If you apply Gartner’s famous hype cycle methodology to web3 technologies and music, where do we stand in 2023? The peak of inflated expectations was some time ago, but are we still mired in the trough of disillusionment?
Or, perhaps, are we making our way up the slope of enlightenment, with well-calibrated bullshit meters helping us to figure out how web3 can really help artists, fans and the music industry?
Thankfully, there was more enlightenment than disillusion during the web3 panel at the Music Ally NEXT conference this week, because we hand-picked a panel of thoughtful music AND web3 lovers, rather than drunk-on-their-own-disruption crypto bros.
Here are some of the key learnings from the session, which was moderated by Neume maintainer Dan Fowler.
The NFTs backlash is a chance to recalibrate
“Utility’s a word that is bandied around a lot, but we need to really take the opportunity to look at the actual usage,” said Charlotte Caleb, artist manager and Elleven co-founder.
“If I’m an average fan, what purpose does an NFT or web3 technology have for me? What does it do? We need to take the opportunity of this downcycle to really look into that, and talk to artists and their communities.”
Katherine Bassett, community lead at Water & Music, said the end of the “gold-rush period of the bull market” is a chance for artists to take a wider view.
“Artists are going to have to integrate web3 strategy more holistically into their careers rather than that be the one thing,” she said. “The times when you could drop an NFT and then retire are over! It’s a good time now.”
“It’s iterating: testing things out, seeing what works,” agreed Caleb. “It’s having fun with it, and seeing what your fans respond to and what they don’t.”
She later encouraged artists not to assume that, for example, a $150 NFT is the obligatory starting point. “It can be giving away a free NFT when fans attend a gig, so you have their information going forward,” she said. “You can literally start small and just build from there.”
Utility may often simply be community
Jeremy Stern, co-founder of Catalog, pointed to a piece of recent Water & Music research about the fan journey in web3 that ran counter to some of the assumptions about ‘utility’.
“A lot of collectors don’t have a huge expectation of any sort of utility outside just being able to have a one-on-one connection with the artist, or seeing some recognition from them,” he said.
Bassett expanded on that by explaining that a sense of reciprocation: a continuous exchange between artists and their fans, which she compared to the existing ‘web2’ social media environment.
“In web2 there’s a lot of expectation on artists to constantly pump content to fans, whether that’s social media or other means, and for the fans to just passively consume it,” she said. “That is a dynamic that has been turned on its head by web3.”
Bassett suggested that a landscape of Discords, web chats and two-way interaction with fans is much more sustainable for artists, although she stressed that “I don’t think anyone is saying that artists should delete their Instagrams and just live on Discord: they’re very different platforms”.
A lot of effort but is there enough return?
Bassett also described a tension between the amount of work that has gone into launching web3 communities and/or NFT drops, and the returns that artists can realistically expect to get.
“It’s labour intensive. Hours of Twitter Spaces. Often reaching out to collectors individually. One-on-one wallet support! Artists end up being tech support for collectors often,” she said.
“But if you can’t expect the same returns any more, how much time can you really invest in this?”
Caleb returned to this theme later on. “When artists are approaching a community around themselves, that’s quite a lot of pressure,” she said.
“When you’re an artist and thinking about how you want to build this superfan community: how do I structure it? How do I see my involvement? What can I reasonably give of myself to that community, and what cadence?”
“It would be really crap if an artist built a really great community and everyone was really involved, but then they lost interest halfway though. So it’s thinking about that strategically before you jump into it.”
There’s no one dominant web3 music format – and that’s good!
Butter founder Vaughn McKenzie-Landell offered his own comparison between web3 and the past, noting that in music there has traditionally been a single, dominant form factor or business model per generation. Not so in web3.
“The difficulty in web3 is there’s no Facebook-controlled algorithm that you can try and game. No Google search that you can try and game with SEO. No Spotify streams that you can try to game,” he said.
“It’s this open, expansive universe where you can create any kind of digital relationship with a fan. Any kind of digital product. And that’s actually quite daunting. If you can build in any direction, there will probably be no dominant paradigms in on-chain music or web3 music.”
McKenzie-Landell thinks there will be disruption though. “Something that looks kind of dangerous to the existing model, that really challenges the major label streaming paradigms. Something that really subverts payments and revenue, outside that system.”
Curation is important for web3 music… as is weirdness
Stern estimated that there are around 5,000 artists minting their music in the web3 space, but likely closer to 2,000 doing it actively. That’s still a small community, but he expects it to grow, and sees careful curation as a key part of that.
This is partly about avoiding copyright controversies – “if you’re starting with an open tool for [uploading] music, you are effectively putting a target on your own head” – but also about expanding the range of artists who are exploring web3.
Catalog has a curator program that is “bringing new communities and sounds on-chain that otherwise probably wouldn’t be there, or wouldn’t get as much attention… music that comes from all places in the world, and different classes and communities.”
In one sense, this is about keeping the web3 music world, well, weird. About fostering individuality, niches, and music and artists that haven’t had their sharp corners filed off to prosper in any particular recommendation algorithm.
“What artists I speak to really like about this web3 element of filtering down your fanbase [to the superfans] is that you get to be your weirdest self,” said Caleb.
“You’re not fighting with Love Island models and the algorithm for exposure on Instagram. Half the time on Instagram, your fans don’t even see your content unless it trips the algorithm in some way.”
“Artists so often are looking at what other people are doing on those platforms. ‘They’ve got x followers and they did this, so how can I emulate that?’ In web3 it’s all your own journey. You can find your people, and they will like the weirdness of you.”
Bassett later offered a warning on this front: that some web2-style success metrics have been creeping into the web3 world. For example, artists judging their success by their “number of collector wallets”.
“It’s really worrying: almost a complete replication of web2 success metrics,” she said. “I don’t think it makes sense for web3. It’s something that artists and platforms should definitely challenge and think about critically.”
“web3 could be an ecosystem where the weird subcultures thrive, and aren’t made toothless by the algorithmic impulse of web2. So focusing on volume as a success metric would be a step away from that.”
web3 and AI music: a shift from stock to flow?
A question about how web3 technologies might intersect with AI-generated music led McKenzie-Landell to talk about the economic concepts of ‘stock’ and ‘flow’.
(The former being a variable that is measured at a certain point in time – it’s static – while the latter is one measured over a period of time.)
He thinks music has often been valued on a stock basis, but that this is being eroded – potentially – by the emergence of deepfakes.
“If your music is something that can easily be replicated, as we’ve seen with the Drake AI songs that have been released, and done so quickly, it really does change the way you have to think about music and its role,” he said.
“For artists who are revered for the way they make music when everybody can’t, and can command an audience when everybody can’t, AI seems to be eroding that stock.”
McKenzie-Landell’s view: artists won’t be able to rest on their laurels because they’re famous and talented. “They need to move into this world of flow, producing community, which is more about the relationships you have,” he said.
“It’s not static. If you’re not showing up every single day with new things to say and new experiences that people can go through, you’re losing out… They’re going to have to do more: be more active, do more things.”
The question is whether web3 can help artists with that challenge. “I think web3 has a massive counterbalancing effect on AI,” he said. “I don’t know what it is, but I assume it’s there. I hope it’s there! I’m rooting for crypto.”
Stern pointed to artist Holly Herndon’s Holly+ project, which open sources her voice as a music creation tool, but has built that most web3 of business models – a DAO – around it to split the royalties when the results are released commercially.