselves in senior management (Head/Director/VP/SVP/EVP/Founders) (55%), followed by senior staff (Supervisor/Agent/Manager/Producer/Buyer) (18%). Freelance represented 16%, followed by junior staff (7%) and “other” (4%).
We also asked people to self-report which broader genre group best described the music they usually operate within professionally, and allowed people to choose as many as felt appropriate. Across all respondents, Electronic (47%) and Indie/Alternative led the way (43%), followed by Pop (32%) and Hip-Hop (31%). We also included an option to write-in. Our most common write-ins were Experimental (3) and Afrobeats (2), and various other responses included Christian, Soundtrack and Japanese Music.
We asked two questions to gather more insight as to where our survey takers lie in their involvement in Web3.
The first distinguishing question was a direct parallel to our Season 1 report on fan onboarding strategies, where we classified fans across a spectrum of four distinct categories of participation in Web3.
In turn, we classified our music-industry respondents in the same manner, as detailed below:
- Crypto-Hesitant: “I currently don’t own any crypto” (83 responses, 33%)
- Crypto-Only: “I own crypto, but do not own NFTs” (71 responses, 28%)
- Non-Music NFT Owners: “I own crypto & an NFT, but no music NFTs” (49 responses, 19%)
- Music NFT Owners: “I own crypto & music NFTs” (49 respondents, 19%)
Our second diagnostic question asked whether respondents had worked on or been affiliated with a Web3-related project within the music industry. The majority of our sample (63%) had not been associated with a Web3 project prior to taking the survey. In addition, 61% of our respondents do not own NFTs.
There are a small number of exceptions to this relationship between crypto/NFT familiarity and likelihood to participate in a Web3 project. For instance, a number of “Crypto-Hesitant” and “Crypto-Only” respondents have in fact worked on Web3 projects (suggesting perhaps a healthy, engaged level of skepticism), and many NFT owners have not engaged with a project yet. That said, the majority of Crypto-Hesitant respondents (82%) have not engaged in Web3 projects, and the majority of Music NFT owners (69%) have worked on Web3 projects. This correlates with our findings elsewhere in our S1.5 research that the line between creator and collector is intentionally blurred in Web3, with many music NFT owners being directly involved in shaping the ecosystem’s growth and development.
Lastly, we were interested in collecting respondent demographics. Considering stereotypes around crypto owners, it may not be surprising that our most common respondent was a millennial male living in the United States.
Almost 80% of respondents were concentrated in the top four ranked countries: United States (50%), United Kingdom (15%), Canada (7%) and Australia (7%). While sample sizes were small, both China and the Netherlands had the highest concentration of NFT owners (100% and 67% respectively, across 3 respondents per country), followed by the United States with 45% of survey takers reporting NFT ownership. Australia had the lowest concentration of NFT owners, with only 11% reporting as such, followed by Colombia (25%) and the UK (28%).
As one might expect, most of our respondents were millennials (57%) followed by Gen-Xers (22%). However, we were surprised to see that only 11% were Gen-Z — perhaps suggesting that younger generations may not be as bullish on the industry side of music/Web3, or alternately suggesting that the broad W&M network is skewed towards other generations. Supporting the former explanation, we found that when exploring the relationship between generation and Web3 Profiles in our data, Gen-Z respondents were the generation least likely to own NFTs — with only 29% reporting as such, in comparison to 41% of millennials, 38% of Gen-X and 33% of boomers.
When exploring the relationship between respondent generation and industry role, it was surprising to see that the highest concentration of boomers come from the live (18%) sector of the music industry, while the most common industry role among Gen X was producer/songwriter (42%). Millennials accounted for the most density across the roles of publishing/music-supervisor (83%) and record labels (71%), while Gen-Z’s most frequent roles were a three-way tie across Artist Managers, Freelancers and Music-Tech (14%).
While gender gaps in the world of Web3 and the music industry may not come as a shock, it can still be surprising to see that 71% of our respondents identify as male, with only 19% identifying as female and 3% as non-binary. 42% of male respondents are NFT owners, compared to 28% of female respondents and 43% of those who identify as non-binary (though again, the sample size for this last category is relatively small). When exploring the relationship between gender and role, it was interesting to find that the role category with the highest concentration of female respondents was “other” with 28%, followed by artist manager (27%) and artist and publishing/music supervisor both with 17%. The roles least represented by females were live (0%), record label (11%) and producer/songwriter (13%).
WEB3 FAMILIARITY AND SENTIMENT
In order to understand which Web3 concepts our respondents were most familiar with, we focused on three of the most common use cases for Web3 in music: NFTs, DAOs and social tokens.
NFTs were the most familiar Web3 concept, with 94% of survey takers saying they werefamiliar with the term. The second most familiar concept was DAOs, with 70% of respondents combined reporting as familiar (24% Very and 46% Some), and 30% unfamiliar. Social tokens were the least familiar concept, with 33% reporting unfamiliarity.
This breakdown of familiarity is further supported when we look only at survey respondents who have “worked on a Web3 project” and what types of projects they engaged with. Among these respondents, we see high numbers of persons who have launched or worked on NFT projects (82%), slightly lower rates of participation in DAOs (54%) and much lower rates of engagement with the world of social tokens (only 26%).
This distribution of responses is relatively unsurprising and generally follows the temporal emergence of the popularity of each concept, with NFTs driving Web3 discourse in late 2020 and early 2021, and popular interest around DAOs and social tokens arriving later in 2021. Water & Music’s previous research also supports this. Our music/Web3 dashboard records that over 90 music NFT startups have launched since we first started tracking the ecosystem in fall 2020. The emergence of music-centric DAOs has been similarly steady but at a smaller scale than NFT platforms, as is detailed in our S.1.5 report on the state of music DAOs. Social tokens bring up the rear in terms of engagement, representing the only category where we saw a majority of respondents who have worked on Web3 projects say that they have not engaged. That said, given recent momentum around social tokens as a method for artists to grow communities around their work, we anticipate seeing familiarity with social tokens grow quickly in the near future. (Notably, independent artist RAC’s community token $RAC recently became the first-ever artist token listed on a major, centralized crypto exchange, via Coinbase.)
While measures of familiarity are important to get a view of how the music industry is engaging with Web3, a deeper dive into the emotional associations with Web3 allows us to better understand the momentum and potential for each of these initiatives.
In our survey, we asked respondents to clarify whether they “Disliked,” “Liked” or felt “Neutral” towards NFTs, DAOs and social tokens. The results suggest that familiarity does not necessarily imply positive feelings towards Web3 music applications.
The most familiar use case among respondents, NFTs, was also the most polarizing: 27% of respondents said they “Disliked” NFTs, followed by 32% who felt “Neutral” and 41% who “Liked” them. The most liked concept was DAOs, with 44% responding positively, 41% percent who felt “Neutral” and 15% who selected “Dislike.” Respondents felt most neutral towards social tokens (the concept with the highest amount of unfamiliarity), with 54% of respondents selecting “Neutral,” 27% “Like” and 19% “Dislike.” These results are unsurprising given the popular discourse around each use case. For example, our S1 fan sentiment and fan onboarding reports reveal concerns among fans and a strong amount of negative sentiment aimed at the growth of NFTs,specifically with regards to negative environmental impact, high cost and scams.
In our survey, NFTs and NFT projects dominated the write-in response to which music/Web3 projects were disliked. Many objected to exorbitant prices and pointed to broad worries about environmental and ethical issues. DAOs, on the other hand, have been received with much more positive coverage (at least in cultural rather than more technical or financial spheres), which likely influenced the results we saw. As we explored in our Season 1.5 report on the state of music DAOs, the narratives of flatter organizational structures and more transparent data and capital flows are powerful forces for music communities to mobilize to, against the backdrop of Web2 industry concerns. When our survey asked respondents if they had seen or been involved in any music/Web3 projects that they love or are excited about, a large number of write-in answers spoke to excitement for music DAO projects; many, like Songcamp, were mentioned multiple times.
All in all, there is a strong overlap between survey takers who registered negative sentiments towards NFTs, DAOs and social tokens, and those who relayed that they “do not intend to work on a Web3 Project” at any time period (constituting a range of 10–13% of “Dislikes” across each category). These responses represent a beachhead of survey takers who appear to be adamantly against Web3, and do not seem interested in exploring it, regardless of the technological use case.
What Web3 projects have you worked on?
As expected given our familiarity results, of respondents who have worked on Web3 projects, NFTs were the most frequently cited project type with 37% of survey takers having launched at least one project, and 45% currently working on at least one. Only a relatively small minority of these same respondents, 18%, have not worked on NFTs. Interestingly, 45% of respondents listed that they are currently working on DAO projects, demonstrating an increased interest in that specific implementation of Web3 technology, and perhaps emphasizing the expanding impact of positive sentiment towards DAOs. As could be expected given the results in our familiarity section above, the least worked-on type of Web3 use case was social tokens, with 74% of respondents having not worked on a token, and only 22% currently working on one, and a tiny 4% having already launched a project.
Do you intend to work on a Web3 Project?
At the end of the day, many of our survey takers who haven’t worked on a project remain open to the idea of working in Web3. 39% shared that they intend to work on a project at some point. The most frequent role categories sharing this intention were artists, artist managers and those who work in record labels. Likewise, 38% of these same respondents have not yet decided whether they will work on a Web3 project, but remain open to the possibility, especially among artists, record labels and music-tech workers. Together, this totals a majority (77%) of respondents who are new to Web3 that are at least open to exploring projects in the ecosystem, while only 23% of those who haven’t worked on a project yet claim that they intend to stay that way. In other words, only 15% of all of our survey takers stated that they “do not intend to work on a Web3 project in the future.” The majority of these respondents were either artists themselves, or producer/songwriters.
To gauge the most prevalent Web3-related concerns among respondents, we looked specifically at comparing those who had worked on a Web3 project versus those who had not. While each concern that showed up in our results could likely provide enough material to sustain its own article, we will explore further the top five concerns.
The top concerns across the combined samples are:
- Legal concerns (51%)
- Personal environmental concerns (48%)
- The process is or seems too complicated (46%)
- Perception of crypto community (46%)
- Cost for fans (43%)
- Fan backlash for environmental concerns (42%)
- Costs for artists (37%)
- Confused – too many options/resources (36%)
- Worried about the success of the project (36%)
- Other (20%)
- Did not have concerns (7%)
Legal concerns were the most frequently cited across both those who have and have not worked in Web3, with over 50% of total respondents expressing concern. This makes a lot of sense given the many legal issues that exist in countless areas of Web3, including the open question of whether some NFTs might qualify as securities. Questions around the law are especially prevalent for music/Web3 applications, where there are significant tensions between existing copyright law and the many ways that music NFTs are being deployed on the blockchain. We discuss these tensions extensively in our S1 report on defining music NFT ownership as well as in our recently released S1.5 article outlining our own modular music NFT contract framework.
We saw that those respondents who come from a music-tech background listed legal issues as their top concern. This is logical given the many legal liabilities and issues that might come from working on a technology-involved music project. If you are a builder with a tech background, getting the legal side right can be the difference between a successful product and one bogged down by ongoing litigation or even risk-of-ruin. We need only look at recent history to see how the complex legal frameworks fencing in the music industry can pose an existential problem for music startups. Ambitious tech projects such as ConsenSys’ Ujo Music, and even well-funded industry consortiums such as the Global Rights Database project, both ran into life-ending roadblocks when interfacing with the complex legal environment that is the global music copyright system. With this in mind, today’s crop of music/Web3 builders, and particularly platforms offering novel products like royalty-bearing NFTs, are essentially playing chicken with the law and with regulators — waiting for clarification, but continuing to build blindly in the meantime.
This point was echoed in our write-in comments, including one from a senior manager in music-tech, who explained the stakes at play, noting “legal is a hard-line and can shut you down, especially because Web3 is global, but laws and regulations are not.” The salient point being made here is that unlike “dumb” contracts, which are tailored by territory, smart contracts are not constrained by territory. The intricacies of how countries execute their unique copyright laws does not currently map to the automated and geographically boundless infrastructure of blockchain.
For artists in our sample, legal issues ranked lower on their list of concerns (fifth), but nonetheless showed up across our write-in responses. Of course, many artists may have similar regulatory concerns to those from the music-tech world described above, especially if they are launching their own NFT or token project. However, we also heard anxiety from artists around the potential for Web3 to negatively impact them from the perspective of potential copyright infringement. An artist working in the rock genre told us that “it is far too simple for others to ‘mint’ material they do not own, with no recourse for the artist to challenge this” — noting, perhaps with some frustration, that “at the end of the day, the artist who created the work owns the work.” These aren’t simply unfounded worries being dreamt up by artists, either. OpenSea, for instance, has publicly confirmed that over 80% of NFTs created with their free minting tool “were plagiarized works, fake collections, and spam.” Similarly, music streaming startup Audius, which has captured attention as a potential Web3-based alternative to the existing major streaming platforms, has faced claims that it is “plagued by piracy.”
Given the fast-paced nature of Web3 technology and the fact that its development pushes the borders of existing law and regulatory policy, we expect that legal issues and concerns will continue to rank highly among those in the music industry interested in Web3.
Environmental concerns (both personal concerns and fan backlash)
Environmental concerns have weighed heavily on the music/Web3 ecosystem over the last year, with many climate-focused worries accompanying the growth of NFTs in 2021, as well as continued interest in solutions to climate concerns. For example, many working in Web3 who are climate-concerned see the the potential of blockchains that rely on proof-of-stake mechanisms for cryptographic security to provide a solution to the high environmental costs that come with the common proof-of-work based blockchain protocols, such as Bitcoin or Ethereum.
In our survey, we asked individuals to distinguish between environmental concerns related to personal ethics and those related to anticipated fan backlash.,
Personal concern for the environment was the second most frequently cited concern across our respondents, selected by 48% of all survey takers (more specifically, 48% of respondents who had worked on a Web3 project and 47% of respondents who had not). A few survey takers expanded on these concerns:
“I feel like most people, like myself, are perhaps more worried about participating in something that is harmful to the planet while justifying it with the innate drive to evolve and innovate. Of course, any new technology becomes more efficient over time, and in a continuously evolving space, there is no time to wait. But this is the internal battle.” – Artist, has worked in Web3
“The second is the environmental concerns, they keep saying it will be solved with the next layer but if it was so solvable, then why hasn’t it happened.” – Freelancer in music-tech, has not worked in Web3
These comments reflect ongoing tensions between those who believe that some short-term environmental damage is tolerable in exchange for the future progressive benefits that have been promised by Web3 technology, and others who are less willing to accept these often unsubstantiated claims of future benefits at face value, and so are much less likely to willingly trade current environmental damage for what they see as unproven claims.
Beyond personal concern, another key consideration for the industry is the anticipation of fan backlash due to environmental impact, a concern shared by 42% of total respondents. In our 2021 fan survey, a clear theme among respondents was a strongly-held perception that crypto, Web3 and other aspects of the blockchain are bad for the environment. Across “Crypto-hesitant” fans, over 43% of respondents claimed that the environment was the number one reason why they had not yet purchased cryptocurrencies.
This time around, our survey takers are aware of the negative sentiment that many fans have towards Web3 projects. For those who had worked on Web3 projects, fan backlash due to environmental impact was the third most frequent concern (53%). This selection was especially frequent among record labels, artists, artist managers, live and producer roles — essentially, either the creatives themselves or those who work closely with them. For those who hadn’t worked on Web3 projects, fan backlash was the eighth most frequent concern, selected by 34% of respondents, perhaps demonstrating that those who have worked on Web3 are more keenly aware of backlash from fans after having navigated the Web3 waters themselves. One artist manager relayed that they had deserted a project primarily due to negative fan response: “The artist NFT we worked on was a one off project and the artist did not support it after receiving some backlash on the environmental concerns. All impetus just fell away.”
Financial cost for fans — and artists
The fifth most common concern across the board was cost for fans, selected by 43% of respondents. For those who had worked on Web3 projects, this was their top concern, especially among artist managers, music-tech and producer roles, as well as among those who are NFT owners. In contrast, cost for fans was the 5th most frequent concern for those who had not worked on Web3 projects.
Our S1 survey covering fan sentiment around Web3 revealed that even the most Web3-oriented responses (falling under the persona of “Music NFT Owners”) listed cost as the number one concern prior to minting a music NFT. Being the number one concern prior to minting implies that cost is the variable with the most leverage in converting a fan into a buyer. There are many events and factors out of an artists’ control, and the one lever artists have the most control over is seemingly the most important in converting sales.
Why exactly is cost so influential? Is it the perception of fair value? The appearance of earnestness in an ecosystem suffering from both the realities of and outsized narratives around scams? The desire to create artificial scarcity in the market? Pressure to sell out?
Some of the most financially successful music/Web3 use cases involve giving artists tools to raise capital by non-traditional means. That said, due to financial and educational friction around the technology, these offerings often end up being in-reach only for a select group of superfans or wealthy collectors within an artist’s audience. Latashá has found incredible success through high-ticket 1-of-1 music video NFTs that ultimately find one owner each. Likewise, Ibn Inglor’s DANGER WORLD crowdfund ultimately raised 20 ETH across 42 backers, which is an average of 0.48 ETH per backer, or almost $1,400 USD at today’s ETH prices. It’s easy to understand why sales like this might price out many fans of an artist.
From an industry-facing perspective, the main takeaway here is that cost affects adoption. Henry Chatfield, an active music manager in the Web3 ecosystem, has an incredibly thoughtful and illuminating music-related insight reflecting on the “bloghaus” era and his recent experience launching a free POAP with Daniel Allan. Chatfield references the book “Never Be Alone Again” by Lina Abascal — an account of music between 2006 and 2011, which was a period when culture traveled on the back of digital technologies that allowed for the free and wide distribution of music via blogs and P2P networks. “The book highlights how music was ‘free’ in a lot of ways” in this era and how artists like A-Trak, Kid Cudi, Steve Aoki, Justice, Diplo and Chromeo, all found success in a genre affectionately known as Bloghaus. As Henry points out, the financial barriers to participation that we see in Web3 music and NFTs today did not exist back then.
When contrasting this more open and accessible music ecosystem of the mid-2000s with costs around the current music/Web3 ecosystem, it’s easy to see how playing in the Web3 sandbox might leave some individuals feeling left out in the cold. For instance, in October 2021, Daniel Allan completed a Mirror crowdfund that raised 20 ETH (approximately $160,000 at the time). 41 out of a total of 87 backers donated .1 ETH or approximately $400 USD. In contrast, in January 2021 when Allan released a freely claimable POAP, over 500 people messaged his team about the offering, and 300+ fans went through the multi-step process to claim one. The incredible response to the POAP offering showed that there was wide demand and interest in Allan’s art. It also hints that music and Web3 projects that are priced more reasonably for everyday music fans might be one way for artists to find success, while avoiding complaints about exclusivity.
W&M has covered the high cost to fans jumping into the music/Web3 world in two recent surveys, but the cost to artists to participate in the space is noteworthy to mention as well. For an individual artist, launching a single custom smart contract on Ethereum Mainnet can cost $1,500 to $2,000 in gas fees — not including the cost of working with Web3 developers and the resources required to educate themselves and their fans about Web3, all on top of the baseline costs, in both time and material goods, of making their art. Even if an artist decides to mint their work on a third-party platform, there is at minimum a cost to listing the NFT, gas fees to be paid when selling and gas fees to be paid when moving Ethereum around. Where transaction costs on the Ethereum blockchain are extremely high, many other less expensive options, including alt-Layer 1 chains (e.g. Solana, Flow) and Layer 2 chains (e.g. Polygon, Optimism), are gaining momentum. For example, artists like Icelandic group Sigur Rós recently launched their HEIMR project on Polygon, which have helped reduce transaction costs.
Perception of the crypto community
Public perception of the crypto community was a notable concern across the board — namely, the third most cited for those who had not worked on Web3 projects, and the fifth most cited for those who had.
This concern sits downstream from all the other concerns discussed. If someone participates in an ecosystem that purportedly perpetuates existing wealth gaps, proliferates scams, hurts the environment and seeds “crypto bro” culture, what does it say about them? This is at the heart of the worries that artists, artist teams and record labels consider before jumping into Web3 and came out very directly in a write-in response from a senior staff member at a record label, who told us that it is “bad for your career in music to be seen or perceived as being close to ‘evangelicals’ and Tech Bro’s.”
These negative general associations around crypto are a real hurdle that the entire ecosystem must overcome in order to enable the large-scale adoption needed to fulfill the promises made by all the money currently flooding into the music/Web3 ecosystem. This is especially true for music NFT platforms, which, as we showed in our recent S1.5 platform onboarding study, rely heavily on artists as a key vector for onboarding new users. If, as a senior staff member at a record label told us, “a lot of artists are worried about how they will be perceived by those who are not involved in Web3,” then the first hurdle that needs to be cleared by Web3-enabled music platforms is convincing artists that the across-the-board fairness and benefits they claim to provide to them are real. With all the social and financial volatility in crypto, one marketer at a major artist management company told us their artists are more comfortable “letting others be guinea pigs. I think managers and artists are extremely interested in Web3 but they want to do it right.”
The complexity and confusion around how to navigate the Web3 ecosystem in the first place was the third overall most cited concern across all respondents (46%). One idea we have discussed in our previous research is the ongoing debate over whether or not the complexities of Web3 should be designed away, with the goal of increasing mainstream adoption. One survey respondent reported feeling “overwhelmed with information and … didn’t [know] where to seek resources/peers.”
Whether or not our respondents felt the process was too complicated for their own teams to tackle or for their fans to understand, or both, isn’t clear from answer to answer. However, some of our write-in quotes provided some context. One artist shared, “the need to educate about defi at the same time as how to metamask is real.” Another was “not about to make fans be onboarded on MetaMask – far too complicated for the general public at this time.” One respondent found the processes actually antithetical to their purpose: “My job is making things easier for artists. Having to understand cryptocurrency and wallets and tokens to participate in a space does not make things easier – it makes artists’ lives harder, adds additional risk (volatility, upfront minting costs and transaction fees), and is only valuable to a very limited subset of their fans, while turning away many others.”
For those who have worked in Web3 projects, the primary motivation for 75% of respondents representing roles and Web3 profiles across the board was to experiment with new technology.68% of respondents also said they were inspired to pursue a project to explore new methods of creating community and connecting artists with fans. Interestingly, “financial opportunity” and “peers were working on it/I saw other people working on it” were motivations for well less than half of respondents who have worked on Web3 projects (32% and 27% respectively).
Was your project successful?
For those who had launched a project, we asked them if they would consider their project a success or not, and why. A number of individuals responded that their project was indeed a success across a variety of financial and marketing metrics. One electronic artist noted that they “made more money off 60 seconds of music than I have off numerous EPs and albums via Bandcamp and streaming”; another jazz/blues artist noted that their project was successful because it landed on the front page of OpenSea.
Others found that their project had not been as successful. One senior manager in music-tech noted that while their project was met with notable reception, it did not translate to generating bids. An artist manager relayed that their one-off NFT was abandoned by their artist altogether after receiving fan backlash over environmental concerns. A consultant clarified that their project “was not successful because the concept was very typical and the people creating it did not fully understand the significance, value, and opportunities of Web3.”
Many respondents relayed that the very act of launching a project in Web3 was a success in itself, due to the educational and community-building after effects involved. One artist relayed that “the act of releasing the project will be a success regardless of if it sells out.” Another respondent working in festival marketing relayed that their launch was successful “because it was a learning experience.” A respondent who classified themselves as a superfan shared “I feel I have been successful, because of the community of people that I am now in touch with and feel accepted by.”
Other responses emphasized the importance of long-term scalability and permanence as critical success factors in Web3, beyond just short-term sales. One senior manager in music-tech declared that they considered their project a success because “experimental perspectives are important when thinking about scalable future tools.” Another artist declared:
“I measure success in Web3 firstly by virtue of successfully launching a drop. I believe with music NFTs, they will eventually find their collector, so patience is important. For me some have been super fast, others 7 months after mint. i have a few unsold 1/1s on catalog, but the fact that they’re on the Ethereum blockchain? That’s huge. My whole approach is rooted in the necessity for us to put culture on-chain.”
While our main survey responses provide numerical clarity on trends in artist and industry sentiment towards Web3, our survey also collected a wide range of “write-in” responses to more open-ended prompts. Among other things, these prompts asked respondents to expand on any concerns they may have around Web3, and describe music/Web3 projects that they have liked or disliked and why.
These responses allow us to dig further into key themes that emerged from the survey and add richness and depth to our overall findings. Below, we expand on some of the dominant threads that emerged from our process for analyzing and coding write-in responses from our survey. Some of these broad themes, such as concerns around scams and calls for more education and simpler user experiences, are not new to us. Other responses provided thoughtful detail and depth around common Web3 and music concerns including the lack of music industry knowledge in Web3, and the risk that Web3 — often championed as a progressive alternative to inequitable organizational structures — might simply recreate the structures of platform capitalism under Web2.
Among the chief concerns expressed by fans in our S1 report on fan sentiment were items that are now basically considered canon as chief anxieties around Web3. Scams and the need for more education and better user experience design all ranked high among fans as issues that they see as needing to be addressed in order to improve engagement with Web3.
With respect to scams, it doesn’t help that our survey was distributed right after the emergence of the scandal around HitPiecel, a platform that purported to sell music NFTs (or at the very least display music for potential NFT sale) on its site without first getting permission from the featured artists. Predictably, this led to a massive backlash in response, including many critical articles and plenty of negative social media coverage. The fiasco’s formative influence on our survey is evident in the write-in responses to our question on Web3 projects that respondents disliked; HitPiece was the top platform mentioned among respondents, second only behind simply “everything.”
While scams are clearly still top-of-mind for many people, there are also signs that the scam narrative around crypto is showing cracks, with multiple comments from survey respondents indicating that they are still broadly open to engaging with the technology despite their concerns. As one respondent puts it:
“Crypto is fairly new for me, so many of the standard concerns (environmental; scams; cost; fairness; etc.) are on my mind, and part of my ongoing research into Web3. I still have many of these concerns, but have not let it stop me from learning and participating in Web3 projects.”
Other comments suggested scams are related to the current state of the technology, tools and user interfaces that have emerged: “I think Web3 is still a hot mess of currencies, wallets, messy ‘Wild West’ issues where people feel highly exposed to scams.” This framing is prescient, suggesting the need for a better UI that makes it harder for bad actors to undertake some of the most common scams such as phishing attacks.
“No idea about the music industry”
An interesting outcome of the HitPiece controversy has been the emergence of more nuanced takes on why these kinds of projects may be perceived to be problematic. We had many respondents simply write in some variation of “scam,” but there were also plenty of more nuanced takes that sought to acknowledge specific issues with the integration of Web3 with the existing music industry.
A notable theme that appeared multiple times among those more nuanced takes is the idea that the people building in the music/Web3 ecosystem have no idea what they are doing, especially with respect to music industry matters. One survey respondent, an independent electronic artist from the UK, made this claim directly, telling us that there are “far too many people with no idea how the music business works making world-changing claims which fall apart under the slightest scrutiny.”
A related theme we heard, and one that is HitPiece-adjacent, is that those working in the music/Web3 ecosystem either don’t understand the basics of copyright law or they are willingly flouting it, creating poor outcomes for artists. A producer working in the electronic music and hip-hop worlds, responding to our question about Web3 projects they disliked, asked the question “Doesn’t anyone in the NFT world respect copyright and intellectual property ownership?,” before lamenting that “artists are not getting any money from these ventures.” With HitPiece, we saw how negatively many artists reacted when their music was linked to the HitPiece website without their permission. This tension between the pressure to “move fast and break things” from an innovation perspective and the need to get proper permissions and respect artists’ existing legal rights is one that we see over and over again, and that we expect will continue to come to the fore.
A variation on these themes is found in a write-in comment from a senior manager at a record label, who told us they see a vacuum in the thinking among music/Web3 projects around what the actual benefits of Web3 are for the music industry. They noted that “most Web3 projects are talked about in the MOST abstract terms without actually talking about what the actual work is that they are doing and how it benefits the industry or what the backbone of the industry should be going into the future.” That same senior manager told us that they think “there’s a real knowledge and accessibility gap around what constitutes good work for artists & labels to spend their time on in this space.” Part of that comes from a lack of high-quality information and clear thinking on how Web3 relates to existing music industry structures.
Others balked at some of the key premises that music/Web3 startups are putting forward to artists. One survey respondent, a junior staff member at a record label, told us specific concerns about relinquishing creative ownership:
“Artists are finally gaining momentum in greater ownership over their music rights, and I don’t think they should be giving long term ownership to fans — that is a dangerous path. We should be exploring other ways for artists to raise money and I don’t think it needs to be within the crypto space if the sentiment in space has to be centered around the idea of a return on investment.”
The above related themes can all be read together as a general negative perception, or at least skepticism, from our survey respondents around the ways in which the music/Web3 ecosystem relates to the existing music industry and to artists. This is especially problematic for those building in the music/Web3 world, because their main product centers around artists and the music they create, and if they can’t convince artists of the value of Web3, then they may face an existential reckoning.
Capitalism and financialization
We also saw a strong theme among our write-in responses telling us that ultimately many of our music industry survey takers just aren’t sold on the promise of Web3 to deliver us from the evils of capitalism.
One lawyer from the music industry working in senior management told us they are concerned that “the new world [of Web3] could be regenerating old-world power dynamics and the worst parts of capitalism,” before asking: “How do we get involved in this without reconfirming these things?” This final part of their answer is telling, in that it signals that some in the music industry are at least open to the potential of Web3 to improve its structures, but need either more time, education or clearer arguments from those building in the ecosystem to convince them. This same sentiment came through in a comment from an artist working in electronic and jazz music, who told us that they “100% believe a lot of artists and fans are coming at this from the right place, which is wanting a more equitable economy for music,” before noting they “just don’t think Web3/crypto is gonna do it,” and that “even if the energy problem gets solved, it’s still going to result in a fundamentally inequitable and regressive arrangement.”
This overall theme finds its roots in concerns around turning art into a fully speculative commodity. One independent artist told us that they “don’t find music being increasingly financialized and turned into speculative or tradeable assets a desirable future for music on the Internet,” further arguing that the “internet can be used to build music community and fandoms *first* and it’s happened many times before — we don’t need to lead with the financial asset.” Another respondent from the distribution side of the music industry linked concerns over financialization to worries around lack of education, arguing that “artists and fans will always lose because they do not have expertise in finance to win.”
Together, these reactions all suggest that, in addition to any structural issues it may or may not have, Web3 also has a persistent perception problem. Many from the music industry fail to see the long-term upside for themselves, while the many potential downsides are clear as day, especially financially speaking. In fact, several of our respondents spoke of not seeing how or why Web3 is even needed to improve upon Web2 technology. One record label manager told us that they do not see how Web3 can solve anything that “existing methods cannot, albeit it with some fresh thinking.” Another respondent told us that “Web3 doesn’t bring any new tools to bear that we don’t already have,” noting they can already have fans directly supporting artists and that “none of that needs the underlying blockchain.”
There are many ways to dissect the burgeoning music/Web3 landscape, and the concerns that are arising from among its most active industry-facing creators and strategists. Some are jumping ship from the traditional industry entirely; others are working on building bridges between Web2 and Web3, and still others are biding their time while others figure “it” out. Regardless of their level of involvement with Web3 projects, artists and music-industry professionals share many of the same concerns about how the landscape will evolve in the future, especially when it comes to educational and financial barriers as well as legal and environmental issues.
Importantly, as we’re seeing with the persistent polarization of discussions around music NFTs, familiarity with Web3 does not automatically translate to positive sentiment around the technology. This suggests that any onboarding initiatives that Web3-native music companies invest in will have to move far beyond just surface-level education about how the technology works, into making a clear, airtight case for how the technology will truly add value to the options that artists and their teams already have available to them in the Web2 music industry. Based on our survey responses, it is clear that many in the music industry still find this messaging from the Web3 side unclear or inconsistent.
That said, music/Web3 applications and communities are evolving rapidly — with many music DAOs and artist social tokens launching in the past few months — that could well change the industry’s mental models for what is possible with the technology. We look forward to taking periodic temp checks on Web3 sentiment across the industry as the landscape matures and expands.
Diana Gremore (A, B, C, D, E)
Yung Spielburg (B, D, E)
Brodie Conley (B, D, E)
Cherie Hu (B, D)
Jacob DeGuzman (C, E)
Julie Kwak (D, E)
Lindsey Lonadier (D, E)
Garrett Frierson (C)
Michael Zhang (C)
Duncan Lindsay (E)
Armen Nalbandian (E)
Andres Botero (E)
Adrian Burger (E)
Patrick McDermott (E)
Holiday Sidewinder (E)
Ryan Abary (E)
Dani Balcells (E)
Brooke Jackson (E)
Mary Maguire (E)
Alexander Flores (E)
Andrew Forman (E)
Chuck Fishman (E)
Alex Webbs (E)
(A) Project lead
(B) Writers and editors
(D) Data categorization
(E) General survey/project development