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2023 in Retro: Investments, implosions, and innovations
Welcome to The Beat, Decential’s weekly breakdown of the music-web3 byway.
Like most things in web3, the music space moves at breakneck speeds, issuing regular bouts of hope, cringe and FOMO. That combination of qualities blur the essence of the movement – the enduring solutions to legacy industry problems and the people building them. Let’s focus on the essence; the rest, as Alex Ross wrote, is noise.
Welcome to the final Beat of 2023, a year of tumult and joy, noise and music. This week, the on-chain music world’s wires are mostly quiet. Many are taking time to reflect, or revel in another year come and gone.
In that spirit, I’ve combed through the Beat archives to find a few 2023 themes that we should hold close as we pierce the 2024 veil. It’s easy to get caught up in the hype of the new, but in doing so we often forget what we should be remembering.
This Beat is longer than usual, so there’s music sprinkled throughout. Read it in pieces, if you’d like. In fact it’s probably better that way – there’s a whole year in here, after all.
Spotify Shake-ups
Say what you will about Spotify, but it continues to be the figurehead of the music industry. What they do matters, and what a wild year it was. Spotify started and ended the year with massive layoffs, and in the process, after a near fiscal nadir, its market cap more than doubled.
How’d they pull that off? In February, responding to shareholder concerns of Spotify’s financial woes, the company’s co-founder and CEO Daniel Ek set the tone. He blamed himself for being “too ambitious,” and you don’t have to look back far for examples of his zeal. Here’s an excerpt from the Beat that covered it:
“Last summer the Spotify boss said that he wanted the company to have 50 million creators by 2030 (there were 11 million in 2021). Compare that to the social music creation platform BandLab, which already has 60 million creators – a contrast Music Business Worldwide’s Tim Ingham just made. BandLab is kind of a GarageBand tool meets TikTok ethos where music-makers of all (or few) talents can “mess around.”
The discrepancy suggests that social perhaps is the route to success at scale, and that Spotify’s streamlined hyper-focus on consumption – one that’s axed many social tools and left thousands of unmet demands for them – may have been short-sighted.
The wilder stat, though, is that there are 17 million songs being released on BandLab per month, far outpacing the already ridiculous ‘100,000 songs uploaded per day’ reality of Spotify and Co.
By my calculation, at three minutes per song, 17 million is about how many songs a person could listen to if they streamed music for 24 hours a day and 365 days a year for the next 100 years. Not that I’m trying to listen to them all, but how does one navigate such a monstrous amount of content? Where does one start? And how can we possibly conceive a world where even some small fraction of those creators are earning a meaningful revenue?”
We’ll come back to these notions of scale, but here are some things Spotify did en route to adding $20 billion to their market cap:
They (kind of) leaned in a more connective direction, releasing a new set of features that “is part TikTok, part Instagram, and part YouTube.”
They expanded their controversial Discovery Mode, which offers better placement for even lower payout rates and is our modern day payola – the concept of accepting payment to promote someone’s music without proper legal disclosures. “It’s exceedingly clear that Spotify is far more interested in its own survival than that of the artists who provide its content offerings,” wrote Shawn Reynaldo for First Floor.
They spent less than 10 percent of their $100 million diversity fund in its first year (originally launched to appease those protesting the platform’s contact with Joe Rogan, which was worth more than the entire fund).
They raised their premium subscription price for the first time ever, introducing price hikes to every plan – from individual to family – in the US and 52 other markets
They announced three adjustments to their royalty structure, largely motivated by fraud deterrence. The third adjustment – a minimum annual stream threshold – is perilous. Any track that doesn’t hit the minimum number earns no royalties. It’s an edict cut from the same cloth as the Universal Music Group and Deezer “artist-centric” boost to so-called professional artists, which halved the royalty weight of artists with less than 1,000 monthly streams and 500 unique monthly listeners. As MIDiA Research founder Mark Mulligan noted in his examination of the UMG-Deezer initiative, artists with under 1,000 streams represent about 80% of all artists. “It is redistribution of wealth in reverse,” he wrote, “taking income from struggling, emerging artists and sharing it among those who have already found success.”
Amongst those included in the most recent layoff was 12-year employee “genre alchemist” Glenn McDonald (as well as many other OGs). McDonald was also the creator of Every Noise at Once – the playful name for a scatter plot of all of Spotify’s 6000+ “genre-shaped distinctions” – which has since lost access to Spotify’s data updates.
I’m predicting an equally eventful 2024.
Tensions between community and cash
Speaking of streaming’s woes and limitations, here’s a snippet from June:
“99.6 percent of artists aren’t making a living through streaming income, so what if platforms over-indexed on facilitating connection instead of consumption? Empower artists to build worlds around their music – constellations of connective and economic possibility. Because once people care, people spend money. It doesn’t make sense to pay platforms a flat fee for a celestial jukebox and just stop there. People want to care, and to connect – not with everyone, but with artists that move them.”
On-chain music projects tend to aim toward those connective ideals. Alas, ideals haven’t been enough to supplant the powers that be, and it’s been tough to make the balance sheets look good without relying on outside capital – and the return on investment expectations that come with them.
Here’s a piece from another Beat that reckons with the tensions that arise:
“A few weeks ago, I co-hosted a Twitter Spaces on an anti-scale approach to growing music communities…Anti-scale was conceived as a challenge to think about ways to grow and cultivate music communities in ways that work with the core tenets of community, which rely on transparent, non-extractive, intimate relationships…
There are natural tensions between venture capital and community, and I’ve spoken with many web3 community leaders – including some of those that were part of the anti-scale spaces – where growth isn’t a priority. They feel protective of their communities, which has made them averse to venture capital because the model demands sustained growth. It’s made them averse even to marketing, because they don’t want the grifters and the noise, or to grow toward the massive platforms that have flattened us into a blanket of sameness.
Music and people aren’t homogenous, so the qualities that make them distinct can’t be captured and authentically represented at scale. Variability and customization are essential for capturing nuance and niche, as are the motives that gather people in the first place.
How do we remind people that community is enough, sans economic incentives? How can we measure value with more holistic rubrics, ones in which vanity metrics and the value of a token are only partial performance indicators? And how can we champion communities that may be content to grow less like a virus and more like a tree?”
Those questions persist. Here are some key 2023 events – at the intersection of money and community – worth remembering as we try to answer them:
The music NFT platform Sound raised a $20 million Series A round and acquired Soho, a mobile platform for NFT collectors – one of the first such acquisitions in the on-chain space.
The web3 label Dreams Never Die raised $3 million, minted and sold 1000 founder passes and then imploded.
Universal Music Group paid about $5 million for approximately 25 percent of NTS, making it the largest shareholder of the online radio station and culture steward.
Ampled – a “Patreon-like platform for musicians structured as an artist and worker-owned cooperative” that made its rejection of venture capital part of its identity – made the decision to shutter.
For the second time in 18 months, Bandcamp was acquired — this time by Songtradr, a B2B sync licensing platform. The new owner swiftly laid off half of Bandcamp’s employees.
Sona, a new web3-powered streaming service co-founded by Jennifer Lee – better known as the Grammy-nominated artist, TOKiMONSTA – and seasoned web3 builder, Laura Jaramillo, raised a $6.9 million seed round.
Continue to pay attention in 2024 – money and ownership are integral elements to the ways in which community forms, is sustained and/or can be exploited.
Music of the FOLK: Ryuichi Sakamoto, Gilberto Gil and Creative Commons 🤝 blockchain
Speaking of community, here’s an ode to one of its champions:
Last month, the world lost Ryuichi Sakamoto, a singular composer who won an Oscar, a BAFTA, a Grammy and two Golden Globes. He was also famously exploratory – unafraid to both speak against legacy paradigms and experiment with new technologies. His explorations included non-fungible tokens (NFTs), which “may have represented to Sakamoto the fruition of a dream he has harbored since the 1980s when the proliferation of CDs promised to usher in an era of digitization that would enable all artists to manage their own copyright, distribution, traceability, and finances in a more direct and fair way.”
Sakamoto was keenly aware of the ways in which new technologies could affect coordination surrounding music and since 1998 he’s been regularly thinking about the Internet’s effect on human behavior.
“In the old days people shared music, they didn't care who made it; a song would be owned by a village and anyone could sing it, change the words, whatever,” he said in a 2009 feature in The Guardian. “That is how humans treated music until the late 19th century. Now with the Internet we are going back to having tribal attitudes towards music.”
Sakamoto’s ideals helped inspire FOLK, a collective that traces ancient folk methodologies in order to embed them into a new commons infrastructure. And his words nod to a great new potentiality – a financial mechanism that works with the core mechanics of the Internet instead of against it.
Here are some words from FOLK’s first experiment, This Machine Kills Copyright (published in Decential in October), which further explores that potential:
Today, on-chain music is creating opportunities to resurrect and reestablish more collective, folk-driven methodologies that can be more equitable to individual music-makers. In order to manifest that reality, though, we’ll have to reckon with a natural tension: an open source, permissionless ethos – this time across public blockchains – and the power and precedent of traditional copyright.
How can we find ways to harness the superpowers of the blockchain – decentralization, immutability and provenance – without harming creators who still rely on copyright to earn money? How can we protect creators’ rights while also embracing the truth that everything is a remix, that genius is a fallacy, and that collective attribution of the folk is a much healthier way to share and celebrate art?
As we wrestle with legacy concepts of ownership – as well as a memetic Internet culture that is increasingly at odds with them – and the legal murk web3, we have an opportunity to create new precedence through action – to embrace solutions that redistribute wealth from one folk to many.
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Creative Commons licenses were developed in response to the challenges and limitations of traditional copyright in the digital age. Varying attribution requirements across licenses, for instance, allowed creators to customize the distribution of their works. Ultimately, the goal was to strike a balance between protecting creators' rights and encouraging the spread of knowledge and creativity.
Conceivably the blockchain can complement the objectives of Creative Commons by providing a secure and transparent way to enforce and manage licensing agreements. For example, blockchain-based platforms can track the usage of Creative Commons-licensed content and automatically distribute royalties to creators. The art moves with ease, and value accrues via the art’s cultural impact. Provenance, enabled by the blockchain, ensures people know who created the art.
It’s a model that’s been used most prominently by Grimes, but also by Songcamp’s CC0lab and folks like Supertight Woody. The reasons are manifold for why we should lean into it in 2024 – not least of which is that it invokes the soul and panache of Gilberto Gil, the 81-year-old Brazilian music legend and cultural champion who went on his final world tour in 2023.
From 2003-2008, Gil served as Brazil's Minister of Culture in the administration of President Luiz Inácio Lula da Silva (who is once again Brazil’s president). Here’s a relevant Gil excerpt to sit with – this one from an October Beat:
Back in 2005, a group of American online rights activists and scholars — one of whom was Lawrence Lessig, founder of the Creative Commons non-profit — sat down with Gil in a living room in Rio de Janeiro. The then 62-year-old presiding Minister of Culture spoke about how “the fundamentalists of absolute property control” stood in the way of the digital world's promises of cultural democracy.
"A world opened up by communications cannot remain closed up in a feudal vision of property," he said. "No country, not the US, not Europe, can stand in the way of it. It's a global trend. It's part of the very process of civilization. It's the semantic abundance of the modern world, of the postmodern world — and there's no use resisting it."
Gil summed up his team’s approach to intellectual property in the digital world with one word: “tropicalize.” The goal? "To make the digital world join in the samba.”
Coda
One rather glaring omission from these key themes is AI, which was near omnipresent – in the Beat and otherwise. Look at music alone: Spotify, Tencent, Bytedance and even Audius have all rolled out AI features, and every major label has an equity stake in a music AI startup, hedging their bets amidst a sea change.
More broadly, what’s grown is a prevailing narrative that boils down to ‘us versus the machines,’ and concerns are warranted, but I want to end this year with some words on how we can see ourselves in the technology. Because like all other technology, AI is an extension of human beings, and as human beings, we are imperfect, full of holes, and builders of systems that focus so much on what makes us individuals that we lose sight of what we share.
Perhaps, through this lens, there’s a key to transforming from an ‘us versus’ mentality to one that is simply, ‘us.’
“AI is basically a neural network trained on the things we’ve done and made. But we must also recognize that the things we’ve done and made are inclusive of our deepest desires, our implicit biases – the things that we pour into our creations unawares.
How do we reckon with those subconscious secretions, ethically and legally? In 1976 George Harrison was found guilty of ‘subconsciously plagiarizing’ the 1962 John Mack tune, “He’s So Fine,” in his song “My Sweet Lord.” There have since been untold cases — from Led Zeppelin vs Taurus to Ed Sheeran vs Marvin Gaye — that tackle the issue, begging questions about the thresholds of infringement and the contours of our own waking mind. To what extent is our own subconscious off limits? To what extent is our own subconscious even our own?
If we cannot rightly say where John Mack starts and George Harrison begins, and we choose instead to build an attribution system that can litigate the space between, then perhaps we’re doing it wrong, and we should simply let it flow freely, and celebrate the whole lot of it as ours.”
With love, see you in 2024.
Now go outside and listen to music – it’s a beautiful day.
My name is MacEagon Voyce. For more music and less noise, consider subscribing to The Beat. And if you already do, consider sharing with a friend. Thanks for being here.