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A New Era of Creator Economy - Why Music NFT Will Rise

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Music platforms can be a bridge to convert more Web2 users to Web3 users.

Original title: "A New Era of Creator Economy—Why Music NFT Will Rise"

Original Author: Chloe@IOSG Ventures

Part .1 Insight A New Era of Creator Economy—Why Music NFT Will Rise

Music Industry in Misery

In addition to eating and sleeping, the most important way for people to relax physically and mentally, music should be counted as Top 3. Humanity's love of music is almost etched into our DNA. From a biological point of view, listening to music can reward and produce pleasure in brain circuits (such as the nucleus accumbens, ventral tegmental area, and amygdala brain area, etc.), and it can also regulate the production of the neurotransmitter dopamine. The same is true from the perspective of "the world is around you": there are many people around us who don't play games, but those who never listen to music are very rare. The music industry should have the broadest market.

Our previous article "P2E is unsustainable, how to find the next Axie Infinity" mentioned Maslow Human needs model pyramid, music is no different from games, and the essence of the music industry is also the consumption of the superstructure. However, as can be seen from the data of the two industries, the performance of the music industry is not satisfactory compared with that of games. Compared with the game industry, the total revenue generated by online music works and live concerts is still far behind. The consumption patterns of music and games are different, and direct data comparison does not seem to be completely accurate, but we can also see the plight of some traditional music industries.

Data source: https://www.statista.com/statistics/1132706/media-revenue-worldwide/

From the picture above, there are more than just industries related to the "creator economy", whether it is There are some dilemmas in literature, music, video or social interaction, which can be said to be common problems, such as:

- Creation

- excellent works are buried

- normalized copyright disputes

This article is the first in the "Creator Economy" series, focusing on the music industry. Discussions will be held around why the traditional music industry is in trouble, and how the arrival of the blockchain can empower the music industry.

The core problem is nothing more than the problem of "people". Music creation needs material support, and it cannot be completely "generated with love". The most important economic model of the traditional music industry is the "streaming media model". Simply put, every time people play a song on a Web2 music platform, such as Spotify or Netease Cloud, the creator can earn a small income. According to INSIDER's survey report, songs on Spotify can generate revenue of $0.003-0.005 per cycle.

This means that the same song is looped 250 times for the creator to earn a dollar. And this dollar will be divided up by copyright owners such as platforms and music companies, and the real benefits of creators are even more minimal. This is actually very difficult for non-"top-tier" singers and small musicians to benefit from it. In addition, the release and post-publicity of music requires a lot of manpower, material and financial resources. Without the help of music companies, even if individual musicians have good works, it is difficult to have a "successful day". "It is gold that will always shine, and there will always be rewards for hard work." This sentence seems too idealistic in the contemporary music industry.

Dawn - Music Tokenization

The advent of blockchain has brought dawn to the traditional music industry. The core of the encryption industry is "decentralization" and "ownership". Token can reshape production relations and empower the music industry to a great extent. To put it simply, the creator economy creates value, and there are different roles in the process of value transmission: value creator-musician, value transmitter-copyright company and music platform, etc., value receiver-audience. Value creators are undoubtedly the most critical link and deserve the most economic returns.

However, in the traditional music industry, most of the income is collected by copyright companies or streaming media platforms. It is an unhealthy and less efficient production relationship. With the help of Token, the Web3 music industry has more efficient and reasonable economic models than the "streaming media model". It can reshape production relations, reduce the importance of middlemen, and distribute more benefits to value creators.

Recently, many music projects have emerged in the encryption industry, and their economic models can be divided into the following four categories. Some projects use a single model, while others are a mixture of several models.

1 .Streaming media model, representative project: Audius

The economic model of Audius is not fundamentally different from traditional music platforms , are all "streaming media mode". Since Streaming is the leader of the traditional music industry, it must have its merits. First of all, it is more friendly to musicians with a large fan base, and second, both music companies and listeners are more familiar with this model. Therefore, platforms like Audius can quickly attract a large number of musicians and listeners.

One of the important breakthroughs of Audius is to optimize the revenue sharing ratio. Compared with Spotify and other music platforms and copyright companies, Audius transfers the benefits of the platform and returns more income to music creators, which solves the problem of insufficient income for creators to a certain extent.

But in essence, Audius did not subvert the traditional streaming media model, nor did it make good use of Token effect. Fortunately, the exploration of the economic model of the Web3 music platform does not stop there.

Web3 applications all have a common core, namely "crowdfunding", and music platforms are no exception. "People" means that musicians and listeners no longer rely too much on "middlemen". Under this framework, musicians, as value creators, can obtain most of the income. The music platform is a simple "work aggregator", a place where creators and listeners can directly interact, rather than an industry oligarch that accounts for most of the income. Listeners also have a greater right to choose to support their favorite musicians, rather than being determined by capital to listen to what to listen to.

Around the core of "crowdfunding", three innovative economic models have been derived.

2. Pure NFT mode, Representative projects: MintSongs, Pianity

Pure NFT means NFT that does not represent copyright, so it will not bring Earnings other than secondary market spreads. The soul of the pure music NFT platform is the "fan economy". This is my favorite model, but also the one that investors find hardest to understand. Fans are different from investors. Investors are looking for returns, but fans are "generating love". For the benefits of real money, fans pay more attention to the "emotional maintenance" brought by fan peripherals such as NFT. And Pianity is created by capturing this fan psychology.

This mode has many benefits. The first is that the form of NFT is unlimited and very flexible, and the quantity and price can be determined by musicians. If the musician has a group of "die-hard fans" who are willing to pay a high price for NFT, then the musician can choose to issue a limited number of high-priced NFT. If a musician does not have many "die-hard fans" but has high "pan popularity", he can issue a large number of low-priced NFTs for passer-by fans to "reward".

This realizes the "three-level price discrimination" in microeconomics-setting different prices according to different demand elasticities The price can capture more consumer surplus and bring more income to musicians. Secondly, pure NFT does not involve the distribution of copyright, so it does not constitute a direct competition with traditional streaming media platforms. Many "top stream" musicians may not be willing to distribute their copyrights. Therefore, the pure NFT mode has higher operability and feasibility. Most importantly, pure NFT is the model that is most beneficial to niche musicians.

Imagine that a musician only has 10 fans, if on a traditional streaming media platform, these 10 fans contribute The revenue from listening volume is negligible. But if these 10 fans buy the NFT of the musician on Pianity, it will bring more considerable income to the musician without affecting the copyright income of the musician.

Image source: Screenshot of Pianity official website, the picture shows the musicians who are about to enter the Pianity platform. Token holders can vote to determine the order of the musicians.

In addition, Pianity can also solve the problem of unfair push mechanism of traditional music platforms to a certain extent. On traditional music platforms, the songs that appear on the homepage of the platform and the daily recommendation list are determined by the platform. And Pianity puts that power in the hands of the listener. Listeners can vote through staking to decide which musicians can occupy more display resources or be given priority.

3. Copyright distribution mode, representative project: Royal

As the name suggests, this model uses NFT or Token as a carrier to distribute copyrights to investors, and investors obtain part of the song ownership. This model makes more economic sense. Investors spend money to buy the song in anticipation of the future, and if the song is a hit, they can get a higher future cash flow.

Compared with middlemen such as music platforms and copyright companies earning the difference, this model allows musicians and investors to obtain most of the income. However, the implementation of this model has more difficulties. For example, compliance issues related to copyright, how to efficiently collect and distribute profits, etc., need to be further explored, and Royal is the "leader" in this track.

4. Crowdfunding model, representative project: Ocean Floor

With the rise of the "crowdfunding economy" in mainstream industries, people's understanding of this concept has become clearer. In short, fans, companies or creators themselves initiate crowdfunding to provide financial support for music creation. Creators can choose a variety of ways to give back to the audience, and fans directly invest in music works, which can give them a great sense of "participation". This model puts the payment in the front and the return in the back. The music works can only be heard after the crowdfunding is completed. It is necessary to design an effective incentive mechanism and governance mechanism.

SocialFi - Looking to the future

Why is the music industry and the creator economy in general important? We believe that the Creator Economy and SocialFi, which have their own social attributes and use social platforms as carriers, are important opportunities for the encryption industry to go mainstream.

First of all, there are many pain points caused by excessive centralization in traditional industries, and blockchain, as a powerful tool with the attribute of "decentralization", can truly empower Industry, from the production relations to achieve changes.

Secondly, social interaction is an indispensable attribute of human beings. Music platforms can be a bridge to convert more Web2 users to Web3 users. In order to achieve this goal, we have higher expectations for the Web3 music platform: the Web3 music platform should innovate the economic model, reshape the production relationship, and solve the plight of the traditional music industry; the new music platform should have a unique market positioning and precise target customer groups.

Finally, an often overlooked but crucial point is the optimization of the user experience to reduce the wear rate. At present, most Dapp operations are complicated and lengthy, and the entry threshold for Web2 users is relatively high. Only products with easy operation and smooth experience can attract a large number of Web2 users to migrate to Web3 and push the encryption industry into the mainstream.

Part.2 IOSG post-investment project progress

Moonbeam successfully won Polkadot's second parachain slot and increased 50% crowd loan reward

*Polkadot Smart Contract Platform

Polkadot Moonbeam, an Ethereum-compatible smart contract platform on the network, has successfully won Polkadot's second parachain slot. Moonbeam plans to start the Polkadot deployment process on December 17th, becoming the first Polkadot parachain fully compatible with Ethereum.

The Moonbeam Foundation has decided to add 50 million GLMRs to the crowd loan reward pool. The current total rewards have reached 150 million GLMRs, accounting for 15% of the initial Token supply , all Moonbeam crowdlending participants can get 50% more rewards than before. This Moonbeam crowdfunding event attracted more than 190,000 participants, contributing a total of more than 35.7 million DOTs (approximately US$1.39 billion). As a reward for participating in Moonbeam crowdlending, you can get 13.9821 GLMR for every 5 DOT you contribute.

Slingshot and Nansen now support Arbitrum

*Layer 2 Expansion

The decentralized trading protocol Slingshot is now available on Arbitrum, and has been launched on Polygon before. Slingshot was formerly known as the on-chain aggregation transaction protocol DEX.AG, which was renamed Slingshot after announcing the completion of a $3.1 million financing last year. Investors include Framework Ventures, Coinbase Ventures, Winklevoss Capital, Digital Currency Group, etc.

In addition, Nansen , an on-chain data analysis tool, has added support for Arbitrum, the second-layer solution of Ethereum, and is currently integrating data related to Arbitrum. Nansen has previously supported Ethereum, Binance Smart Chain (BSC), Polygon, and Fantom, and plans to add support for Solana in the first quarter of next year.

Oasis Labs Launches Emerald, an EVM-compatible ParaTime smart contract execution environment

*Privacy

Oasis Labs, developer of the private computing network Oasis, announces Emerald, the An EVM-compatible ParaTime smart contract execution environment. Oasis allows multiple ParaTimes (each capable of using a different virtual machine execution environment) to run concurrently on the same blockchain. EVM-compatible ParaTime will also enable Ethereum developers to quickly port native code copies of Ethereum and other EVM-compatible Layer 1 chains. According to a press release, Emerald claims "99% lower gas fees than Ethereum, high throughput and instant transaction finality."

Part.3 Investment and financing progress

Royal completes $55 million financing

* Music Tokenization Platform

Music Royal, a tokenization platform, completed a financing of US$55 million. A16z, Coinbase Ventures, Paradigm, and well-known musicians The Chainsmokers, Nas, Logic, and Kygo participated in this round of financing. In August of this year, Royal completed a $16 million seed round, with Paradigm and Founders Fund each injecting $7 million. Royal aims to upend the traditional record trade by tokenizing songs, splitting copyright into encrypted tokens that anyone can buy and trade, and may eventually allow fans to claim a small percentage of song royalties.

Polemos received $2 million in financing, led by Delphi Digital

* Games

P2E game association Polemos recently announced the completion of $2 million in financing, led by Delphi Digital and Framework Ventures, and founders of DeFi projects such as Sushi, Aave, and 1inch Exchange participated in the investment. It is reported that Polemos focuses on the game earning (P2E) game guild of NFT games, and is developing a GameFi learning management system, a decentralized guild asset exchange, and a player analysis for educating, tracking, analyzing and managing players platform.

Niantic raises $300 million from Coatue at $9 billion valuation* AR Niantic, the AR company behind Pokémon, announced Monday $300 million in financing from hedge fund Coatue at a valuation of $100 million. The company was spun out of Google's parent company in 2015 and is led by former Google executive John Hanke. The new funding will be used to expand the recently launched Lightship platform to help developers create in AR and build their vision of the real-world Metaverse. Niantic had raised $245 million in Series C funding at a valuation of nearly $4 billion in early 2019.

Staking Rewards completes CHF 3 million financing, led by Galaxy Digital, CoinShares and DCG

* Staking Data Website

Used to evaluate staking returns The staking data website Staking Rewards completed a financing of 3 million Swiss francs (about 3.21 million US dollars), led by Galaxy Digital, CoinShares and DCG, and participated by 1kx Capital, Sygnum Bank, CoinMarketCap and others. This round of financing will be used to develop new products and services, including the development of investable pledge index products. Staking Rewards previously raised CHF 1 million (approximately $1.07 million) in a Pre-Seed round led by Swiss Founders Fund and A&T Capital.

SpaceY 2025 completes $21 million Series A financing

* Metaverse Sandbox Game

Metaverse Sandbox Game SpaceY 2025 Completed $21 Million A Round of financing, investors include Ash WSB, Draper Dragon, Formless Capital, Huobi Ventures, Zonff Partners and Magnus Capital, etc. OKEx Blockdream Ventures also made a strategic investment in the game before. SpaceY is committed to building an open source metaverse platform, and the new funds will be used to further develop the SpaceY series of games. The SpaceY 2025 beta version was released in July 2021, and the full version is expected to be released by the end of November 2021. Steam and mobile versions are planned for 2022.

TabTrader completes US$5.8 million in Series A financing, 100X Ventures and others participated

*Aggregation trading software

Cryptocurrency aggregation trading software TabTrader completes $5.8 million A round Financing, 100X Ventures, Hashkey Capital, Spartan Capital, SGH Capital, SOSV and Artesian Venture Partners participated. TabTrader, which aggregates token prices from dozens of exchanges and collects rebate fees from exchanges when users make purchases through its app, currently has around 400,000 active users in Europe and Asia.

Avocado Guild Raises $18M in Series A Funding Led by Animoca Brands

*Game Guild

Play while earning guild Avocado Guild led by Animoca Brands It raised $18 million in a round of funding, bringing its valuation to $200 million. Other investors include Three Arrows Capital, Golden Tree Management, Solana, Hashed, Binance Capital Management. Avocado co-founder and CEO Brendan Wong describes the guild as a "metaverse within a metaverse" because it enables players to participate in multiple virtual worlds.

Greenfield One has raised $160 million in encryption funds, with participation from Galaxy Digital and others

*Fund financing

Berlin-based venture capital The company Greenfield One has raised a US$160 million (142 million euro) encryption fund and plans to invest in cryptocurrency projects. Galaxy Digital, German media giant Bertelsmann, telecom giant Swisscom, etc. participated in the investment. Greenfield One has invested in voting rights lending protocol Paladin, Bitcoin open source development non-profit organization Brink, and Web3.0 creator economy platform Darkblock. It focuses on European Web3.0 projects and is also an early investor in Celo.

Part.4 Industry Pulse

V God's article: Using calldata expansion and fragmentation to expand Rollups' step-by-step roadmap

*extended

V God released a "step-by-step roadmap for scaling Rollups with calldata scaling and sharding". In this article, V God stated that transaction fees on L1 have been very high, so it becomes more urgent to take any necessary measures to help facilitate the entire ecosystem's transition to Rollups. Rollup has significantly reduced fees for many Ethereum users: l2fees.info shows that Optimism and Arbitrum offer fees ~3-8x lower than the Ethereum base layer itself, however, even these fees are too expensive for many users up.

V God proposed 4 steps, the first step: tx calldata expansion, the second step: some fragmentation, Step 3: N shards and protected by committee, Step 4: Data availability sampling. But this leaves a question: if the Ethereum core protocol doesn't store this data, who does? V God proposed several possibilities: individuals and institutions; block browsers; Rollup DAO, client; portal network; protocols like TheGraph. Some of these solutions (individual and institutional volunteers, block explorers) are already available.

Ethereum Foundation: It is expected to launch the test network Kintsugi in early December

*Kintsugi Testnet

The Ethereum Foundation announced that its test network Kintsugi is expected to be officially launched in the first week of December, and released the specifications and plans of the Kintsugi test network. Currently, developers are making final adjustments. It is reported that the Kintsugi specification combines all the knowledge and minor adjustments of Amphora interoperability, aiming to incorporate new change sets and facilitate the implementation of The Merge. After the launch of the Kintsugi testnet, the relevant EIP and specifications will enter the last call state, and the public workload proof and testnet will undergo a merged transition in the new year. In addition, the Ethereum Foundation also announced that the Ethereum Arrow Glacier network upgrade will be carried out at block height 13773000 (about December 8th), and nodes must complete the upgrade before December 5th.

Data: The number of projects applying to build on IMX in the past 6 months has increased by 100 times

*Infrastructure According to

Immutable X recently retweeted, In the past 6 months, the number of projects applying to build on IMX has increased by 100 times. It is reported that Immutable X is the second-layer NFT expansion solution of Ethereum. Based on the ZK Rollup expansion technology, it can mint and trade NFT with zero gas fees. It is built in cooperation with StarkWare.

Rarible launches messaging service, after A standalone Web3 communication tool will be provided

*NFT

Rarible has launched a messaging service (Rarible Messenger) that allows users to communicate through their wallet addresses. Currently, this service needs to be carried out on the Rarible market, and an independent one will be provided later Web3 communication tools.

Meta Launches XLS-R Trial Version of Virtual Voice Processing Infrastructure to Solve Metaverse Multilingual Problem

*Metaverse

Meta has launched the XLS-R webpage trial version of the AI language processing model, which can recognize up to 128 languages, aiming to solve the problem of not being able to understand foreign languages in the Metaverse. However, the trial version currently has certain flaws. It only supports the translation of 22 languages into 16 languages, but its advantage is that it can split speech into basic units of 25 milliseconds to analyze and use context-converted speech content to improve recognition accuracy. Meta said that although the metaverse is still some distance away from us, technologies such as XLS-R can be used as one of the basic constructions of Meta's virtual world.