The music sector hit record revenues at $25.9 billion in 2021, which amounts to an 18.5% growth from 2020, according to IFPI’s “Global Music Report.” Of these nearly $26 billion, streaming drove the bulk of the growth, with a 24.3% increase relative to 2020. These patterns constitute great news for the emerging class of NFT musicians and highlight the demand for audio and video content.
Even if the way that streaming is done changes — moving from centralized platforms, like Spotify to decentralized NFT marketplaces — streaming is here to stay. The rise in streaming is part of a broader transformation in media and entertainment towards digital content — print media is quickly fading. Digital media began replacing print media years ago with profound effects on the sector. Economists find that the move toward national digital media is linked with the decline in local newspapers and partially explains the focus on national topics and heightened politicization.
But, we have the opportunity to do things differently in the emerging Web3 era. We now are starting to see the emergence of individual musicians minting their own NFTs and marketing them — and keeping the bulk of the revenues, rather than cedeing them to record labels or other intermediaries.
However, what the latest numbers on streaming highlight is that there is a growing audience for music NFTs beyond just streaming — if that was all that there was, then we would expect to see steady, not exponential, growth. Instead, we saw continued momentum as consumers look for more audio and video content to consume and enrich their lives in place of traditional print media.
NFTs have the potential to unlock an incredibly exciting and new market in the creative economy. If we think of artists — and content creators more broadly — as people who help build experiences for others, then NFTs become the vehicle to transmit and authenticate unique artistic content.
While there has been some talk of buying music-related NFTs in the Metaverse — most notably for fashion — imagine if creators came together in the Metaverse to create immersive digital experiences that combine audio, visual, and potentially other forms of content simultaneously. The creative options are limitless, and the NFTs can be used to facilitate more than just leisure activities — such immersive experiences can also directly advance educational and training needs.
Although there are now several examples, Arizona State University, in partnership with Dreamscape Immersive, launched the Dreamscape Learn project in 2020. As Michael Crow, President of Arizona State University, said:
“We’ve always known there is huge potential to unlock new learning realms for students by merging VR — and all that it empowers educationally and socially — with advanced, adaptive educational experiences.”
The latest streaming revenues and expansion of the music sector is great news for content creators across the board. The data show that there’s more demand than supply, so NFTs and Web3 tools are poised to help creators leverage these trends to not only become financially sustainable, but also to create even more compelling and immersive experiences in the Metaverse for society at large.
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Christos A. Makridis is a research affiliate at Stanford University and Columbia Business School, and the chief technology officer and co-founder of Living Opera, a multimedia art-tech Web3 startup. He holds doctorates in economics and management science and engineering from Stanford University.