Joining the writers’ strike that began in May, Hollywood actors also went on strike, reflecting a hard truth about the Web2 economy. The economics of the streaming platform industry don’t work.
It’s also a reminder that all creatives should look to Web3 solutions, ignoring the ignorant media commentary that has stripped the term of Web3 of its mainstream appeal.
Dysfunctional Web2 Economy
Amid the coronavirus pandemic, platforms like Netflix, Amazon Prime, Hulu and Disney Plus have spent billions on content as they vie for market share.
But now feature film, TV series and documentary makers are being turned away, leaving them with no money to pay actors and writers.
For music streaming, the situation is perhaps even more serious.
Spotify now completely dominates the market. Pandora, owned by Sirius XM, is no longer what it used to be, as is Rhapsody, which acquired the name of the legendary file-sharing service and rebranded itself to Napster in 2016, and was acquired by blockchain developer Algorand in 2022.
Spotify itself has never been profitable since it was founded in 2009. Last year, it posted a loss of $430 million (about 60 billion yen), the third largest loss on record.
a small share of musicians
When it comes to musicians, artists are said to earn just a third of a cent each time their songs are streamed on Spotify. In an interview with think tank Milken Institute, hip-hop star Snoop Dogg succinctly said:
“Can someone explain to me how it’s been streamed a billion times and I’m not getting a million bucks? It just doesn’t make sense.”
Who is the winner if not the platform or the musician?
A decade ago, it might be the record company infamous for signing multi-billion dollar deals with Spotify and other streaming platforms to license their songs. Spotify recently announced it was approaching $40 billion in royalty payments.
Record companies may be destroying their business by making their cuts too big and leaving musicians too little. New musicians are starting to give up on record companies.
To earn a living, they engage in content marketing, produce soundtracks for online games, and find other ways to make money without being tied down to record labels or Spotify.
Many musicians focus on live performances, where they sell merch, sign up for mailing lists, or sell CDs directly to audiences if they still have players.
But unless it’s Taylor Swift, gigs leave artists dependent on another exclusive intermediary. Take, for example, Live Nation Entertainment, the result of the merger of live entertainment company Live Nation and ticketing company Ticketmaster.
Musicians, filmmakers, and other content creators must find ways to circumvent these over-profitable giant gatekeepers. And, as the true followers of digital assets have long said, Web3 provides a path for that.
While the NFT market has been rife with hype, bubbles and broken hopes over the last three years, this innovation contains an undeniable breakthrough.
It was the creation of a one-of-a-kind digital asset that was not possible in the world of the Internet, where anything could be duplicated.
In the digital world, NFTs are a fundamental building block for a more creator-centric system, as they can recreate the direct, peer-to-peer ownership relationships that fans and artists once forged with LPs, books, movies, and more.
Having moved past the speculative madness around collectible digital stones and absurdly overpriced art and monkey images, a new breed of innovator is tying NFTs and related technologies directly into regular content creation.
The strategy is to use NFTs as an access key for fans to extract added value from engaging with the content, rather than driving up prices in the hope that a limited number of “rare” NFTs will “explore to the moon”. We value connecting creators and fans, adding value, and fostering a sense of shared interest and ownership.
Many such cases unfold.
Web3 platform Aspen, developed by Monax Labs, has helped independent singer-songwriter Jeremy Stein, known by the stage name of Steinza, to offer fans who purchase his NFT and attend his concerts exclusive access to virtual screenings of his live performances and the opportunity to own multimedia memories of his concerts.
Gala Games, the company behind Web3 games, has launched a division called Gala Film, using NFTs to deliver value to fans who support filmmaking, and using smart contracts to guarantee permanent rewards for both creators and the fans who financially back them.
In one project, Gara collaborated with Emmy Award-winning director Steven Cantor’s Stick Figure Productions to fund and produce Four Down in an innovative way.
The documentary is based on the book Not Without Hope, which tells the true story of Nick Schuyle’s 43-hour survival on a capsized boat in the Gulf of Mexico after the loss of three friends, including NFL players Will Bleakley and Marquis Cooper.
And anime studio Toonstar, founded by a range of veteran cartoonists, is allowing the NFT community to vote on the content of its projects, including naming shows, including The Gimmicks, and “choose your own adventure” storylines.
Small is OK
Will all this be a smashing success? Of course not.
But the hit-driven entertainment industry has always been that way. Some win, some lose.
More importantly, by engaging fans and providing creators with a direct connection to them, these projects have a common experience that can transcend the win-lose dichotomy of an industry so focused on betting on blockbusters. Here is a new path for artists that gives small projects and the many creators who work on them a place and potential.
Indeed, “Web3” has become a buzzword. And perhaps some work is needed to define what models actually apply. But denying these innovations is living under the illusion that the current Web2 economy works.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Writers strike in Hollywood (CLS Digital Arts / Shutterstock.com)
｜ Original: Hollywood’s Angry Creators Show Why Web3 Is Needed