DSPs will drive mainstream Web3 adoption, but fan-powered music communities will share the wealth

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In the following MBW editorial, Bruno Guez, CEO of digital rights administration firm Revelator, suggests that 2022 will be the year DSPs/distributors support Web3 adoption and the incorporation of NFTs and technology. blockchain for the payment of duties and royalties. The publication of this editorial follows the news that the world’s largest music streaming company, Spotify, is currently recruiting for Web3 experts.


It’s hard to miss the fever and excitement surrounding web3 in general and NFTs in particular in the music space.

Artists and fan communities were the first to participate in the game, experimenting with drops, NFT-related royalty shares, DAOs, and fan-centric projects.

Now, big tech is integrating NFT-related capabilities into their creator-facing platforms faster than you can say “Meta.” Everyone from Twitter to Instagram to YouTube to Microsoft announces new Web3 features or initiatives. Recruitment for web3 is underway across major music services. Major labels are also unveiling their first deals with NFT marketplaces.

They see the writing on the wall: Web3 is too big an opportunity to miss. Yet the change we are just beginning to see will not happen overnight. It’s the music business, after all.

Like the move to streaming, web3 adoption will be a gradual, bifurcated process, fueled by fear of irrelevance but held back by the complexities of the music industry‘s ownership-based business model. After all, in web3, economic actors must become actors, not owners.

Just like with streaming, there is a significant mindset shift that needs to happen to make cultural and technological adoption possible. The end result will be a bigger overall market for music intellectual property, but that bigger pie will be more widely distributed. The era of major player consolidation may be coming to an end.

DSPs, not labels, are the most likely to succeed in changing consumer behavior. They have the means to connect web2 interfaces to web3 protocols. Consumption patterns are often changed by market makers, not the other way around. We saw it in the streaming transition with innovators convincing consumers to adopt a subscription-based, all-you-can-eat approach after P2P networks like Napster enticed music lovers to gorge on free music files. These tastes and habits have been shaped by the services, not the other way around.

DSPs and the industry as a whole know they can’t own web3; they can only participate in decentralized applications and distributed ledger technologies. Instead, DSPs will try to figure out how to leverage these new protocols and applications to increase consumer adoption and gain market share in the next generation of the Internet.

To capture this share, DSPs will need to address the challenges of web3’s user experience. The vast majority of people will be slow to adopt Web3 protocols due to their non-custodial complexity and clumsiness. Yet they will still want to buy collectibles, engage in defi, manage crypto assets, or even fractional ownership of intellectual property.

Most marketplaces will need to offer a hybrid of crypto and fiat on-ramps to facilitate Web3 transactions. Most consumers who do not want to deal with the complexities and security of managing private keys will use custodial services or managed wallets on the market to hold digital assets. Security will be compromised due to marketplace hacks.

“DSPs and the industry as a whole know they can’t own Web3; they can only participate in decentralized applications and distributed ledger technologies. Instead, DSPs will try to figure out how to leverage these new protocols and applications to increase consumer adoption and gain market share in the next generation of the Internet.

Bruno Guez

In general, interoperability and optionality will become increasingly important. Five years from now, people won’t care about the blockchain they use to create assets, or gas fees or transaction fees. They will simply have a wallet that manages their assets across the networks.

The tensions between web2 and web3 go beyond consumer behavior, however, and could determine the future of the music industry. DSPs and distributors will want to use the capabilities of web3 to monetize IP music and unlock new revenue streams for creators.

At the same time, once incentives can be thoughtfully integrated into web3 tokenomics, wealth can be distributed to a larger population. Fanbases around the world will take a more active role in marketing in a way that is very different from the current behavior. The BTS Army, as active traders, will become the mainstream.

The value of the music intellectual property market is expected to be one trillion dollars. Much of the growth in recent years has come from the independent sector of this market, smaller labels and self-managed artists who have a vested interest in creating authentic communities fueled by like-minded fans. It’s a stronger attraction, for many music lovers, than an easy-to-use interface.

In a way, we’ll see a “hard fork” in the decentralized music business: with the big platforms touting hybrid models, and the more local, artist-driven, culturally relevant business making the most of communities symbols, DAOs and other models. yet to imagine. These models will in turn distribute the wealth generated by music IP to more people.

The contributory economy will drive this evolution from the bottom up, and will become a new center of wealth for creators and their followers. It’s an exciting prospect for all of us who love the vitality and creativity of musical communities.The music industry around the world

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