How do you onboard a billion users into web3?
That's the question every NFT startup is asking themselves every minute of the day.
And sure, perhaps one of those startups will crack the code or come up with the killer app that ushers the masses into web3. But a more likely scenario is already established giants entering the web3 game and offering their hundreds of millions of users an enhanced (and profitable) experience using NFT technology.
Imagine YouTube suddenly enabling NFTs and issuing some kind of token based on your lifetime viewing hours on the platform. Or imagine Facebook converting all of the times your content was liked and issues a similar token. Suddenly users will have thousands of dollars worth of NFTs just sitting there and waiting for them to convert. Perhaps the haters will still hate, but history shows that most people love free money. And that's what NFTs are turning out to be in a lot of cases.
Spotify is the latest web2 giant to throw its proverbial hat into the web3 game as they've announced that NFTs will be integrated into the platform. We have yet to see the details of how this will take shape. Will they let artists mint NFTs that lead to gated merch? Will artists be able to mint unheard tracks and demos as NFTs? Will every single track eventually be an NFT? We'll see in the coming months what they have in store for the platform.
The interesting thing I see with music NFTs is how they fundamentally change how musicians are compensated. With the actual smart contract of the NFT, royalties become fair and automated. A fixed, artist favorable percentage will flow back to the artist. This already is a huge course correction to an industry that has famously undercut the very people creating the value. However looking at how smart contracts can revolutionize the music industry gets even more intriguing.
In the past, musicians would collaborate with other musicians and enjoy a split in royalties. Or one artist would ghost write for another artist, and get a cut of the pie. What music NFTs offer, is the chance for this collaborative spirit to work at an unprecedented scale. Instead of artists needing to work with lawyers to broker royalty collaborations with other artists, the collaboration rights are already built into the smart contract of the NFT. This opens up a wild new way that collaborations could work.
With music NFTs, artists can sell their tracks, or samples, or stems, and their listeners will be able to collaborate with them and participate in a fair share of the profits. Imagine an artist minting a track as an NFT. Their fan buys it and has the rights to use it as the track on their TikTok video. As the video is played, it generates royalties that will be split between the artist and the fan. Imagine if the TikTok video goes viral and gets millions of views. Add this royalty multiplier to the NFT and the smart contract is rewarding the artist and the fan automatically. Now imagine an artist creates a hit song that thousands of fans use to create their own content. Suddenly the artist is getting a whole new stream of revenue from every fan who is creating content using the song. This model doesn't exist now, but is precisely what music NFTs can offer.
As Spotify enters the NFT space, they could be the ones to establish the ground rules on this new model. They could empower artists on their platform to mint songs as NFTs and earn additional revenue beyond their streaming money (which has been much maligned). By adding a new way for artists to make money from their music, they could incentivize artists to stick with the streaming service as they pivot meaningfully into the NFT space. This would be the equivalent of Netflix pivoting from DVD sales into the streaming game. This could be the first meaningful web2 to web3 transformation. And with the pivot, 400 million Spotify users could turn into newly minted NFT users overnight.
Of course, YouTube or Facebook could also make the pivot to web3 and bringing their billions of users along for the ride. At some point, they will all make the switch. Maybe at first in a small, experimental way. Or maybe they will boldly go all in with a splashy token airdrop that announces their pivot and rewards all the NFT naysayers with fat stacks as a balm for their potential hate. Once people see how NFTs don't really change things, and that they only empower people to profit from doing what they are already doing, the tides of sentiment will change on NFTs and we will officially enter the widespread adoption of web3.
And once we go full web3, we will never go back to an era where we didn't own our content and where we didn't have the opportunity to be co-owners of artists content. We are about to enter the era of artist to fan mass collaborations. We don't know what this will mean, but the possibilities are fascinating.