NFTs
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Warner Chappell Music is the first major publisher to step into Web3 through a new deal with Defient — a Web3 entertainment incubator. The deal will allow the Warner Chappell roster, which includes Bruno Mars, David Bowie, Katy Perry and Lizzo, to tap into blockchain technology through digital collectibles, events and memorabilia.
The first project is a digital museum launching early 2023 called “Archives,” which will shine a light on songwriters through an exhibition of music, artwork and collectibles built around the song creation process. A limited-edition NFT mint pass will also give holders access to highly curated drops, auctions and virtual experiences.
WCM believes the partnership will allow the publisher to unlock new methods of monetization. “By embracing the power of blockchain technology, we can create impactful new revenue streams and creative opportunities for our songwriters while giving music fans access to unique experiences,” said WCM senior vp of creative services Ashley Winton. “Not only are [founder & CEO] Sidney [Swift] and his whole team at Defient experts in this space, but they also have deep roots in music and know how to champion the voices of creators.”
Defient is a Web3 incubator with experience across the music industry and the emerging NFT landscape. Founded by Grammy-nominated producer Sidney Swift, Defient was instrumental in developing a Web3 record label, ChillRx, which has generated over $1 million in volume since launching in February 2022.
In a statement about the collaboration, Swift said, “We’re proud to be working with Warner Chappell as they expand into the web3 community that Defient is already so ingrained in. Having started my career as a songwriter and producer, it’s exciting to join forces with a forward-thinking partner and work towards making it easier and more accessible for songwriters and artists to leverage web3 platforms. Together, we want to use technology to empower creatives and help them elevate their brands.”
Major labels have already made the leap into NFTs via dedicated Web3 imprints such as 10:22PM at Universal Music Group and Probably a Label at Warner Records UK. Publishers have taken a slower approach, but WCM is optimistic that blockchain technology will offer new opportunities for its songwriters. “This is a unique opportunity to shape the future of music publishing,” said WCM co-chair and CEO Guy Moot and co-chair and COO Carianne Marshall in a joint statement. “With Defient’s support, we’ll be able to unlock new avenues in web3 on behalf of our songwriters and find different ways for them to grow their legacies and engage with fans.”
What happens when you let 5,555 music fans make decisions at a major label? Warner Records is about to find out through its new Web3 imprint Probably a Label. After selling out a collection of NFT access-passes, the holders will now gather in a Discord server to help develop artists together, share the credits of any future awards such as a Grammy, and ultimately offer intellectual property rights in some of the projects to NFT holders.
The experiment is a collaboration between Warner Records UK and Web3 brand Probably Nothing, whose debut NFT collection fetched $500k in seven minutes in October. Each NFT comes with different rarity and label roles (4,000 scouts, 1,500 managers and 55 label heads), allowing holders to vote on certain decisions. The rarest — and most expensive, currently at $2,138 — come with priority voting and access to exec dinners.
“This is a vehicle for us to explore new ways of working as a label,” says Sebastian Simone — vp of audience & strategy at Warner Records UK. For the first time at a major label level, fans will be involved in artist development, starting with the creation of a virtual artist. “[The virtual artist] will be built in conjunction with the community of holders through a voting system on design, storyline and other creative.”
Holders have already been gifted a free music NFT — “Money on the Table” by Diddy and Jason Martin — but the label isn’t just focused on NFTs. It will also run traditional campaigns to help break emerging talent within the Web3 space. Simone envisions a future where Web3-native artists developed through the label are “Selling out global tours, winning awards and crossing over into the mainstream.” There will also be crossover from the existing Warner roster where Probably a Label will act as the first touchpoint for established acts to experiment with NFTs.
Warner has been an early-adopter in Web3, launching the Stickmen Toys NFT project in August — an early experiment in granting IP rights to fans from a major label. Stickmen Toys holders own the full rights to the music and can use it however they like. Warner Records also landed the UK’s first ever No. 1 with a chart-compatible NFT release through Muse’s Will of the People. “WMG is focused on ensuring that our artists are deeply embedded in this world of Web3 so that they are not just using the technologies but helping to define them,” says Oana Ruxandra, chief digital officer and executive vp, business development. “We are putting a lot of time and energy behind this burgeoning space.”
Courtesy Photo
Rather than keep everything inside the Warner machine, however, the label partnered with Probably Nothing — a Web3 brand founded by former restaurateur and TV chef Jeremy Fall. The brand already has a community of thousands and previous experience with NFT drops including the Probably Nothing Genesis Pass which generated 879 ETH (~$1.03 million) in volume since launching in May 2022. The idea is to co-sign Warner’s NFT activities with an established name in Web3. “We’re in a new market exploring and learning,” says Simone. “It’s crucial we partner with people who have a deep, early-adopter understanding of new technologies and the culture.”
On paper, it’s a smart move. Many music companies and major label artists have blundered into Web3 without engaging with the existing community or taking the temperature of the market, leading to disastrous results and backlash. Collaborating with native Web3 teams appears to be a winning formula for bigger corporate entities.
For Fall, the venture allows him to dive deeper into music, which he says has always been part of his identity. During his days as a TV chef, he hosted a “Beats for Breakfast” show with Miguel. “Anytime I can be creative in a new way gets me excited. I have a vision on how I could help impact the music industry … and having Warner Records help bring those ideas to life excites me the most.”
The label’s biggest promise of all, however, is to “redefine IP ownership in music.” Although specific details are still cloudy, Fall says “We will be granting IP rights to certain [label] projects, depending on how they are structured … disrupting the traditional label model by opening the doors to sharing ownership in valuable content.” The team can’t yet confirm whether this will extend to the virtual artist currently in development or any of the songs.
Some of this IP experiment will also be explored in an initiative called Studio A and Studio B. “Studio A is our IP incubator,” explains Fall. “It allows our holders to pitch their existing [NFT-related] IP to us.” For example, if a member of the community owns a Doodles, Azuki, Bored Ape Yacht Club or select other NFTs, they can pitch an idea to the label based around the NFT, such as a music video, virtual artist, song or short-film. If accepted, Probably a Label will help provide resources, financing and marketing.
Studio B is more like a pooled music library. Anyone with a label pass can submit tracks to Studio B, and someone else from the community could use that music in their own project, such as a movie or sample for a beat. “If someone from our community wants to use one of the tracks for a project,” says Fall, “We will broker the communication between holders that allows them to license it.”
Critics might ask whether any of this requires NFTs at all. Fan voting mechanisms and shared communities can be created without Web3. Fall explains, “The traditional Web2 model doesn’t allow us to … give [fans] any ownership in projects. NFTs are this exact core that give people emotional ownership and value in projects they are a part of.” Important to note, however, that owning an NFT does not automatically guarantee IP ownership unless it’s explicitly stated.
In terms of providing value, the NFT label pass could be expected to rise if the label and its artists are successful, rewarding holders for their participation. However, the label will have to contend with the fact that the current price of the NFT (0.03 ETH) is now worth less than half the mint price (0.09 ETH). Anyone that purchased on the day of launch is now underwater unless they pulled one of the 55 rarest passes. While this is not unusual for NFT projects in the current down-market, it is uncharted territory for a major label that will now have to manage expectations of thousands of music fans who may have lost money on paper. The team isn’t fazed yet, though. “We’re focused on providing the best experience and value to our community,” says Simone. “The rest will fall into place.”
Almost five years ago, I wrote a column about how Bitcoin and Blockchain might change the music business. At the time, the question seemed more about how than if: An online merchandise store had just started accepting cryptocurrency, several entrepreneurs had founded startups to use blockchain technology to pay rights holders, and entrepreneur and then-Dot Blockchain CEO Benji Rogers predicted that “Blockchain technology is coming like a tsunami.”
I was skeptical. I called Blockchain “a solution looking for a problem” and pointed out that the only person I knew who had bought anything with Bitcoin was a former neighbor in Berlin who had purchased LSD online. At that time, Bitcoin was worth $11,631 and the Dow Jones average was 25,803.
As Bitcoin shot up — to a November 2021 high of more than $56,000 — more artists and music executives became certain that cryptocurrency and Blockchain technology would change everything. Artists sold NFTs — as did Billboard — and in February Coachella sold $1.4 million of NFTs, including 10 lifetime passes to the annual festival.
Now the cryptocurrency exchange FTX is in bankruptcy, Bitcoin is down to $16,099, and the U.S. will almost certainly regulate cryptocurrency “banks” and exchanges. In economic terms, that means cryptocurrency companies might have to compete on an even playing field with traditional finance entities, which would reduce risk for consumers but eliminate some of the advantage that startups get from making their own rules. In non-economic terms, Mom and Dad are home, they’re pissed, and they’re not going to let you run your business unless you can wear your big-boy pants!
So, what about that tsunami? It has been a busy five years for the music industry: recorded music boomed, major financial players invested in publishing catalogs, two of the three major labels went public, Latin music gained a bigger global audience, and TikTok emerged as a transformative source of promotion. Blockchain and Bitcoin barely changed the industry at all, though. A few artists made an insane amount of money on NFTs and a bunch of companies announced plans to fundamentally disrupt disruption itself. But Bitcoin is still an inefficient means of exchange and a poor store of value — at best it’s a high-yield, high-risk investment — and Blockchain is still a solution in search of a problem.
A little more than a year after my column, Benji Rogers, he of the tsunami prediction, left Dot Blockchain, which in September 2019 rebranded as Verifi Media. The company still helps rights holders track ownership and use data, but it doesn’t emphasize Blockchain technology on its website. (Emails to the Verifi publicity contact came back as undeliverable.) That makes sense: The big problem with rights data has always been that it’s incorrect or incomplete. Blockchain is a distributed database that allows users to track changes, but it can’t fix incorrect or missing information.
Five years ago, the startup Choon had a plan to track music use with Blockchain and pay rights holders immediately with a digital currency called Notes. It went out of business in 2019, as Notes fell in value along with Bitcoin. The following year, Choon co-founder Bjorn Niclas launched Rocki amid the pandemic and exchanged outstanding Notes for Rocki tokens at a 50:1 ratio. (The company also lets independent musicians sell NFTs.) Since then, “Rocks” tokens have gone from being worth about 5 cents each, up to an April 2021 high of $5.45 — it peaked when Bitcoin did — and down to about a penny. That sounds exciting, and potentially profitable, but I suspect most artists prefer to get paid in currency that holds its value.
Bitcoin and NFTs aren’t going anywhere — some investors see the “crypto winter” as a buying opportunity, while others just want to HODL. (Art NFTs are performing better than most.) But the collapse of FTX will inspire investors, and hopefully government agencies, to ask more questions about whether celebrities who buy and sell NFTs are being transparent enough about their transactions — especially since the fans they influence may buy into investments in a way that help those who already own them.
Like many online technologies, Blockchain and Bitcoin offered a utopian dream of decentralization, free from government regulation and control. When it comes to finance, however, government regulation isn’t a bug, to use the technology phrase — it’s a feature. Just ask anyone who had money with FTX, which wasn’t insured by the Federal Deposit Insurance Corporation (FDIC) the way U.S. banks are. Among the assets stuck in the exchange are the Coachella Keys that offer holders access to the festival.
Coachella told Billboard that it’s confident it will handle this issue. But it’s hard not to wonder if there wasn’t an easier way to do this — say, passes with QR codes, or maybe even just spots in a database that could be sold with the cooperation of the event promoter. Blockchain is essentially a distributed database that can operate at internet scale, and it’s easy to see how exciting that is. It’s just still hard to see what use the music business might have for it.
Imagine a platform where fans can buy and sell streaming rights from the music they love, as easily as buying a stock on an investing site like Robinhood. This is the vision of Web3 music platform Royal, which today announces a music rights marketplace.
Founded by DJ and producer Justin Blau, Royal launched in January 2022 with high-profile NFT drops from Nas, Diplo and The Chainsmokers. The platform allows fans and investors to earn a percentage of streaming royalties alongside the artists. Thus far, the platform says it has paid out $100,000 to holders.
After proving the concept works, Blau says Royal is growing into its bigger vision. “The drops were very much a beta,” he tells Billboard. “We needed to show that you could actually pay out royalties in an efficient manner on chain … The next piece is the tradability of these assets.”
Royal’s marketplace allows fans to buy and sell music rights directly on the website. It includes a ‘portfolio’ where fans can manage their collection, track the performance of their assets and connect to a bank account. Since the beginning, Royal has worked to hide the crypto technology that underpins the platform, and that same Web2.5 philosophy applies to the new marketplace.
“You can buy and sell these things and never see crypto if you don’t want to,” Blau says.
Royal sees music as a rapidly growing asset class with global music revenues hitting $26 billion in 2021, according to IFPI. And while streaming accounts for 65% of recorded music revenue — also via IFPI — most of the value is locked up in legacy music companies and investment firms. “The private markets have controlled all the value in music rights,” says Blau. “It’s not moving between artists and fans, it’s moving between institutions.”
The concept of Royal’s marketplace is to unlock some of that value and let fans participate.
“If you’re a fan and you own a piece of a song and it comes on the radio, there’s something really special about saying you own that.”
Hanging over this announcement, however, is a lawsuit served to Blau over an $11 million NFT auction connected to his Ultraviolet album in 2021. Songwriter Luna Aura — who says she owns a 50% royalty share in one of the tracks on the album — claims she was not adequately compensated from the NFT sale.
Blau could not offer further comment on the details of the lawsuit, but did say the experience of releasing the Ultraviolet NFT and navigating IP laws with 21 other artists informed how they built Royal.
In the coming weeks, the platform will also host more than a dozen new drops from independent artists, starting today with Bingo Players & Zookëper and their new single “Bathroom Line,” followed by “I’ll Wait” by Madison Ryann Ward, as well as music from Yemi Alade, 27Delly and Matt Cooper.
The crypto world was rocked last week by the stunning implosion of FTX — the second-largest cryptocurrency exchange. Though the ripple effect across the industry is still playing out, Coachella appears to be caught up in the collateral damage.
The festival partnered with FTX.US to sell $1.5 million worth of NFTs back in February, a couple of months before the Southern California event’s first staging since the pandemic. The collection included 10 NFT “Coachella Keys,” which granted lifetime access to the festival and VIP perks such as luxury experiences and exclusive merchandise. Many of those NFTs now appear to be stuck and inaccessible on the defunct exchange.
“Like many of you, we have been watching this news unfold online over the past few days and are shocked by the outcome,” said a Coachella staff member on the festival’s Discord server. “We do not currently have any lines of communication with the FTX team. We have assembled an internal team to come up with solutions based on the tools we have access to. Our priority is getting Coachella NFTs off of FTX, which appears to be disabled at the moment.”
Coachella did not immediately respond to requests for further information.
FTX filed for Chapter 11 bankruptcy on Friday citing a “severe liquidity crisis,” after depositors rushed to withdraw more than $6 billion in 72 hours. It is alleged that FTX and its founder Sam Bankman-Fried commingled customer deposits with its sister trading firm Alameda Research, resulting in a multi-billion dollar hole in the exchange’s balance sheet. When customers rushed to withdraw their funds, it became clear that FTX was insolvent.
The knock-on effects have been disastrous, with billions of dollars locked up and little prospect of recovery. Among those assets are several NFTs released through the FTX platform, including NFTs from Coachella and Tomorrowland.
One collector told Billboard he was able to withdraw his Coachella Key to his own wallet just days before FTX went bankrupt, but many others have not been so lucky. Anyone who kept their NFT on the FTX platform currently has no access to them.
Although few in the Web3 industry predicted a crisis on this scale, many crypto advocates have long argued that NFTs and cryptocurrencies should not be stored or held by centralized platforms such as FTX. The last update from the Coachella team — issued on Saturday (November 12) — advised users against interacting with any FTX product and recommended they sign out of all FTX accounts.
Santigold has launched a new community fan club powered by Web3, allowing her to connect directly with fans and offer exclusive content and experiences. It follows a tour cancellation in September where she told fans, “I have tried and tried, looked at what it would take from every angle, and I simply don’t have it.”
The difficult touring conditions has many artists looking for an alternative in Web3. Digital communities, unlocked through NFT access, are becoming increasingly popular for musicians seeking a deeper connection with their fans.
“I am excited about Web3 as an opportunity for artists to interact with our audiences in more honest, intimate and creative ways, while exploring new art mediums and technologies,” says Santigold. “I’m also looking forward to using this space to innovate ways to control the release of our art on our own terms.”
After claiming a free NFT pass, fans will have access to a hub of exclusive content including a sneak peak at Santigold’s upcoming music video. Fans can also submit questions for her new podcast and vote on merchandise designs.
Santigold’s ‘Fan Club’ is powered by Web3 tech company Medallion which already hosts personalized fan clubs for Tycho, Sigur Ros and Jungle. The tech is customizable so it can be integrated into an artist’s existing website and aesthetic. The onboarding process for fans is free and seamless — an example of Web 2.5 whereby the complicated crypto technology is disguised with simple and familiar interfaces.
Medallion Logo
Courtesy Photo
British band Jungle launched their Medallion fan club in September and has already used it to launch hyper-localized campaigns to support their touring activity. For example, the band onboarded 500 local fans in Mexico City ahead of a headline show. “The Jungle Fan Club has allowed us to connect with fans directly in a digital space that feels communal, interactive and collaborative,” says Jungle. “Medallion’s technology has built solutions for ideas we’ve had for years, but have never had the tools to make practical.”
Since launching, Medallion has onboarded 20,000 users to Tycho, Sigur Ros and Jungle’s communities — 95% of those had never touched crypto before. Within 24 hours of launching his Web3 fan club, Tycho tripled the number of fans in his Discord community.
“Medallion’s technology has been built with a singular goal of helping artists create more meaningful connections with their fans, both on and off the road,” says Medallion president Derek Davies. “And with the hardships facing touring artists since the onset of the pandemic, the invaluable importance for community in digital spaces has become clearer than ever.”
Web3 fan clubs are not a new phenomenon. Steve Aoki launched the Aokiverse in 2021 which offers fans token-gated access to VIP tickets and free NFT airdrops. Hard rock band Avenged Sevenfold launched the Deathbats Club which gives fans unlimited meet and greet access for life. Meanwhile, alt-rockers Portugal. The Man launched a Web3 fan club complete with its own social token $PTM.
The trend is accelerating, however, especially as new platforms are developed to create a simple, custom experience. The harsh realities of touring in a post-COVID world, coupled with the pressure to create ‘content’ for a mass audience on social media, means that digital communities could become an increasingly important way to engage with super fans.
3LAU is facing a new lawsuit that claims the DJ refused to properly share the earnings from an $11 million NFT auction with a musical collaborator who co-authored one of the songs involved.
In a complaint filed Wednesday (Nov. 9) in New York federal court, Luna Aura (real name Angela Anne Flores) says she has a 50% royalty stake in the song “Walk Away” from his album Ultraviolet — but that 3LAU (real name Justin Blau) offered her just $25,000 from the much-publicized NFT auction tied to the record.
“Despite this financial windfall, defendants only offered Luna Aura a flat one-time payment of twenty-five thousand dollars as compensation in connection with the sale of Ultraviolet and ‘Walk Away’ NFTs,” her lawyers wrote.
Even during last year’s fever-dream craze for NFTs (non-fungible tokens), 3LAU’s Feb. 2021 auction stood out as notable. By selling 33 collectible tokens linked to his 3-year-old album Ultraviolet — the NFTs gave the buyers access to vinyl copies, unreleased music and other special experiences — the DJ-producer raked in $11.7 million. “It was one of those moments in my life where I was like, ‘Holy s—,’” 3LAU told Billboard at the time. “‘I think we just changed everything.’”
But according to Aura’s new lawsuit, he didn’t share those profits with a key person who helped create the album. She says the auction was done without any notice to her, and that the sale breached her 2017 agreement with Blau, which guaranteed her a 50 percent publishing royalty on “Walk Away.”
“Luna Aura has not received any compensation from revenues generated from the NFT project, nor has Luna Aura [received] appropriate credit in connection with the ‘Walk Away’ and Ultraviolet NFTs,” her lawyers wrote. “Despite the commercial and financial success of the NFT auction, defendants only offered Luna Aura an after-the-fact, one-time payment.”
The lawsuit did not specify how much Aura believes is an appropriate cut from the Ultraviolet NFTs but demanded an accounting to determine how much is owed.
A representative for 3LAU did not immediately return a request for comment on Thursday.
Mainstream buzz around NFTs is fading, but the Web3 music space is quietly gaining momentum. Sales volume across the top 10 projects in October rose sharply for the second month running, largely driven by a high-profile drop from Warner Records’ new Web3 label and a new project featuring Linkin Park‘s Mike Shinoda.
Independent artists are also building strength, with primary sales doubling in October on Sound.xyz — the leading platform for independent drops — to a total of $200,000 according to Token Terminal. Meanwhile, last month saw a music project on the Solana blockchain enter the top 10 for the first time.
Total volume across the top 10 climbed 50% in October to reach 2,164 ETH. In dollar terms, the volume climbed 73%, hitting $3.38 million helped by the rising price of crypto. Based on analysis of sales data from 19 different NFT platforms, independent releases and secondary sales volume on OpenSea, here are the 10 biggest-selling music NFTs and collections in October 2022.
1/ Probably A LabelMonthly trading volume: 1,196.95 ETH ($1,873,226 at month-end conversion rate)Primary sales (Oct.): 499.95 ETHSecondary sales: 697 ETHDrop date: Oct. 6
Probably A Label is the new Web3 imprint from Warner Music UK. It sold 5,555 NFT access passes at the start of October, minting out in seven minutes through an exclusive drop page on OpenSea. NFT holders will shape how the label is run, collaborate on the development of a virtual artist and even share IP rights in some future projects. “This is a vehicle for us to explore new ways of working as a label,” Sebastian Simone, vp of audience and strategy at Warner, tells Billboard. “We believe Web3 allows artists to create with more freedom and connect with fans on a much deeper level.”
The label is a joint venture with Probably Nothing, an established Web3 brand founded by former restaurateur Jeremy Fall. The team is now preparing the first airdrop for holders — a free music NFT featuring production from Diddy.
View the collection on OpenSea.
2/ SAN OriginMonthly volume traded: 502 ETH ($785,630)Primary sales (Oct.): N/ASecondary sales: 502 ETHDrop date: Sept. 16
SAN Sound is a project that aims to launch a Web3 music streaming service, using a “listen-to-earn” model where holders earn crypto tokens while streaming. It exploded to the top spot in September and remained strong in October through secondary sales.
Over the last month the project has encouraged holders to ‘soulbind’ their NFT — which ties it permanently to their wallet — allowing fans to access the streaming platform. Those that bind their NFT will also be eligible for a free airdrop of governance tokens enabling them to vote on how the platform develops.
View the collection on OpenSea.
3/ Secret Garden – “Wind Chime ft. Mike Shinoda”Monthly volume traded: 153 ETH ($239,445)Primary sales (Oct.): 114 ETHSecondary sales: 39 ETHDrop date: Oct. 12
Secret Garden is a unique beat making tool built on the Ethereum blockchain. Fans can interact with it by choosing which stems (drums, bass, synths) to activate until they find a beat they like. The project had some early success through collaborations with electronic producers Robotaki and Smle, but Secret Garden launched its biggest mint yet in October with Mike Shinoda.
Shinoda joined the project as an advisor and created the music stems for the latest Wind Chime collection. It sold 2,000 NFT players and went on to generate 39 ETH in secondary sales. Secret Garden is under the umbrella of the Capsule House NFT project which is among the most successful anime profile picture (PFP) projects founded by renowned digital artist Seerlight.
View the collection on OpenSea.
4/ KINGSHIP – “Keycards”Monthly volume traded: 85 ETH ($133,025)Primary sales (Oct.): N/ASecondary sales: 85 ETHDrop date: July 15
The Bored Ape Yacht Club band remains in the top 10 for the fourth month running due to strong secondary sales on OpenSea. In October, the project teased an upcoming airdrop where holders will get a free NFT or item sent to their wallet. Producers Hitboy and James Fauntleroy are still busy in the studio preparing music for the project.
View the collection on OpenSea.
5/ BlocktonesMonthly volume traded: 49 ETH ($76,685)Primary sales (Oct.): N/ASecondary sales: 49 ETHDrop date: Sept. 16
Founded by Grammy-winning producer Gino the Ghost, Blocktones is a collection of 2,500 generative music NFTs. Each one was created using a random combination of music stems. One of the collection’s rarest NFTs, with production by Timbaland, sold for 5 ETH ($7,825) this month. The team also ran an experiment where holders could sign a non-exclusive license using their wallet to allow Blocktones to stream their NFTs on a YouTube radio channel. Holders were sent $10 back as a royalty straight to their wallet.
View the collection on OpenSea.
6/ Alan Walker & Ava Max – “Alone Pt. II”Monthly volume traded: 46.6 ETH ($72,929)Primary sales (Oct.): 35 ETHSecondary sales: ~11.6 ETHDrop date: Oct. 20
“Alone Pt. II” is among the biggest dance tracks in the world with almost 500 million streams on Spotify. Now, fans can own a small piece of the future streaming royalties. This is the third drop launched on rising platform Anotherblock.
The company typically partners with a songwriter or producer to unlock a small percentage of a song’s streaming rights. In this case, the ownership share comes from The Very Good — the publishing company behind many of Sweden’s biggest songwriters. “The Alone Pt. II” drop offered 500 editions, each granting 0.001% of future streaming royalties.
View the collection on OpenSea.
7/ Daniel Allan – “Glass House Remixes”Monthly volume traded: 35.02 ETH ($54,806)Primary sales (Oct.): 9.9 ETHSecondary sales: 25.12 ETHDrop date: Oct. 20
Independent artist Daniel Allan first appeared on this list back in July with his landmark Glass House collection. Now he returns with the remix package. Allan dropped four remixes from the Glass House EP via Sound.xyz’s new protocol — allowing him to host the drop on his own website and Sound.xyz simultaneously — making almost 10 ETH in primary sales. He also generated a flurry of secondary sales on this collection and his back catalog through October.
View the collection on OpenSea.
8/ Oshi – “U&I” and “Fight For This”Monthly volume traded: 27.84 ETH ($43,569)Primary sales (Oct.): 10.54 ETHSecondary sales: 17.3 ETHDrop date: Oct. 6
Independent artist Oshi has been at the heart of the Web3 music scene since 2020. He was also the first artist to release an NFT on Sound.xyz when it launched in 2021. In October, he dropped two new tracks, generating more than 10 ETH in primary sales. Secondary activity also picked up with around 17 ETH traded on OpenSea and Sound.xyz’s newly-launched marketplace.
View the collection on OpenSea.
9/ Kids of the Apocalypse – Noise GenesisMonthly volume traded: 1,283 SOL ($41,825)Primary sales (Oct.): Free mintSecondary sales: 1,283 SOLDrop date: Sept. 30
Kids of the Apocalypse (KOTA) is the first music project on the Solana (SOL) blockchain to make the monthly top 10. It’s an ambitious music project with a dystopian graphic-novel storyline which has been in development for several years, before Web3 was a popular concept. The 666 genesis NFTs grant holders access to the KOTA community and will act as a key for all future music drops.
The project was founded by Stefan Storm, a Swedish producer whose credits include Lady Gaga and Tiesto, and Derek Davies — the founder of Neon Gold Records. The NOISE Genesis project was free to mint but quickly generated more than 1,000 Sol in secondary trading volume.
View the collection on OpenSea.
10/ ChillrxMonthly volume traded: 21 ETH ($32,865)Primary sales (Oct.): N/ASecondary sales: 21 ETHDrop date: Sept. 16
Founded by Grammy-nominated producer Sidney Swift, Chillrx is a community record label where holders of the 10,000 NFTs get to participate in label decisions. The big goal, according to Swift, is to “win a mf-ing Grammy” as a community, via the label’s virtual artist called ChillPill. In October, Chillrx launched a new ‘staking’ feature. Holders can lock up their NFT (so that it cannot be sold). In exchange, they receive a loyalty token $CHILL which they can use to buy exclusive songs and eventually get access to other NFTs. The Chillrx floor price doubled after staking went live and more than a quarter of all NFTs are currently staked.
View the collection on OpenSea.
Methodology: The chart was compiled using data from primary music NFT sales across 19 different NFT platforms, independent releases and secondary volume data from OpenSea. Data was captured between October 1 – October 31, 2022. Conversion rates from crypto to US dollars were calculated on September 30.
One evening in July, panic spread in a small corner of the Web3 music space. Mysteriously, $6.1 million worth of cryptocurrency began moving out of blockchain music service Audius’ company treasury into an unknown wallet. Audius was being hacked.
The hacker discovered a bug that allowed them to take control of the Audius treasury — the crypto equivalent of a shared bank account — and transfer the entire funds to their own crypto address. The bug had lived in the code for two years.
This is shaping up to be the worst-ever year for crypto hacks, according to Chainalysis, with over 125 major hacks surpassing $3 billion in total, and on track to surpass the $3.2 billion in 2021.
Meanwhile, phishing scams continue to drain NFT wallets at an alarming rate. “Everything is unbelievably insecure,” says Sam Williams, founder of blockchain storage platform Arweave and a self-proclaimed “hacker,” though he uses the term as a broad description for coders. “We’re in the hackers’ Wild West of Web3 right now.”
Since the popularity of NFTs and cryptocurrencies like Bitcoin took off in early 2021, things have only gotten worse, creating a honeypot for hackers. “There was a lot of fluff brought in during the hype cycle last year,” Williams says, “and that typically lowers security standards for a period.” Teams scrambled to push products live to capitalize on the stream of new money paying too little attention to security.
For music companies or artists entering the space, the consequence of a hack could be enormous. Audius took a $6 million financial hit but it’s more than just money. Exploits can also damage the trust of music fans and undermine the entire promise of Web3. Warner Music Group considered this dilemma when launching its Stickmen Toys NFT collection earlier this year. “No matter how much time, how many resources, or how good of intentions go into a project, if there is a security breach, it can harm the project and its team’s reputation,” says Jillian Rothman, Warner’s vp of new business & ventures, business development.
The stakes of hacking are higher in Web3 than in today’s internet because customers are at direct risk of losing their money. If there’s a malicious link in a Discord server, dozens of community members could have their NFTs or cryptocurrency stolen from their wallet. If there’s a bug in the code, users could have their funds cryptographically locked with no recourse. The community backlash from these security incidents can be severe and costly that Web3 teams often resort to refunding users out of their own pocket. So, where are the biggest risks and what can music companies do to protect themselves and their artists?
Experts say the main vulnerabilities for the NFT space lie in smart contracts. These are programs written by developers on top of blockchains like Ethereum that hold funds and execute transactions — such as paying out royalties on secondary sales. “Smart contracts are just buggy and can be exploited,” says Nic Carter — partner at Castle Island Ventures, a VC firm with several Web3 music investments. “Things are so new in the crypto space that developers are still learning the best practices for safety.”
One NFT project, for example — Aku, by former MLB player Micah Johnson — got $34 million locked in a smart contract due a small bug in the code. The money was never recovered.
One way to immediately lower the risk is operating with transparency. “It should be damn open source,” says Williams, so that anyone can check and verify the code. “There’s no point trying to hide it. Better you find [bugs] early so you can fix them.” Blockchains like Ethereum are transparent by nature so hackers will find exploits if companies go live with buggy code. Better to test it in the open on so-called test-nets before deploying with real money and high stakes. While building publicly might take away an element of surprise in terms of marketing, it’s a small price to pay for added security. Additionally, smart contracts should be audited by external developers.
Next, there’s the risk of customers getting their wallets hacked. “[Crypto wallets are] probably the No. 1 risk,” for newcomers, says Carter. “A poor wallet setup or a failure of key management — that’s probably been responsible for the greatest loss of funds.” Companies can keep the community safe by highlighting the risks and educating music fans entering the space.
Carter recommends that anyone interacting with crypto use a hardware wallet — a USB device that disconnects from your computer and the internet. And they should limit the funds on a “hot wallet,” such as Metamask, which can be easily compromised through malicious links. “The NFT space is really aggressively targeted by phishing,” he cautions. “I think because it was mainstreamed so quickly… It meant a lot of people didn’t have as much experience in [wallet] management.” He also suggests using two-factor authentication on all crypto-related accounts and advises against clicking unknown links.
The team at Warner put this into practice using a “security” page on their projects’ Discord servers. Users have to read this page before entering. It explains the best practices and warns the community how to spot scams. “In a nascent space, bad actors prey on unsuspecting community members,” says Sebastian Simone, Warner’s vp of audience & strategy. “It will take longer for Web3 to go mainstream if people have negative experiences.”
Importantly, however, the failure of wallets and smart contracts does not imply a failure of the blockchain itself. “It’s extremely rare to have the blockchain itself be hacked,” says Carter. It is the code and applications on top of the blockchains that pose the biggest security threat.
Carter and Williams are both optimistic that these security issues will decline over the coming years through standardized contracts and simpler code, but the young industry is still learning the hard way. With every new exploit, developers are learning where the vulnerabilities are and adopting safer practices for the future.
As Carter puts it, “Safety rules are written in blood.”
As real-life touring continues to be plagued by cancellations, Soulja Boy, Dillon Francis and Ozzy Osbourne are turning to virtual worlds. The Metaverse Music Festival returns on Nov. 10-13 for its second year in Decentraland — an immersive digital world built using blockchain technology and owned by its users — with more than 100 artists across 15 stages. The event will be free to attend and no crypto wallet is required to participate.
Set in a cyberpunk city of the future, Dillon Francis will open the festival with a “mega club” experience projected on several screens, while Soulja Boy will perform through a virtual avatar. The digital setting also allows for elaborate stage design. “The final [headline set] should look like a city from the future, abandoned for 100 years,” says Sam Hamilton, creative director at Decentraland Foundation.
Despite the metaverse backdrop, the team hopes to recreate a real-life festival experience, complete with atmospheric rain (every festival needs mud), custom dance moves called ‘emotes,’ pop-up nightclubs and even a virtual porta-potty experience.
“[We’re] trying to capture that chaos that happens at a real festival inside a digital world,” explains Hamilton.
The festival features a diverse lineup thanks to Decentraland’s global community picking many of the performers. “We’re curating the main stage,” says Iara Dias, head of the Metaverse Music Festival, “but we gave the rest of the stages to the community for curation.” As a result, the lineup also features Chinese idol group SNH48 and Japan’s J-pop group Atarashii Gakko!
“Rather than trying to be American-centric,” adds Hamilton, “We’re trying to give a cultural experience to everybody that they wouldn’t normally be able to have.”
More than 50,000 attendees logged into Decentraland to experience 2021’s inaugural event with performances from crypto-native artists including Deadmau5, 3LAU, RAC and Alison Wonderland. This year will also feature crypto favorites like CryptoPunk rapper Spottie Wifi and British DJ Akira the Don, but the foundation hopes that a roster of bigger names will expand the festival’s reach.
Virtual music performances have grown in popularity in recent years, partly due to COVID-19 lockdowns putting IRL concerts on hold. Travis Scott and Ariana Grande both played virtual concerts in Fortnite’s virtual gaming world, while MTV launched a Best Metaverse Performance category.
Decentraland, however, is different from corporate metaverses like Fortnite as it is owned and operated by its users through crypto technology. The land inside the world can be bought and traded by the community who then choose what to build. Wearables and digital items can be traded on the platform’s native marketplace.
“The big difference is philosophy,” says Hamilton. “We believe that the user should not be the product, but should own and direct the product.”
Decentraland’s community also helps make decisions through a decentralized autonomous organization (DAO).
Despite last year’s metaverse hype, however, these virtual crypto worlds are not as popular as Fortnite, Roblox and others. As the tide goes out on the metaverse mania, Decentraland has approximately 60,000 monthly active users according to data provided by the foundation; a small number compared to the tens of millions of daily users on gaming worlds like Roblox.
“We’re working hard to catch up with the hype,” admits Hamilton. “We needed longer to build out a better platform with more features but the hype [of 2021] came too quickly.”
Last year’s festival brought in Decentraland’s biggest numbers of the year, and Hamilton believes this year’s event will bring another wave of new users to the platform. “The metaverse is inevitable,” he concludes. Zooming out, he envisions a network of virtual worlds, some centralized and some decentralized, but not necessarily dominated by one company or platform. “This is definitely happening.”