As an independent music artist let me welcome you to the painful reality of the music industry. Most of us don’t actually make money from the music itself. Not unless we’re Bad Bunny, Beyonce or Brian Adams. That’s to say we either boast hundreds of millions of streams or we produced a good deal of successful music in a pre-streaming era.
Did you know that in 2020, each time a listener streamed a song on Spotify, an artist received a bit more than three one-thousandths of a penny on average? This statistic is according to a United Nations report and is a very hurtful truth. As a result, we as artists must make our money elsewhere in the form of brand partnerships, live shows, paid content and other revenues.
David Greenstein, co-founder and CEO of Sound (formally Soundxyz), is looking to change this landscape. On Wednesday, Sound announced that it raised $20 million in a Series A round led by a16z Crypto, a branch of Andreessen Horowitz. Other participants included the rapper Snoop Dogg, songwriter Ryan Tedder, as well as Palm Tree Crew, A Capital, Sound Ventures, Collab + Currency, and Scalar Capital.
The injection of capital follows a seed round of $5 million in December 2021, also led by a16z. Greenstein declined to provide his firm’s latest implied valuation, a rare raise of capital in an increasingly tight fundraising market for crypto firms.
Greenstein understands that the music industry needs help from a financial perspective. “Music is the category of media with the very worst power imbalances, heavily favouring intermediaries and screwing over artists,” Ali Yahya, a general partner at a16z Crypto, said in a statement. “Sound is music without the middleman.”
Greenstein also boasts quite an impressive resumé. When he was 13, he landed an internship at Atlantic Records after an executive from the company spoke at his school, and Greenstein’s college application essay focused on structural issues within the music industry.
As a platform, Sound is a cross between Spotify and iTunes. Artists pay a small fee to upload their songs onto the website. All songs are available for a user to stream. Along with the free song to stream, an artist creates a limited quantity of non-fungible tokens, or NFTs—Greenstein says the average is somewhere between 25 and 50—that users can mint. Artists determine both the quantity and price, not Sound, and the firm takes a flat fee from users every time they mint an NFT. Blending elements of centralised and decentralised ideologies for art is a genius move.
“Sound is digital vinyl,” Greenstein said, comparing NFTs purchased on his platform to the throwback records fans now increasingly buy from their favourite artists. He added later: “We need new ways to experiment with how we value and monetize music.”
So far, Sound has generated $5.5 million in revenue for those who have uploaded their music onto the website as NFTs. Greenstein says that his team of now 16 employees has officially opened up the platform, which was currently invite only, to all interested musicians as of Wednesday.