While vinyl records are back in style and some are rebuilding their CD collections in hopes of becoming popular again, the reality is that most people are using streaming services to listen to music — in fact, according to Statista, as of 2022, just two services, Spotify and Apple Music, account for roughly 45% of the industry's market share.
Today, we have access to a plethora of streaming services, but despite a fair amount of competition, music streaming startup Tune.FM is hoping its differentiated approach will help it gain a loyal following.
Unlike major streaming services, Tune.FM is a decentralized music streaming platform that runs on the rails of Web3. Rather than a subscription model, users pay for each song they stream using the company's proprietary JAM tokens (tokens can be purchased on the Tune.FM website). Users can also earn more JAM tokens by listening to promoted music.
Artists get paid 1 cent per minute each time their song is streamed, meaning they can make much more than Spotify, which pays $0.003-0.005 per stream, or Apple Music, which pays $0.01 per stream. Tune.FM also sells NFTs and other collectibles of artists.
The startup recently secured a $50 million token purchase program commitment from Global Emerging Markets (GEM). The commitment will see GEM purchase $50 million worth of JAM tokens over the next two years. Tune.FM can convert these tokens into funds at any time. The company is also backed by other asset managers and angel investors, including Andy Hertzfield.
The startup will charge a 10% fee for all transactions using JAM tokens on its platform, and the company will also allow paid JAM tokens to be converted into cash at any time through traditional cryptocurrency exchanges.
Tune.FM co-founder and CEO Andrew Anter was a classically trained violinist who toured the world with bands and orchestras in his younger years before launching a musicians directory at Brown University that grew to over 4,000 users.
Antal told TechCrunch that he had always wanted to create a music-focused social media platform, and after learning about cryptocurrency and how Web3 could facilitate micropayments for artists, he came up with the idea for Tune.FM.
“Web3 and tokenization are critical to our business model. [for] “It's going to change the way artists are paid and the way they are monetized,” Antar said.
He stressed that despite the app using Web3 infrastructure for its backend, most users will not know the role of cryptocurrency in interacting with it. “Users don't need to know anything about cryptocurrency,” Antar said. “We don't use the word 'cryptocurrency,' we use the word 'credits.' We don't use the word 'NFT,' we use the word 'collectibles.' This is actually the underlying technology behind it. We've made it easy for anyone to use.”
Tune.FM launched as a web app in 2021, with the app becoming available in July. Since then, its user base has grown to about 20,000 monthly active users. That's not a huge number, but Antal said the company has seen strong growth in recent months. He declined to provide details.
Antar said the company plans to use the funding to expand its tech team, build a metaverse site to host music festivals, and scale the platform to support more artists.
“I've been basically talking to artists, labels and managers this week about deals,” Antal said. “We have some great artists that we're not ready to announce yet, and a lot of artists that you all know.”
While Tune.FM's idea is great, building a company to compete with Spotify is nothing new. Lüm closed down after raising $4.9 million in venture capital in 2022. StationHead is another startup looking to change the way people stream music and interact with musicians. Tune.FM also has competition from free video streaming platforms like TikTok and YouTube that people are using for music.
But Antal isn't too worried about the competition. He thinks his company stands out because it's trying to innovate the music streaming process, rather than repeating a few features. Tune.FM listeners get perks the longer they spend on the platform, like free JAM tokens and exclusive content from artists, and Antal hopes they'll keep coming back.
“When it comes to the music industry, financial innovation can be disruptive,” Antal said. “For years, we've had a lot of issues with artists being treated unfairly, catalogs being licensed in certain places and not others. We've created an entirely new business model for the industry and the global music economy, and that can only be made possible through tokenization.”