There have been many reports questioning if Spotify pays musicians fairly. While the popular music streaming service is yet to disclose exactly how much it pays, industry experts have suggested that its payout rate for recordings at nearly $4,000 per million streams, or less than half a cent per stream. However, NFT is here to rescue, at least, according to Saxo Bank.
NFTs vs. Traditional Streaming Platforms
Saxo believes that the outlook is bright for NFT technology despite all the initial chaos and hype. According to one of Saxo Bank’s Outrageous Predictions 2022: Revolution, NFTs’ use case can prove compelling to those musicians and artists who feel exploited or unfairly treated by the existing streaming platforms and their revenue structures.
Along the same lines, the Danish investment bank’s cryptocurrency analyst Mads Eberhardt’s blog post stated:
“These models don’t guide individual subscribers’ fees to the actual music an individual subscriber listens to. Rather, all subscription fee revenues are aggregated and distributed based on every artist’s share of total streams.”
The streaming platforms also churn a massive cut which, if coupled with the cut paid to labels, totals up to 75% or more of the total revenue.
NFT Challenging the Music Industry
The infrastructure of the current music industry has left both artists and their fans with just a handful of viable alternatives. The dominance of major record companies is dwindling. The reason – Spotify. Its third-quarter earnings show a 27% year-over-year surge in revenue to a whopping $2.8 billion.
Besides, the audio giant’s gross margin amplified from 24.8% a year ago to 26.7% in 2021, which helped it amass more than $100 million in free cash flow in Q3.
This trend may change as individuals around the world are paying close attention to the cryptocurrency and blockchain industry. In 2021 alone, many musicians, sportspeople, and artists have flooded the NFT scene and are cashing in on it.
Saxo’s Eberhardt, for one, is pretty confident about its success. Citing the use of smart-contract blockchain networks, musicians can eliminate the need for a centralized entity and distribute their creations directly to their listeners. The decentralized process would help the artists get paid in real-time while also retaining the revenue cuts that generally go to the streaming sites.
In a not outrageous prediction, the analyst predicted that NFT-based music streaming services will emerge that will feature the likes of Katy Perry, The Chainsmokers, and Jason Derulo. The trio has already been involved with the blockchain music platform, Audius. Slowly, Eberhardt believes that musicians will pull off their music from the mainstream platforms, which will be “terminally disrupted.”