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How do platforms influence the music business ? - WR #176
Weekly Roundups
August 25, 2023

How do platforms influence the music business ? - WR #176

This week has been an interesting one for sure. Some main platforms operating new tech on which music relies are decidedly very powerful. Let’s see what changed these last few days.

#1. Say goodbye to royalties on OpenSea

OpenSea is a major NFT marketplace, and Music has been relying on this as any other ecosystem. But OpenSea has declared the end of NFT royalties by announcing that it will no longer enforce resale fees.

Starting from August 31, OpenSea will put a stop on royalty fees on new NFTs, and the existing royalty fees for established NFT collections will continue until March 2024. After that point, royalty fees will be treated as optional tips for future sales. This move reflects a shift away from the previous web3 community approach, acknowledging that supporting creators through royalty fees is no longer a priority in the NFT space.

OpenSea's decision contrasts with the emerging marketplace Blur, which has overtaken OpenSea in trading volume and instituted a 0.5% fee on most collections. While OpenSea's decision marks a significant departure from its original model, the company asserts that there are still other avenues for creators to monetize their work using web3 technology. This shift highlights the evolving nature of the NFT ecosystem, and its implications for the music field.

#2. TikTok’s deal with Warner may help with trust in the platform

The recent agreement between TikTok and Warner Music Group is starting to make TikTok look like a strong player in both cultural and business aspects of the music industry. The deal licenses Warner Recorded Music and Warner Chappell Music's entire repertoire to ByteDance-owned entities. TikTok takes its place as a platform for music promotion, discovery, and monetization.

The Warner deal exemplifies TikTok's pursuit of a major position in the music world, showcased through initiatives like TikTok Music streaming service, AI-powered music creation app Ripple, and artist-focused programs like Elevate. Despite these efforts, the music industry has voiced concerns over compensation, highlighting the need for TikTok to establish fair and mutually beneficial relationships with key players in the music industry.

#3. Music AI Incubator is coming

YouTube seems to have reached an agreement with Universal Music Group (UMG) to launch a 'Music AI Incubator'! Some major artists such as Bjork will be part of the project, giving it a little more visibility. The initiative aims to explore generative AI experiments and research, gathering insights from the creative community to build a safe and profitable ecosystem for music and video. The partnership aligns with UMG's vision of responsible AI use in music, enhancing creativity, protecting intellectual property, and providing opportunities for artists and fans.

#4. TikTok’s plan to step into music streaming

Ole Obermann, global head of music development at ByteDance, discusses TikTok's impact on the music industry and its role as a discovery platform for emerging artists. Before anything, one key aspect is the fact that TikTok’s ability to recommend the right music to the right audience seems to be unmatched. And the music industry has been embracing TikTok’s influence, making it more and more important.

Going forward, TikTok tries to start initiatives to support artists, including the SoundOn music marketing and distribution platform, and the Elevate program for emerging artists. Obermann also touches on TikTok Music's launch in Brazil and Indonesia and its focus on personalized music recommendations based on users' TikTok activity. He envisions integration between TikTok and TikTok Music, where users can engage with music both on the short-form video creation side and the audio creation side through tools like the Ripple app. A lot is going to happen pretty quick!

#5. The music industry’s spiral

To MIDiA Research, the music industry is facing a challenge of misaligned incentives, throwing the field into a spiral. Let’s put it simply: record labels are driven to grow market share regardless of artist development due to the pro-rata streaming model, while streaming services prioritize cheaper music to maximize profit, affecting music quality.

But at the same time, artists, realizing streaming's limited revenue potential, are focusing on alternative revenue streams, leading to a lack of support for emerging talent. As labels lose revenue, streaming services lose cultural capital, artist development suffers, and artists burn out, the industry faces a dilemma unless streaming economics change fundamentally. A potential solution could involve focusing on artist development, counteracting virality, and redefining what it means to "break" an artist.

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