When social and music platforms started taking off in the 2000s, many musicians saw the huge potential of global distribution networks to showcase their artistic talent and connect with fans. Unfortunately, as they consolidated more power and leverage, the platforms acted more as gatekeepers – ceding little control and extracting large take rates from artists’ revenue.
Thankfully, a new movement has emerged in web3 music, led by platforms such as Sound.xyz. Sound is championing a future where artists and fans can reap the rewards of music creation and appreciation, so we’re excited to announce that we’ve doubled down on Sound.xyz by leading their Series A funding round.
The music industry has been more resistant to new digital business models than other entertainment mediums – most notably video games – and artists are suffering as a result. As Chris Dixon noted, the video game and music industries adapted to the internet in very different ways. Game makers embraced new models, and as online play became more pervasive, discovered they can earn more revenue by making their games free and selling virtual goods. The music industry filed lawsuits against innovators and eventually accepted today’s dominant model of bundled streaming platforms. Their algorithms direct 90% of streams to the top 1% of artists, making it extremely difficult for new artists to get discovered by potential fans.
Furthermore, the industry is a labyrinth of intermediaries – from record labels to publishers to aforementioned streaming platforms – all taking a cut of the revenue generated by artists’ work. As a result, musicians earn a minuscule amount from each stream, typically around $0.003. This uneven distribution of attention and unfair dilution of income prevents nearly all independent artists from earning a living wage on their music.
Fans are also feeling disconnected from the artists they love. Current platforms impede genuine connection between artists and their fans, treating communities as a homogeneous blob where dedicated individuals fail to stand out. Artists are restricted from exporting their audience to reach them on their own terms, and reaching new fans requires paying the platform or becoming friends with their playlist editors.
Sound will help the music industry bridge this gap. Sound is music without the middleman: a suite of web3-native music and economic tools powering and empowering the next generation of artists and their communities. And as of today, its tools are available to all artists.
On Sound, songs stream for free and users curate their own playlists. Artists can debut songs along with a series of limited-edition NFTs, and listeners can collect directly from the creator and leave a public comment on the songs they own. Each artist (not the platform) sets the terms of their relationship with supporters through unique, customizable digital item drops powered by smart contracts. By unlocking new, web3-native revenue opportunities, Sound economically empowers artists to bypass traditional intermediaries and retain a majority of their earnings without sacrificing distribution.
Since our initial investment in 2021, Sound has onboarded more than 500 artists who have earned over $5 million across primary sales and secondary royalties. Each dollar earned was paid out accurately, transparently, and instantly via the smart contracts that make up the Sound Protocol. In the traditional music industry, that equates to more than a billion streams.
On Sound’s mobile app, fans can stream music for free, collect Sounds from their favorite artists, and showcase their support to other listeners. Sound’s marketplace, available on web and mobile, enables liquidity for existing collectors and new fans.
Alongside Sound’s frontend products, the Sound Protocol launched in 2022 as a new canvas for artists and developers alike. The Protocol facilitates the creation of composable, artist-owned song contracts, with permanent and decentralized metadata and modular architecture that allows for custom drop experiences. It gives artists the flexibility to customize their own experience without limiting themselves to a single listening destination.
The founder David Greenstein, and the seasoned team he’s assembled, are executing in a world-class way to bring Sound to life. We couldn’t be more excited to further our partnership with David, Vignesh, Kevin and the entire Sound team as they build the future of music.
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