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Thursday, June 1, 2023

Saxo Bank Predicts NFT Music Platforms Will Disrupt Spotify In 2022

Saxo Bank said new technologies like nonfungible tokens (NFTs) will help artists regain their fair share of music revenue as popular streaming services like Spotify cut into their revenue.

According to Saxo Bank’s Outrageous Predictions 2022: Revolution, NFT-based streaming platforms enable music creators to distribute music directly to listeners without the involvement of centralized middlemen.

Similarly, Saxo Bank’s cryptocurrency analyst Mads Eberhardt said mainstream streaming platforms like Spotify and Apple Music take a substantial cut, which, together with the cut paid to labels, is roughly 75% or more of the revenue.

According to Eberhardt, these models do not determine individual subscription fees based on what each subscriber actually listens to:
In the next phase, NFTs could prove particularly compelling for content generators in the music sector, as musicians believe they are unfairly treated by the revenue sharing models of streaming platforms like Spotify and Apple Music.

According to the analyst, NFT-based music streaming projects will likely start launching in 2022, including initiatives like Audius, a blockchain music platform backed by Katy Perry, The Chainsmokers and Jason Derulo. Audius’ blockchain-based platform is a decentralized music-sharing and streaming platform designed to eliminate the middleman in the music industry and allow fans and creators to interact directly.

In contrast, traditional streaming platforms such as Spotify face a bleak future, according to Saxo Bank. The company predicts that Spotify shares will plunge 33% by 2022. Spotify shares already dropped to as low as $204 in August from around $300 at the start of the year, according to TradingView data. The stock is trading at $229 at the time of writing.
Spotify’s revenue has been steadily increasing over time, indicating the potential for NFT-based music platforms to disrupt. The company generated 7.85 billion euro ($9.5 billion) in revenue last year, an increase of 16% over 2019. Spotify’s financial results for 2020 are available here. In Q3 2021, Spotify’s monthly active users increased 19% year-on-year to 381 million.

In late 2020, Spotify will look for talent with a crypto background, as we previously reported. NFTs are also well known to Spotify, as it noted NFTs in its Spotify Wrapped 2021 compiled for users on Dec. 1, 2021.

Spotify has not responded to this yet

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