# Web3 Labels

**Published by:** [Coopahtroopa](https://paragraph.com/@coopahmirror/)
**Published on:** 2022-07-05
**URL:** https://paragraph.com/@coopahmirror/web3-labels

## Content

Artists want to be heard. Whether it's Spotify or TikTok - strategic partners share one goal: more fans. When it comes to music, record labels are the strategic partner that every aspiring artist strives to work with. There are three major labels in the music industry today: Universal Music Group (UMG), Sony Music Group (SMG) and Warner Music Group (WMG). In this post, we’ll explore the role of labels today, and how web3 labels are working their way into the picture. If you found this article helpful, subscribe to my newsletter to stay up with more regular content on web3 music.The Role of a LabelLabels exist to develop artists. The mission is to grow an artist’s career by providing them with the resources they need to scale. Their services can be summarized into three categories:Capital - Money to make records. Distribution - Humans to handle administrative work and get more plays.A&R - Connections to platforms and mentors to develop the artist.Typically, an artist will “sign” - or partner with - a label through a record deal. Once signed, the artist is added to a roster of other artists working with the label, starting their official working relationship.A Typical Record Deal in 2022Let’s explore a developing act that has over 1,000,000 monthly listeners on Spotify and a TikTok song with some buzz. When creating an album, the artist (and their team) will either pitch (or be approached by) a label with:$500,000 budget + advance80/20 master royalty split (in favor of the label) 3 project (or 30 song) option10-15 year reversion clauseIn layman’s terms, the artist will receive $500,000 for 80% of the master royalties on their next 3 albums (or 30 songs) over a 10-15 year period before they can request ownership back. The $500,000 is an advance, meaning that it must be fully recouped (or repaid) before the artist starts to earn their 20% of royalties. The advance is usually split 50% as an up front payment and 50% upon the delivery of the album - subject to label approval. This means they get $250k today, and the other $250k once the label agrees upon the project they want to put out. In exchange, the artist receives a:$500,000 budget.Label representative(s) responsible for handling their requests and needs.Personalized marketing plan, an exclusive network of playlist opportunities and potential partners.All sounds great right? Let’s unpack.How Deals UnfoldNot all artists are treated equally. Every label has “priority” artists, or those who are expected to make the most money. Priority artists receive the most capital, time and resources. If you’re a priority artist at a major label - life is good. You’ve got a fantastic credit line, a team fully dedicated to your success and a network of ever expanding connections. Unfortunately, most signed artists are not priority artists. Oftentimes, the A&R who signed the artist has left to another company, moved up the chain or got canned. More times than not, the artist is unable to recoup their initial advance, leaving them in debt and in a tight spot with their label. This leaves the relationship in a weird place where the artist has no trusted connection at their label and little to no leverage until their tracks perform well financially. This is why you tend to hear about more artists wanting out of their deal than being stoked to be in one. Let me be clear: labels are not intentionally malicious. They are a business looking to make a profit. Coop 💿 @Cooopahtroopa The most common misconception about Music NFTs: It’s not fuck the labels. It’s help the artists. 722 5:43 PM • Feb 12, 2022 If a signed artist does not perform well or changes the direction from what was originally promised, it makes sense that tensions arise as both parties look to find a middle ground. So - where do artists turn when the existing system is not working in their favor? Community ownership. Enter web3.Quality over QuantityWeb3 has worked best for creators who focus on the quality of individual fans over the quantity of total fans. Coop 💿 @Cooopahtroopa Web3 shows that the quality of a community is exponentially more valuable than the quantity of its followers. 453 1:37 PM • Oct 26, 2021 Instead of optimizing for play count, web3 encourages artists to optimize for superfans. This model is best exemplified by the concept of 100 True Fans - or the thesis that a creator only needs 100 fans willing to pay $1000 per year to make six figures. With the rise of platforms like Sound, Catalog and Decent - Music NFTs are creating a new mechanism to identify superfans. The thesis is simple - find 25 fans willing to buy a collectible version of your song. Coop 💿 @Cooopahtroopa Selling 25 Music NFTs at 0.1 ETH pays more than a million streams on Spotify. Let that sink in. 3,920 4:44 PM • Jun 4, 2022 In the case of Royal - you can even sell royalties of your song directly to fans! Seems easy enough? Not quite. It’s not only about web3. Artists also need to leverage platforms like Spotify for distribution and discovery. The winning formula is somewhere in the middle - balancing web3 superfans with a strong distribution funnel in web2. This is where web3 labels come in.Web3 LabelsThe existing market of Music NFT collectors is tiny in comparison to those with a Spotify account. I’d guess there are ~10,000 unique Music NFT collectors in the world, compared to more than 182 million premium subscribers worldwide on Spotify. While the number may seem laughable, here’s where web3 labels start to develop their edge.Leading Web3 Labels & CollectivesOn top of growing an artist’s career, web3 labels zoom in to find and build relationships with superfans. This can broadly be categorized into three areas:Community - Deeper social engagement among fansTreasury - New on-chain revenue streams and strategic fund allocation.Governance - Transparent decision making to incentivize contributions.Realistically, web3 labels (today) do not have endless capital. In fact, they are very capital constrained. Instead, their value-add comes by offering grassroots operational services to find and retain those 100 True Fans. Coop 💿 @Cooopahtroopa Music NFTs favor independent artists. Web3 is the new record label. 1,383 6:01 PM • Jan 7, 2022 Areas where web3 labels shine include but are not limited to:Setting up and managing a Discord.Creating relationships with Music NFT platforms.Structuring the total supply, pricing and rarity for releases.Handling on-chain splits (using 0xSplits) and royalty allocations.Coordinating Twitter Spaces to create awareness.Writing governance proposals for Snapshot votes.Booking live performances at web3 events.Instead of offering a huge cash advance, many web3 labels will work in exchange for a percentage of future profits - leveling the playing field and creating equal incentives for both parties to benefit from one another’s success. Seeing as this might lead to web3 labels also prioritizing artists that are performing the best financially, new ownership structures can create more autonomy and less reliance on a label to succeed. More on this in a later post.Web3 LabelsWhile still early, there are a couple web3 labels leading the charge.Hume CollectiveAs the creators of Angelbaby, the Hume Collective is creating a playbook for the rise of Metastars - or digital artists who are born out of web3. https://coopahtroopa.mirror.xyz/jaCObLqSO0S7O7UB5RR9BJkXSWrro2EeX_ODH3CAqA0 Aside from recurring Twitter Spaces, the Hume Discord serves as the homebase for community discussions, votes and exclusive alpha.Dreams Never DieAs long-time curators who discovered acts like Billie Eilish, Dreams Never Die is helping artists tackle web3 through relationships with platforms like Sound and Catalog. The early-stage DAO was recently backed by Polychain, giving the rising label runway to hire full-time contributors and expand their ability to fuel artists careers, both in web2 and in web3. https://mirror.xyz/dreamsneverdie.eth/HMumx6VrRiIZSI5UQ88l4h0W_dKCQ9wU4VzFg0qXjCAVeniceThe rising web3 music collective Venice acts as both a distributor and a community hub - offering membership passes which grant holders access to a growing network of artists, collectors and operators. Spearheaded by Troy Carter, the Venice team brings decades of industry experience paired with a deep understanding of the Music NFT landscape to help artists take their first steps in the space. Venice Music @venicemusic Plenty of s from @justcallmetroy in his interview with @musicbizworld. "Right now, my bet is on the future. Blockchain is here to stay and it’s going to be transformational to the world: Music NFTs specifically." musicbusinessworldwide.com/troy-carters-v… 32 4:10 PM • May 23, 2022 Good Karma RecordsAs one of the earliest web3 labels, Good Karma Records was funded through Mirror, and has since gone on to host a number of events in LA along with signing their first artist - Daz Merchant. https://mirror.xyz/goodkarmagrady.eth/crowdfunds/0xf669F717AB2980A86078f4196dcAAFcBE4AF8577Web3 CollectivesThis goes in tandem with a growing wave of collectives, or communities which offer label-like services in a more grassroots fashion.SongCampThe collective behind Headless Chaos holds weekly Heartbeat calls every Monday at 1 PST. If you’re an artist looking to make waves in web3, SongCamp is your home. CHAOS @headless_chaos Well if it isn't us breaking into the "regular" world of music. Thanks for shining a light on us @billboard and showing all artists what is possible in the world of web3. billboard @billboard The project from artists collective Songcamp wants to rewrite the rules of collaborative songwriting, using NFTs to get paid. blbrd.cm/6wYzvZI 35 9:33 AM • Jul 1, 2022 The ParkStarted long before web3, The Park consists of leading minds in Friends with Benefits - spotlighting up and coming talent and curating spaces to bring new artists into the space. thepark.eth @thepark Made with friends on a Friday. Coming to you thiiiis Friday 6/17 @gflipmusic @soundxyz_ What’s your favorite PB&J? sound.xyz/thepark/pbandj 28 2:10 PM • Jun 15, 2022 LNRZIncubated by Reo Cragun, LNRZ DAO (pronounced “Loners”) recently announced their Freshman Class of artists set to debut the collective's first mixtape. LNRZ @lnrzxyz We’d like to Welcome @itsmarkjohns to the LNRZ freshman class. Undeniably talented, she was the first solo vocalist signed to Skrillex's OWSLA label. Born to Moroccan parents in Canada and raised in Singapore, she started performing covers while attending college in Miami. 59 3:12 PM • May 12, 2022 Key TakeawaysIf you’re an artist new to web3, familiarize yourself with these key players. If you’re a collector or operator looking to add leverage to your brand, web3 labels are a fantastic place to chip in. Almost every web3 label is in search of additional talent, and the experience you’ll gain from working closely with artists on their rollouts is invaluable. While web3 labels are nowhere near the size of the major labels of today - these projects should shine light on the role labels can play when it comes to artists taking advantage of new monetization models for music.Web3 ChallengesIt’s not all sunshine and rainbows. Coop 💿 @Cooopahtroopa 20 problems with Music NFTs today 856 3:21 PM • Mar 29, 2022 As web3 labels mature, it’s important to recognize some of their current shortcomings.Scaling - Newer labels will need to scale to meet growing demand. Experience - Very few operators have ever broken an act or worked with A-list talent.Copyrights - Songs have many contributors. Ensuring everyone is properly accounted for while copyrights are enforced is a huge challenge for Music NFTs.However - challenges create opportunities. While we’re far from any web3 label remotely rivaling a major, many of these challenges are a completely unique design space. These are the edges worth zooming in on.Closing ThoughtsThere’s a generation of artists eager to fully own their music and to explore new mediums for distribution. Web3 is purely one of those verticals, and one that seems to be working well for those who are consistent. While we’re still a long way away from finding the perfect model for web3 music, the above projects offer a strong complement to the existing label system we’ve all come to know so well. Coop 💿 @Cooopahtroopa Music NFTs. Q2 2022. 2,203 12:38 PM • Apr 27, 2022 If you’re an artist, manager, collector, builder or investor looking to expand your roots in web3, look no further. To keep up with the day to day movements of the sector subscribe to my newsletter - This Week in Music NFTs. Until then, keep a close eye on web3 labels. A new path is closer than you may think.Special thanks to Andre Benz, Reo Cragun, Li Jin, Justin Blau, David Greenstein, David Edmondz, Braedon Alexander, Brett Shear and Chad Hillard for their feedback on this post.

## Publication Information

- [Coopahtroopa](https://paragraph.com/@coopahmirror/): Publication homepage
- [All Posts](https://paragraph.com/@coopahmirror/): More posts from this publication
- [RSS Feed](https://api.paragraph.com/blogs/rss/@coopahmirror): Subscribe to updates
- [Twitter](https://twitter.com/Cooopahtroopa): Follow on Twitter