This week’s strike by Hollywood actors, who have joined writers on a work stoppage, reflects a hard truth about the Web2 economy: the platform streaming industry’s economics don’t work.
It’s another reminder that everyone involved in creative production should now be looking at Web3 solutions, irrespective of ill-informed media commentary that has stripped the term of its mainstream appeal.
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During the COVID pandemic, a battle for market share saw platforms like Netflix, Amazon Prime, Hulu and Disney Plus fork out big for all manner of content. Now, makers of feature films, TV series and documentaries are being repeatedly shown the door, which is why there’s no money to pay actors or writers.
In music streaming, it’s arguably worse. Spotify now completely dominates the market. Pandora, owned by Sirius XM, is a shadow of its former self, as is Rhapsody, which rebranded to Napster after it acquired the legendary file-sharing service’s name in 2016 and then was acquired by blockchain developer Algorand in 2022. Yet Spotify itself has never made a profit since its founding in 2009. Last year, it posted a $430 million loss, its third biggest ever.
And the musicians? Well, artists reportedly earn a measly one third of a cent from each Spotify stream. During an interview at the Milken Institute, hip hop star Snoop Dog put it succinctly: ”can someone explain to me how you can get a billion streams and not get a million dollars. That s__t don’t make sense.”
If it’s not the platforms or the musicians, then, who are the winners? Maybe it’s the record labels, which a decade ago infamously inked multibillion deals with Spotify and other streaming platforms to license their music. (Spotify recently said total payments it has made on royalties approach $40 billion.)
By keeping so much for themselves and leaving musicians with the dregs – the labels could be killing their own business. New musicians are abandoning them. To make ends meet, they’re working in content marketing, or producing soundtracks for online games or finding other ways to make money that don’t entail entering into a bondage relationship with a label and Spotify.
Many are emphasizing live shows, where they can sell merchandise, get people on their mailing lists and, if their audience members still have the players, directly sell them CDs. But, unless they’re Taylor Swift, live performances leave artists dependent on another monopolistic intermediary: Live Nation Entertainment, the ugly offspring of the Live Nation and Ticketmaster merger.
A new way
Musicians, filmmakers and other creators of content must find a way to bypass these giant, rent-seeking gatekeepers. And, as true believers in digital assets have been saying for some time, Web3 offers them the path to getting there.
For all the hype, bubbles and burst hopes of the non-fungible token (NFT) market these past three years, this innovation contains an undeniable breakthrough: the creation of unique, one-off digital assets, a construct that was impossible in the everything-can-be-replicated internet that preceded it. NFTs are a building block for a more creator-centric system, since they recreate, in the digital realm, the direct peer-to-peer ownership relationship that fans and performers used to have with LPs, books, films and so forth.
Now that we’ve gotten beyond the speculative madness around collectible digital rocks, wildly inflated art and monkey pics, a new breed of innovators is directly tying NFTs and related technology to regular content production. The strategies are not about pumping a limited number of “rare” NFTs in the hope they’ll “moon,” but rather using these unique assets as an access key for fans to unlock added value from their engagement with the content. It’s about connecting creators with their audience, adding value, fostering a sense of shared interest and ownership.
There are lots of examples in play.
Aspen, a Web3 platform built by Monax Labs, helped independent singer-songwriter Jeremy Stein, better known by his stage name Steinza, offer concert-going fans who’d acquired his NFTs special privileges such as exclusive access to a virtual screening of his shows and the opportunity to own multimedia memories from the concert.
Web3 gaming company Gala Games has spun up a unit called Gala Film, which deploys NFTs to deliver value to fans who support video productions and uses smart contracts to assure rewards in perpetuity to both creators and fans who financially support them.
In one project, Gala is working with Stick Figure Productions, headed by Emmy Award-winning filmmaker Steven Cantor, to innovatively fund and produce “Four Down.” The documentary, based on “Not Without Hope,” the true story of how Nick Schuyler survived 43 hours on an overturned boat in the Gulf of Mexico after losing three friends that included NFL players Will Bleakley and Marquis Cooper, will generate behind-the-scenes footage and hands-on experiences to which the Gala community will gain exclusive access.
Or, there’s animation studio Toonstar, founded by various cartooning veterans, which is allowing its NFT community to vote on aspects of its projects, including naming and “choose-your-own-adventure” plot outcomes for shows that include The Gimmicks.
Small is OK
Will all these become runaway successes? Of course not. But such has always been the nature of the hit-driven entertainment industry. Some win, some lose.
More importantly, by engaging fans and providing creators with direct connections to them, there’s a shared experience in these projects that can transcend the win-or-lose dichotomy of an industry that is now overly focused on big blockbuster bets. Here is a new path for artists that gives space for smaller projects and the many, many creators working on them.
Sure, “Web3” became a buzzword. And perhaps there’s work to be done to define what models actually fall within it. But to dismiss these innovations is to live under the delusion that the current Web2 economy is working.