NFT music platforms to compete with Spotify in 2022

Saxo Bank predicts non-fungible tokens (NFTs) will help artists gain back some of their revenues as streaming music services cut into artist's profits.

NFT music platforms to compete with Spotify in 2022

Saxo Bank predicts non-fungible tokens (NFTs) will help artists gain back some of their revenues as streaming music services such as Spotify cut into artist's profits.

One of the predictions in Saxo Bank's "Outrageous Predictions 2022: Revolution" suggests that NFT-based streaming platforms will benefit music creators because they let them distribute music directly to listeners without paying centralized intermediaries.

Mads Eberhardt, a crypto analyst at Saxo Bank, argues that mainstream streaming services such as Spotify and Apple Music take an inordinately large percentage of revenue, which, along with the labels' cut, puts the figure at around 75% or more.

“This model doesn't align the subscription fee with the music a subscriber listens to," says Eberhardt.

The next step for NFTs will be to provide content generators in the music industry with a technology that is particularly compelling since musicians feel unfairly treated by revenue-sharing models like Spotify and Apple Music.

Analysts said streaming music using NFT-based technologies is likely to launch in 2022, including platforms like Audius, which is backed by Katy Perry, The Chainsmokers, and Jason Derulo. Using blockchain technology, the Audius platform is a decentralized platform that allows fans and music creators to easily share and stream music directly.

Traditionally streaming platforms like Spotify, on the other hand, face a "bleak future," according to Saxo Bank. In 2022, Spotify shares are expected to plummet 33%.

Spotify's price has dropped steadily in 2021, starting the year around $300 and dropping to as low as $204 in August, according to Bloomberg data. It is currently trading at $228.8at the time of writing.

Spotify's revenue has been steadily increasing in recent years, indicating the potential for NFT-based music platforms to disrupt. According to the company's official financial results for 2020, Spotify generated 7.85 billion euros  in revenue – a 16% year-over-year increase.

In Q3 2021, Spotify had more than 381 million monthly active users, up 19% year-over-year.

As a result, Spotify has been looking for talent with crypto backgrounds in late 2020. NFTs have also been on the rise, as Spotify noted NFTs in its recent Spotify Wrapped 2021 update for users.