Web3 music platforms are combining new tech with Web2 features to give artists better compensation and 'create dope consumer experiences'

• Web3 music platforms are changing the industry, giving artists better payouts and ways to reach fans.
• Companies such as Even, Sound.XYZ, and IYK have found success by integrating Web3 and Web2 features.
• This method has strengthened their user bases and is forging the future of tech and music.
• This article is part of "Build IT," a series about digital tech and innovation trends that are disrupting industries.

The independent music artist Tanerélle never felt fairly compensated for her work — a common frustration among artists who receive scant earnings from music-streaming platforms such as Spotify and Apple Music. 

But the "Continuum" singer felt differently once she started sharing her tracks on Even, a Web3 platform that enables artists to connect directly with their most dedicated supporters and offers fans exclusive access to artists' creative content and experiences. The service allows artists to set their own prices, and each sale results in direct access to fan-related data — such as emails, locations, numbers of purchases — and instant payouts.

"It was wonderful partnering with a team who finally made me feel like my art was worth the love I pour into it," Tanerélle told Insider. "I wish it could always be like this."

The importance of direct-to-consumer offerings for music artists has never been more evident. 

In recent years, streaming and social-media algorithms have soured artists' attitudes toward earning royalties and trying to make a living doing what they love: Chasing pennies on saturated digital platforms can be draining, and streaming payouts constantly disappoint.

Since the early days of the COVID-19 pandemic, when touring halted, cutting a significant amount of musicians' revenue, independent and signed artists alike have desperately sought new ways to monetize their work and connect with their supporters.

This is where Web3 came in. 

Web3 is a decentralized internet powered by blockchain technology, offering music artists direct and transparent payments via smart contracts, increased control over their creative content and earnings, and ownership of their work through nonfungible tokens, which can be collected and enjoyed by their most loyal supporters. 

In 2021 alone, music NFT sales generated over $83 million in revenue for artists. With platforms taking miniscule fees, as low as 0%, and intermediaries virtually nonexistent — curator fees typically don't exceed 5% — the vast majority of revenue goes where it belongs: artists' pockets.

However, by summer 2022, there were signs of a decline in the Web3 landscape because of regulatory uncertainty, speculative volatility, security concerns, and the lack of real-world adoption. By November, crypto winter was in full effect.

While the Web3 and crypto bull markets between 2020 and 2022 may never be realized again, some Web3 platforms are finding success through a tech strategy that's helping them survive and thrive during the bear market: combining Web3 experiences with Web2 interfaces.

Insider spoke with top execs at the innovative digital platforms Even, Sound.XYZ, and IYK about how their companies were transforming the music business by blending Web3 features and utilities with practical, familiar integrations that appeal to mainstream users.

Keeping accessibility at the forefront and the front end

Even, which has been used by Tanerélle and other artists such as Omarion, Jidenna, and LaRussell, is built on the Polygon blockchain, but its marketing, branding, and front end are entirely Web2-oriented. For example, Even uses email sign-up and allows credit-card purchases. It also uses familiar terminology throughout its platform and in marketing, similar to what one would find on traditional music platforms. This fosters a seamless onboarding experience for fans and takes the burden off artists to educate them. 

The benefit of this hybrid approach is clear: In April, when much of the Web3 music space faced uncertainty, Even closed its $2.2 million seed round.

Mag Rodriguez, the founder and CEO of Even, was determined to leverage Web2 and Web3 technologies to empower artists — especially Black and brown musicians, who often bear the brunt of exploitation in the music industry — and streamline support from their fans.  

"We believed in making it accessible and seamless for fans to engage," Rodriguez told Insider.

He said that making Even "too Web3" by using a Web3 front end and obscure verbiage "would have been counterproductive," consequently deterring traditional artists and their fanbases.

"We wanted to bridge the gap and welcome fans into a new era, while maintaining familiarity," he added.

Web2-Web3 integrations are also expected to introduce a new monetization model, which the Grammy Award-winning artist and songwriter Eric Bellinger said was long overdue in the music industry.

"This is going to start a wave of business owners and even consumers thinking differently," he told Insider. "There's no longer a middleman needed to take the majority of artist revenue, and we can get paid instantly. That has never been the case."

Meeting users where they are

Sound.XYZ, which has an impressive roster of users, including Snoop Dogg, Tayla Parx, and Bobby Shmurda, attained $5 million in seed funding, led by the venture-capital firm Andreessen Horowitz, in December 2021, when music NFTs were heating up. The company beta-launched last year.

Sound.XYZ is the leading Web3 music platform in terms of artist caliber and diversity, volume, and collector base. It allows artists to release music audio on chain — meaning the audio is verified and recorded by the blockchain — so supporters can collect music NFTs and any fan can listen to them. 

The platform initially catered to crypto natives, but in May, the company added Apple Pay, credit-card payments, and email sign-ups — integrations that were on the company's road map when it secured a $20 million Series A at the beginning of the year. In July, following the introduction of these features, Sound.XYZ announced the multimillion-dollar funding and became available to the public.

David Greenstein, the cofounder and CEO of Sound.XYZ, said adding more Web2 integrations beyond the sleek SoundCloud-inspired aesthetic came down to meeting people where they were.

"It's about loosening the burden on the artist and the listener," he said. "Don't force people to do things that they're not ready yet to do."

Brett Shear, the managing partner of PTC Crypto at Palm Tree Crew Investments and an investor in Sound.XYZ, said the startup's "aesthetic and user interface have undoubtedly contributed to its success." He added: "The company has continued to release new features that make it easier for creators and collectors to get started, such as the mobile-app experience, credit-card-purchase capability, and email sign-in."

Shear also said that its expanded interface would influence other companies in the Web3-music space.

"Incorporating familiar Web2 features and aesthetics can bridge the gap for mainstream users, ensuring usability, wider adoption, and showcasing innovation, while maintaining a crypto-native value proposition," he said.

Leading with experiences, not just tech

Christopher Lee, the cofounder of IYK, a platform for digital-physical experiences, opted for a conventional user interface when the startup launched in April 2021. IYK offers creators and consumers the ability to connect through both digital and IRL experiences. 

Creators can share exclusive content with fans via NFC chips that unlock exclusive content once scanned; provide incentives and perks to fans who buy multiple items from them; and reward supporters with access to unreleased music, never-before-seen music videos and photos, and meet and greets.

"From the beginning, the goal was to create dope consumer experiences — not necessarily push a technology," Lee told Insider.

The Web2 nature of the IYK shopping experience and merch strengthened the company's ability to partner with independent artists, including the singer Vérité, and major labels such as Atlantic Records.

"Intuitive user experiences are table stakes for having successful activation," Lee said. "When users find an experience easy to navigate, they're more likely to engage and leave with a positive sentiment. And I think our focus on the fan experience resonated."

Vérité, who launched a sold-out merch collection with IYK, told Insider that making experiences accessible to non-tech-native fans was essential.

"I think Web3 companies should embrace interfaces that people actually want to use," she said.

Her advice for successfully dropping a merch collection in the Web3 space? "Make sure you have a well-defined and clear base-value proposition that you're offering your fans, and deliver on that promise, regardless of the delivery method or technology used. Don't speculate, don't overpromise," she told Insider.

Safeguarding security and enhancing education

While integrating Web3 and Web2 experiences on music platforms offers promising benefits, there are drawbacks and areas for improvement. 

One challenge is ensuring the security and scalability of blockchain networks as breaches continue, even among crypto natives. For example, in July 2022, hackers stole $6 million worth of tokens from the Web3 music-streaming platform Audius.

In the aftermath, Audius notified its community of the attack and explored new storage-modification measures to prevent security breaches. The incident made a strong case for providing enough education to artists and fans to ensure they understand Web3 risks and safety guidelines.

Further, solutions to address high transaction fees and environmental concerns associated with some blockchain technologies are in progress. Innovation and user-centric web designs that strengthen affordability — by building more-efficient solutions that reduce fees, and prioritize sustainability, by leveraging eco-friendly and energy-efficient blockchain technologies — are needed to address these challenges.

A happy medium is the key to industrywide mass adoption

As the Web3 music space adapts to market conditions, more companies will likely embrace Web2 interfaces and integrations to expand their creator and consumer base and drive industry growth.

Rodriguez is confident that integration will become the standard.

"The strengths of both Web3 and Web2 can coexist harmoniously," he said. "By blending the familiarity of Web2 with the innovation of Web3, we can foster user adoption."

The startups leading the way with this approach will likely have a lasting impact on the industry, creating a seamless blend that ensures accessibility and usability on the road to mass adoption.