The reaction of crypto twitter around Spotify’s recent announcement that they are testing NFTs has been for the most part very positive. The sentiment seems to be akin to “welcome to the party, Spotify!”

I use Spotify every day as a listener and as a music professional. I’m not 100% anti Spotify at all. But it would be wise to be cautious about heralding their movement into NFTs as a positive thing.

First up, let’s explore the news itself…

Spotify recently announced that they are rolling out a test of allowing a small subsection of artists to display their NFTs on their profile.

These NFTs will then lead to an external marketplace such as OpenSea, where they can be sold on the secondary market.

As of now, Spotify have confirmed they are not taking fees for any NFTs sold through the artist displays on their Spotify page.

Overall, this isn’t surprising news, as they have been hiring ‘Web 3’ staff since the start of the year, but this appears to be only a small test for now.

Overall, NFT adoption is usually considered a good thing for proponents of web3 and its potential, but in this instance, I’m not so sure. The reasons why are below.

There is little doubt that Spotify has been net good to the music consumer. They have managed to put the history of recorded music into everyone’s phone for $10 a month (or for free, if you want to listen to ads).

In order to do this, they needed to get deals in place with the big three music groups (Universal, Sony, Warner), which they successfully did (and those three came away with hefty ownership percentages of the platform).

This leads to the point that whilst Spotify is certainly net good for the consumer due to its ease of use, it is net bad for the artist.

Spotify may well claim that they saved the industry by stopping piracy, but the fact remains that Spotify’s business model is exploitative of artists and devalues music.

Spotify’s streaming algorithm is set up to benefit those at the very top and those whose music aesthetically fits within their pay per stream model.

Artists whose music is suited to be streamed millions of times like Drake or similar will see a good benefit from Spotify, but longer-form instrumental music, noise artists or experimental hip hop artists (to take three different examples) will not be able to benefit in the same way.

This is because ‘popular’ music is always going to be more consumable in their length, immediacy and mainstream appeal. This is fantastic for the tiny percentage of pop artists that ‘make it’, but the fact remains that Spotify just doesn’t suit every artist’s music.

Aside from the fact that the big three music companies can quite literally dictate what is placed in front of the consumers the most, it is skewed unfairly to the artist in that Spotify severely underprices their offering at $10 per month.

Spotify can’t be blamed for this. Their competitors (Apple, Amazon, Google etc) are some of the world’s biggest companies and can use their streaming platforms as a loss leader, so Spotify need to be able to somewhat price match in order to survive.

This leads to a literal race to the bottom, with artists sitting at the bottom of that bottom, as has historically been the case throughout the history of music.

The music NFT space is filled with a community of artists who for the most part have been ignored by the traditional industry. There are very few large artists that have fully embraced Web3 as the primary vehicle for their art.

The reason that a lot of the artists that currently frequent crypto twitter are into NFTs is because it is a chance to break free from the gatekeepers that have not served them in the past. Spotify is the most pervasive and visible of these gatekeepers.

Spotify (for the most part) determines which releases are deemed a success or a failure. Spotify’s playlists dominate many genres of music in terms of what gets listened to, and Spotify has always looked after its bottom line before it has looked after the people who create their content (the artist).

If Spotify were to gain a significant foothold in the Web3 infrastructure, and if it were to be celebrated by those whose bag they wisheth pump, then we are on the way to have a less than ideal, centralised, company-structured web3 music landscape. Not ideal.

What would be the ideal scenario for Music & Web3 would be for a big, bold, new company to enter the space that is native to Web3. Think OpenSea for music.

It doesn’t have to be perfect (lord knows OpenSea isn’t) but a company that makes it much easier to buy, and more importantly FLEX, your music NFTs would be the ideal scenario to grow the space.

Mat Dryhurst explains in this thread on how tired the streaming model is in general.

https://twitter.com/matdryhurst/status/1528804511686348801?s=20&t=DGFWNUGDAoPSz3O9mwX4mQ

There are a number of reasons why building ‘the OpenSea for Music’ is more difficult to achieve than it was with art:

• Visual art has an element of instant gratification and constant scroll stimulation that music does not have, making it more likely to go viral.

• Music has massive incumbents in Spotify and Apple Music whereas OpenSea doesn’t have a household name as a competitor where digital art was bought and sold.

That being said, we should encourage the current landscape of Music NFTs to keep building during this period of market downturn. I don’t think many will survive, but those that do should be embraced by the community much more than the industry incumbents that have de-valued music and the musical experience for decades.

Spotify’s editorial playlisting model currently runs the new music industry. Getting on a Spotify Editorial Playlist can mean hundreds of thousands or even millions of new streams. It is the benchmark on what many artists consider a success or not when they release new music.

Look at the titles of the playlists above. These are some of the most popular playlists on Spotify. As someone who runs a label that releases high quality instrumental music for the most part, I have a love-hate relationship with these playlists.

On the one hand, when one of our artists gets selected for one of these, we know they will be happy and we will see more revenue, but these playlists are DEEPLY flawed.

They are populated by fake artists throughout (another article to come on that) and they encourage passive listening. A lot of the top artists on some of these playlists would struggle to sell out a 100 cap room in London, New York or LA. That is because the music is to be played in the background as the listener is pre-occupied with something else.

Passive listening is of course perfectly fine as a concept. Everyone listens to music in the background from time to time, but these playlists have made passive listening the primary way that people now listen to music.

How many people who listen to a piece of piano music on one of the above playlists will go into the artist’s profile and follow them, and do the same on social media? Sign up to their mailing list? Go to a show? It is massively unlikely.

This results in artists having a very wide, vague and horizontal listenership, with no way of connecting to the fans that DO love them. There is no way to distinguish the super fans from the passive listeners on DSP backends. Spotify and others don’t provide the analytics to filter by amount of plays per user.

This bottom-up approach is detrimental to an artist’s progression. If the artist could properly reach their super fans, they would be much better off than having hundreds of thousands of active listeners who will listen once and leave.

That said, we’re not sure if Music NFTs are the answer to this either, from a musical perspective, but they definitely would re-evaluate the artist/superfan relationship.

Cherie Hu from Water & Music has her own take on this, which is food for thought.

https://twitter.com/cheriehu42/status/1530197157223055368?s=20&t=DGFWNUGDAoPSz3O9mwX4mQ

It should be noted that this is the case for all genres of music, not just the ones that populate the example playlists listed above.

It would be very interesting to access some of the data that Spotify glean from this experiment with NFTs. I would posit that this won’t result in too many NFT sales, and that Spotify will not roll out a large-scale NFT offering in the short-term.

This is because there is still a very big gap between the mainstream music consumer and the person who buys music NFTs. There is a large barrier to entry - from learning about metamask, private keys, buying cryptocurrency etc that means that most will not buy even their favourite artist’s NFTs for a while to come.

Overall, these larger companies that operate in the music world will more than likely come into the web3 music space in a meaningful way, but their offerings in the longterm will more than likely not look anything like what their offerings are today.

The larger labels and streaming providers are all hiring crypto native people at the moment, looking to front-run the opportunity.

Whilst it is good that they are interested, and whilst it will be good if they participate in the ecosystem’s growth, we should not let them front-run the opportunity any longer.

The reaction of crypto twitter around Spotify’s recent announcement that they are testing NFTs has been for the most part very positive. The sentiment seems to be akin to “welcome to the party, Spotify!”

I use Spotify every day as a listener and as a music professional. I’m not 100% anti Spotify at all. But it would be wise to be cautious about heralding their movement into NFTs as a positive thing.

First up, let’s explore the news itself…

Spotify recently announced that they are rolling out a test of allowing a small subsection of artists to display their NFTs on their profile.

These NFTs will then lead to an external marketplace such as OpenSea, where they can be sold on the secondary market.

As of now, Spotify have confirmed they are not taking fees for any NFTs sold through the artist displays on their Spotify page.

Overall, this isn’t surprising news, as they have been hiring ‘Web 3’ staff since the start of the year, but this appears to be only a small test for now.

Overall, NFT adoption is usually considered a good thing for proponents of web3 and its potential, but in this instance, I’m not so sure. The reasons why are below.

There is little doubt that Spotify has been net good to the music consumer. They have managed to put the history of recorded music into everyone’s phone for $10 a month (or for free, if you want to listen to ads).

In order to do this, they needed to get deals in place with the big three music groups (Universal, Sony, Warner), which they successfully did (and those three came away with hefty ownership percentages of the platform).

This leads to the point that whilst Spotify is certainly net good for the consumer due to its ease of use, it is net bad for the artist.

Spotify may well claim that they saved the industry by stopping piracy, but the fact remains that Spotify’s business model is exploitative of artists and devalues music.

Spotify’s streaming algorithm is set up to benefit those at the very top and those whose music aesthetically fits within their pay per stream model.

Artists whose music is suited to be streamed millions of times like Drake or similar will see a good benefit from Spotify, but longer-form instrumental music, noise artists or experimental hip hop artists (to take three different examples) will not be able to benefit in the same way.

This is because ‘popular’ music is always going to be more consumable in their length, immediacy and mainstream appeal. This is fantastic for the tiny percentage of pop artists that ‘make it’, but the fact remains that Spotify just doesn’t suit every artist’s music.

Aside from the fact that the big three music companies can quite literally dictate what is placed in front of the consumers the most, it is skewed unfairly to the artist in that Spotify severely underprices their offering at $10 per month.

Spotify can’t be blamed for this. Their competitors (Apple, Amazon, Google etc) are some of the world’s biggest companies and can use their streaming platforms as a loss leader, so Spotify need to be able to somewhat price match in order to survive.

This leads to a literal race to the bottom, with artists sitting at the bottom of that bottom, as has historically been the case throughout the history of music.

The music NFT space is filled with a community of artists who for the most part have been ignored by the traditional industry. There are very few large artists that have fully embraced Web3 as the primary vehicle for their art.

The reason that a lot of the artists that currently frequent crypto twitter are into NFTs is because it is a chance to break free from the gatekeepers that have not served them in the past. Spotify is the most pervasive and visible of these gatekeepers.

Spotify (for the most part) determines which releases are deemed a success or a failure. Spotify’s playlists dominate many genres of music in terms of what gets listened to, and Spotify has always looked after its bottom line before it has looked after the people who create their content (the artist).

If Spotify were to gain a significant foothold in the Web3 infrastructure, and if it were to be celebrated by those whose bag they wisheth pump, then we are on the way to have a less than ideal, centralised, company-structured web3 music landscape. Not ideal.

What would be the ideal scenario for Music & Web3 would be for a big, bold, new company to enter the space that is native to Web3. Think OpenSea for music.

It doesn’t have to be perfect (lord knows OpenSea isn’t) but a company that makes it much easier to buy, and more importantly FLEX, your music NFTs would be the ideal scenario to grow the space.

Mat Dryhurst explains in this thread on how tired the streaming model is in general.

https://twitter.com/matdryhurst/status/1528804511686348801?s=20&t=DGFWNUGDAoPSz3O9mwX4mQ

There are a number of reasons why building ‘the OpenSea for Music’ is more difficult to achieve than it was with art:

• Visual art has an element of instant gratification and constant scroll stimulation that music does not have, making it more likely to go viral.

• Music has massive incumbents in Spotify and Apple Music whereas OpenSea doesn’t have a household name as a competitor where digital art was bought and sold.

That being said, we should encourage the current landscape of Music NFTs to keep building during this period of market downturn. I don’t think many will survive, but those that do should be embraced by the community much more than the industry incumbents that have de-valued music and the musical experience for decades.

Spotify’s editorial playlisting model currently runs the new music industry. Getting on a Spotify Editorial Playlist can mean hundreds of thousands or even millions of new streams. It is the benchmark on what many artists consider a success or not when they release new music.

Look at the titles of the playlists above. These are some of the most popular playlists on Spotify. As someone who runs a label that releases high quality instrumental music for the most part, I have a love-hate relationship with these playlists.

On the one hand, when one of our artists gets selected for one of these, we know they will be happy and we will see more revenue, but these playlists are DEEPLY flawed.

They are populated by fake artists throughout (another article to come on that) and they encourage passive listening. A lot of the top artists on some of these playlists would struggle to sell out a 100 cap room in London, New York or LA. That is because the music is to be played in the background as the listener is pre-occupied with something else.

Passive listening is of course perfectly fine as a concept. Everyone listens to music in the background from time to time, but these playlists have made passive listening the primary way that people now listen to music.

How many people who listen to a piece of piano music on one of the above playlists will go into the artist’s profile and follow them, and do the same on social media? Sign up to their mailing list? Go to a show? It is massively unlikely.

This results in artists having a very wide, vague and horizontal listenership, with no way of connecting to the fans that DO love them. There is no way to distinguish the super fans from the passive listeners on DSP backends. Spotify and others don’t provide the analytics to filter by amount of plays per user.

This bottom-up approach is detrimental to an artist’s progression. If the artist could properly reach their super fans, they would be much better off than having hundreds of thousands of active listeners who will listen once and leave.

That said, we’re not sure if Music NFTs are the answer to this either, from a musical perspective, but they definitely would re-evaluate the artist/superfan relationship.

Cherie Hu from Water & Music has her own take on this, which is food for thought.

https://twitter.com/cheriehu42/status/1530197157223055368?s=20&t=DGFWNUGDAoPSz3O9mwX4mQ

It should be noted that this is the case for all genres of music, not just the ones that populate the example playlists listed above.

It would be very interesting to access some of the data that Spotify glean from this experiment with NFTs. I would posit that this won’t result in too many NFT sales, and that Spotify will not roll out a large-scale NFT offering in the short-term.

This is because there is still a very big gap between the mainstream music consumer and the person who buys music NFTs. There is a large barrier to entry - from learning about metamask, private keys, buying cryptocurrency etc that means that most will not buy even their favourite artist’s NFTs for a while to come.

Overall, these larger companies that operate in the music world will more than likely come into the web3 music space in a meaningful way, but their offerings in the longterm will more than likely not look anything like what their offerings are today.

The larger labels and streaming providers are all hiring crypto native people at the moment, looking to front-run the opportunity.

Whilst it is good that they are interested, and whilst it will be good if they participate in the ecosystem’s growth, we should not let them front-run the opportunity any longer.