The challenge of how to deliver engaging, high-quality user experiences becomes ever more central as music NFTs continue to push into the mainstream. Building a robust and sustainable music culture means offering an experience that does not centre on users’ wallets or trading volume, but on NFT music players, playlists, and personal collections that feel genuinely beautiful to interact with. Ultimately, this means a good streaming experience: the layer of web3 where these activities will be based.

As you might expect, web3 streaming looks decidedly and fundamentally different from its web2 ancestors – and this difference is most apparent in the economics; in how users discover and experience music; and in how longer-term engagement and fan relationships are built.

To understand how web3 is changing the streaming economy, it’s instructive to first get a sense of what is broken in the old system. There’s ample evidence that subscription streaming in web2 has been a race to the bottom, pushing down artist royalties down to as low $0.003 per stream and favouring major label artists at the expense of every other musician.

Part of the problem stems from classifying streams as a sale (like an album sale) rather than a rental (like being played one the radio), and from the ‘pro-rata’ model used by the likes of Apple Music and Spotify, where subscription fees are bundled together and then paid out based on the total number of plays an artist gets globally. This cuts the connection between artist and fan, meaning that, regardless of who you actually listen to, the majority of your subscription fee will likely go to BTS and Beyoncé.

In 2021, the UK government estimated that musicians now need one million streams per month to earn a living wage, and that only 0.4% of artists actually achieve this. At the same time that artist royalties fell off a cliff, revenue for the music industry as a whole rose by 54% from 2014 to 2020. In short, there’s lots of money around – it’s just not finding its way into the pockets of musicians.

Despite this evidence, the UK’s antitrust regulator (the Competition and Markets Authority), has, in what has been widely regarded as a win for major labels and streaming platforms, decided not to pursue any further investigation or action to improve the country’s royalty system, which is generally duplicated with few tweaks across platforms worldwide.

Rather than wait for governments to level the old playing field, artists and builders are coming together to build a new one. For example, Sound combines streaming with the mechanics of a marketplace. Artists can host ‘listening parties’ to promote new releases and fans can listen for free but are encouraged to support music they like through direct NFTs purchases, with 100% of sale profits remaining with the artist. Rather than financially supporting the platform through a subscription fee, the platform facilitates fans connecting and supporting the artists they care about. Sound artists have earnt over $3.3 million from fans (£2.7m), with almost 11,000 tracks published on the platform.

By comparison, Audius focuses on the streaming experience, rather than the marketplace. Artists can display NFTs on their page and embed links to marketplaces like OpenSea, but monetisation is primarily achieved through artist investment in the platform itself, via their native $AUDIO token. Users and artists can purchase tokens directly, or earn them through making and sharing playlists, hitting the ‘top weekly plays’ list, or by participating in remix competitions. The underlying principle is that those who add value to the ecosystem gain a stake in the platform – which has 60,000 users – and should benefit from its future growth.

These are two distinct examples, but it’s worth pointing out that there are many more. In comparison to the heavily consolidated web2 streaming market, where Spotify alone has captured 31% of all subscribers worldwide, the current topography of web3 music streaming is notably diverse. Approaches like streaming royalty splits, resale royalties, and finder’s fees for curators (amongst many more models) are all the subject of entrepreneurial experimentation in the space at the likes of Catalog, Opus, and Emanate.

When it comes to the issue of continued engagement and relationship building, a platform like Decent shows how elements of the web2 streaming economy and NFT sales can be combined to let fans and musicians develop longer-term and deeper connections. Using the platform, artists can mint a track and allocate a percentage of future streaming royalties to fans who purchase the associated NFT, which fans can stake (commit not to sell their NFT) in exchange for further perks. Big artists are embracing the model: The Chainsmokers sold 1% of the royalties for their album So Far So Good to fans on the music platform Royal.

“Artists do not have the time to be responsible for community engagement,” Decent co-founder, Charlie Durbin, tells Culture3. “So there has to be incentives for fans to build that community around the artist organically.” By creating the infrastructure for the “post-mint relationship between artists and fans,” Charlie says the goal is to enable sustainable music careers within the web3 space build partially on an entirely new model.

“Music NFTs are great because they enable you to monetise your recorded music far more significantly than the incumbent system allows, but more importantly, they let you engage your community in an interesting way. What we've seen is that artists' biggest fans really place a lot of value in holding a first edition NFT. It makes them feel closer to the artist and that engagement can be really powerful as they grow their career.”

“When we set out to build, our mission was to provide artists an alternative route to the traditional label path”

— Charlie Durbin, co-founder of Decent

The platform, whose name is inspired by web3's decentralised ethos and the organisation's purpose "to be decent to artists", is combining music streaming apparatus with many of the functions that a record label would traditionally provide – something that was a conscious decision for Charlie and the founding team. “When we set out to build, our mission was to provide artists an alternative route to the traditional label path,” says Charlie. The platform realises this goal through NFT sales as a form of seed capital which helps artists get started and grow, and by offering “positive sum incentives that motivate fans to work on an artist's behalf in a way that can rival label resources.”

Then there are platforms whose primary focus is on improving how users discover and experience music on web3, going beyond the limits of a single chain. Aiming to unify the fragmented web3 media landscape by aggregating music NFTs into one simple hub, DNS is a leading multi-chain music platform. Shokunin, the organisation’s pseudonymous founder and CEO, has a refreshingly straightforward vision for what web3 streaming should offer:

“You should have a thing that finds all the music,” he says simply. “When you find an artist you like, it shouldn’t matter where they are: if they are on Ethereum or Polygon or Tezos, it shouldn’t matter if they put their music on objkt or Zora. You should just be able to play it and, if you want, buy it. It should work on mobile, it should work on your desktop, there should be apps, it should work on whatever.”

Platforms like DNS are tackling what is arguably the central challenge facing web3 music – how to drive mainstream adoption. For Shokunin, part of the answer lies in making the space fun rather than financial. “NFT marketplaces really revolve around the idea of holding, or flipping, or doing all sorts of financial transactions around the NFT. But when I talk to people, that's not what they're excited about – they're excited about the art.”

“When you find an artist you like, it shouldn’t matter where they are.”

— Shokunin, founder of DNS

Part of reframing web3 as a creative and cultural space means abstracting away much of the complexity that has characterised early development in web3, and instead giving users an easy to use and aesthetically engaging experience. “If you want people to enjoy web3,” Shokunin says, “as opposed to just trading and investments, it needs to be as usable as web2; it has to be fun, and delightful, and have interesting content.”

Usability is one piece of the puzzle, the other is discoverability. The organic growth of web3 music has resulted in a number of siloed communities, which has been both a blessing and a bane. That these spaces have been able to evolve along separate lines is part of what gives the music produced its distinctive character and flavour. At the same time, as the number of music NFTs increases it becomes increasingly hard for listeners to navigate these siloes.

An entire generation has now come of age with near effortless discovery and playback being the norm; Spotify has over 70 million songs, Apple over 50 million. To truly compete, listening to web3 music shouldn’t need to be a ‘deep dive’ but instead part of a person’s casual listening habits.

“We need to have really good discovery mechanisms,” says Shokunin. “The algorithms that exist at the moment are very focused on finding things that do a lot of trading – if you go on to marketplaces, they're very focused on the latest mints or the top selling thing for the past seven days. And that's it.”

DNS tackles this paradigm by having a number of in-house curators, who seek out and promote music, not because a track may have a particularly high resale potential, but for the sake of the music. “We try to replicate more the experience of a music magazine,” Shokunin says. “The user comes in and we’re like ‘hey, check out this band – they’re doing lots of cool stuff that you didn’t know about'.” As a result, the tracks on DNS' front page range from hip-hop by Jburn to spoken word poetry from Laurence Fuller.

There is a palpable excitement in web3 music that seems to remain consistent, even during the tumultuous highs and lows of the wider space. That unwavering optimism may stem, in part, from just how dynamic and fresh the ideas feel in comparison to the entrenched culture of the traditional music industry. “Music is ubiquitous in our lives,” observes Charlie. “But it is a tiny and stagnant market by comparison to its impact. You would think the market would be clamouring for infrastructure upgrades and new monetisation tools.”

Young and emerging artists are migrating to web3 because they are sick of waiting for change to come from the top. The challenge now is to develop tools, techniques, and infrastructure that retain the best of the disparate approaches that web3 has nurtured whilst making the space accessible for a mainstream public. The push for user-friendly designs, engaging mechanics, innovative discovery models, and new economic models are all part of achieving that goal.

Mainstream adoption will not happen overnight but, in Shokunin’s view, the time to start planning for it is now. “You need to do more than make current users happy, you need to start thinking about the bigger stuff, like, what's gonna bring in and excite those users who don't exist in the space yet? How can they discover the best content in web3, and experience it in the best way possible?”

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