What makes Sound.xyz, the leading player in the music NFT field, attractive to a16z’s investment?

Why did a16z invest in Sound.xyz, the top player in music NFTs?

Author: Blocking, Climber

On July 12th, foreign media reported that the Web3 music NFT platform Sound.xyz had completed a $20 million Series A financing round in February of this year. The round was led by a16z, with participation from Sound Ventures led by singer Snoop Dogg, artist and producer Ryan Tedder, and actor Ashton Kutcher, among others. The investment lineup is quite impressive.

The disclosure of this financing information was delayed by nearly five months, indicating that Sound.xyz and its major investors are not eager to capture the early market value of the project, but rather to improve project functionality and services, with the intention of capturing a larger share of the music NFT race.

Back in December 2021, Sound.xyz had already raised $5 million in seed funding led by a16z. Since then, it has developed into a leading project in the music NFT space. So why is Sound.xyz constantly favored by a16z and major investors? And how does it leverage Web3 music NFT?

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Sound.xyz Introduction

Sound.xyz is a Web3 music NFT platform that supports Ethereum and Optimism. Its main goal is to help creators earn income by turning music into NFTs, which can be bought and sold by listeners for profit.

According to statistics, 90% of Web2 music industry traffic flows to the top 1% of artists, which means that many music creators are not fully discovered. In addition, many artists earn only about $0.003 per song, making it difficult for many talented artists to make a living from music.

Against this backdrop, the emergence of Sound.xyz will eliminate intermediaries that have plundered the interests of musicians in the music industry, directly connecting creators with listeners for maximum value exchange of talent and remuneration.

As Sound.xyz officially puts it, Sound is a music platform without intermediaries: a set of web3 native music and economic tools that empower and give rights to the next generation of artists and their communities.

Specifically, Sound.xyz enables artists to launch new music for the first time in the form of a set of NFTs. Each version of the NFT has a unique serial number, so listeners can show off their early support objects on social media platforms.

Each Sound NFT is not just a song. Supporters who own the NFT of a song can publicly comment on the song, but once the NFT is sold, the comments disappear and are replaced by new comments from new users.

Since its first investment in 2021, Sound.xyz has recruited more than 500 artists, who have earned over $5.5 million in primary sales and secondary royalties.

Features and Functions:

On Sound.xyz, songs are played for free, and users can plan their own playlists. Artists can showcase their songs with a series of limited edition NFTs, and listeners can collect them directly from creators and publicly comment on the songs they own.

Sound.xyz is open to all artists, who can release music at a price of their choice and sell it directly to their personal community, while receiving instant payment funds.

Usually, streaming platforms cannot allow artists to deeply understand their fan base, but on Sound.xyz, based on the already on-chain information, creators can accurately see who their earliest and most loyal fans are.

In terms of revenue generation, Sound.xyz also has instant payment and song splitting capabilities, and the resulting revenue can be directly deposited into the creator’s wallet. Unlike the traditional music industry, where royalties may take months or even years to reach the account, Sound.xyz can be immediately implemented without intermediaries.

Through Sound.xyz, artists can:

·Upload songs on-chain and retain creative ideas for what music to release, as well as decide how to sort their music catalog.

·Have complete control over the relationship with the audience, without intermediaries, and the creator is their own agent.

·Instantly, accurately, and transparently pay each time a fan collects their song.

·Artists receive 100% of the revenue and retain 100% ownership and publishing rights.

Similarly, as a music fan of Sound.xyz web and mobile applications, you can:

· Discover the hottest new music works from emerging independent artists.

· Collect music to prove that you are the first person to discover the next Billie Eilish.

· Leave permanent comments on collected songs to show your support to other listeners.

· Get access to group chats with artists and other collectors, as well as other rewards and experiences.

· Earn money by creating playlists and sharing links to your favorite songs.

Every Sound.xyz listener can be a builder of music, whether it’s collecting music or making playlists, fans can be rewarded for actively participating in the ecosystem and planting other listeners. At the same time, on Sound.xyz, music lovers can also be recognized for discovering new music.

In addition, Sound.xyz has launched a creator editing feature, where artists can freely edit their works after uploading music.

If a creator wants to edit their own music version, they can navigate to their song page or “Your Versions”, click the ellipsis (…), and then click “Edit Version”.

Then:

↳ Change song media and details, metadata, or rewards ↳ Add/remove published collaborators or change split percentage ↳ Edit Drop configuration (start time, price, duration of open edition Drop, or supply of fixed edition)

After completing, check the changes and click “Update” to sign the transaction to complete the changes.

Fee Model:

Each artist (not the platform) sets their relationship terms with supporters through a unique and customizable digital project supported by smart contracts. By releasing new web3-native revenue opportunities, Sound.xyz economically enables artists to bypass traditional intermediaries and retain most of the revenue without sacrificing distribution.

On July 6, Sound.xyz changed its platform fee model again, where artists can receive 100% revenue generated from their music NFT issuance.

Sound.xyz has canceled the percentage-based minting fee (5% for primary coins and 2.5% for Sound Swap) and replaced it with a small minting fee charged to each transaction’s collector. That is, the platform will charge a fixed fee of 0.0007 ETH to the collector for each transaction, regardless of whether the collector mints one version or 100 versions. This will encourage collectors to collect multiple versions without worrying about high costs.

For artists, this means that every dollar they earn will go directly into their wallets.

Comparison of old and new charging models:

Old:

· 5% of the primary minting fee is borne by the artist

· 2.5% of the Sound Swap minting fee is borne by the artist

New model:

· Collectors pay a fixed fee of 0.0007 ETH per transaction.

· Artists receive 100% of the income from their works.

· Sound will no longer charge artists 5% for primary minting

· Starting on July 7, 2023, Sound will no longer charge a 2.5% fee for Sound Swap minting

Conclusion

Music NFTs have not gained the same popularity as PFP NFTs in the past year or two. One reason for this is that NFT or Web3 music is still an early market and application, and most music NFT platforms tend to be e-commerce models, which makes the two core concepts of Web3 ownership and tradability (or liquidity) of music NFTs not fully extended. Moreover, music is more difficult to enter than pictures, so it is important to involve more fans in music NFTs.

Sound.xyz is a music distribution platform, but as can be seen from the above introduction, it is trying its best to bring creators and collectors closer together in terms of content creation and interactive gameplay. In addition, in terms of income, the platform is also trying to minimize the costs generated in various music NFT creations and circulation, and instead strives to provide maximum value benefits for content creators.

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