Many reports question whether Spotify fairly compensates musicians. While the popular music streaming service has yet to divulge exactly how much it pays, industry experts have suggested that its payment rate for recordings is nearly $ 4,000 per million streams, or less than half a cent per flow. However, NFT is here to save, at least, according to Saxo Bank.
NFTs vs. Traditional Streaming Platforms
Saxo believes that the outlook is bright for NFT technology despite all the initial chaos and hype. According to one of Saxo Bank’s Outrageous Predictions 2022: Revolution, NFTs’ use case can prove compelling to those musicians and artists who feel exploited or unfairly treated by the existing streaming platforms and their revenue structures.
On a related note, Danish investment bank cryptocurrency analyst Mads Eberhardt’s blog post said:
“These models don’t guide individual subscribers’ fees to the actual music an individual subscriber listens to. Rather, all subscription fee revenues are aggregated and distributed based on every artist’s share of total streams.”
Streaming platforms also generate a massive reduction which, if combined with the reduction paid to labels, totals up to 75% or more of total revenue.
NFT Challenging the Music Industry
The infrastructure of the current music industry has left both artists and their fans with just a handful of viable alternatives. The dominance of major record companies is dwindling. The reason – Spotify. Its third-quarter earnings show a 27% year-over-year surge in revenue to a whopping $2.8 billion.
In addition, the audio giant’s gross margin increased from 24.8% a year ago to 26.7% in 2021, which allowed it to raise more than $ 100 million in cash flow. free in the third trimester.
This trend may change as individuals around the world are paying close attention to the cryptocurrency and blockchain industry. In 2021 alone, many musicians, sportspeople, and artists have flooded the NFT scene and are cashing in on it.
Eberhardt de Saxo, for his part, is quite confident of his success. By citing the use of smart contract blockchain networks, musicians can eliminate the need for a centralized entity and distribute their creations directly to their listeners. The decentralized process would help artists get paid in real time while still retaining the revenue cuts that typically go to streaming sites.
In a not outrageous prediction, the analyst predicted that NFT-based music streaming services will emerge that will feature the likes of Katy Perry, The Chainsmokers, and Jason Derulo. The trio has already been involved with the blockchain music platform, Audius. Slowly, Eberhardt believes that musicians will pull off their music from the mainstream platforms, which will be “terminally disrupted.”
