Saxo Bank predicts NFT music to disrupt Spotify in 2022
Among popular music streaming services, including Spotify, that cut huge portions of musicians’ revenues, upcoming technologies like NFTs are being expected to help artists get their fair share, as per a prediction by Saxo Bank.
According to Outrageous Predictions 2022: Revolution by Saxo Bank, music creators, would greatly benefit from NFT-based streaming platforms owing to their aspect of distributing music directly to listeners without any need for centralized middlemen who regularly charge a fee.
Mads Eberhardt, crypto analysts for Saxo Bank, has argued that mainstream music streaming platforms, including Apple Music and Spotify, take a substantial cut, which combined with the sum paid to labels amount to some 75 per cent or more of the total revenue.
Eberhardt explained that these models don’t guide individual subscribers’ fees to the actual music individual subscribers are listening to. The use case for NFTs could potentially prove “compelling” in the next step for the technology for mainly for “content generators in the music industry” amid the feeling of “unfair treatment” of musicians in the revenue sharing models of current music streaming platforms.
The analyst has also noted that NFT-based music streaming projects would most efficiently start working by 2022, including projects like Audius, a blockchain music platform by Katy Perry, Jason Derulo and The Chainsmokers.
The Audius platform, powered by blockchain, is a decentralized music-sharing and streaming protocol that is specifically designed to cut out middlemen from the music industry so that fans and creators can have a direct interaction.
However, the future of traditional music platforms is “bleak,” says the predictions report from Saxo Bank. The company has also predicted that Spotify shares would tumble 33 per cent in 2022. In fact, SPOT has already been dropping in 2021. It started the year around $300, but its shares dropped to as low as $204 in August, according to data obtained from TradingView.
Spotify’s revenues have been witnessing steady growth over time, reflecting the significant potential for NFT-based music platforms to disrupt. According to Spotify’s official 2020 financial outcomes, the company had generated 7.85 billion euro (worth $9.5 billion) revenue in 2020, which is a 16 per cent increase from 2019.
Spotify’s financials have been continuing to grow in 2021, with the total amount of monthly active users surging 19 per cent year-on-year to 381 million in Q3 2021.
Spotify has been paying close attention to the cryptocurrency industry, with the company reporting to have been looking for talents in the crypto background since late 2020.
The company is also well aware of the trending rise of NFTs, as it had mentioned NFTs in its Spotify Wrapped 2021 that was compiled for users on December 1, 2021.