Why Music *NEEDS* Blockchain
It is said that music has the power to change lives. Music is debatably one of the strongest industries out there; after all, music will never die. It is a beautiful art.
The same can be said about blockchain. It has changed lives and is changing the world as we know it.
But what makes them such a “match made in heaven”?
In order to understand that, let’s quickly review some advantages of the distributed ledger and then tie it into how it fits for the music industry:
- Tracking the flow and movement of data and assets
- Erasing the middle man
- Great for decentralizing markets
- Creating trust by erasing the option of dishonesty
Tracking The Flow and Movement of Data and Assets
In the beginning, blockchain’s claim to fame was the ability to transfer Bitcoin, a digitized currency, which it did by storing cryptographically records of financial transfers. The reason it is called a distributed ledger is that it can store a copy of the data on each node, and each node must form a consensus on the information, transaction, or change that is going through the ledger in order for anything to happen.
But the truth is, the “chained” data technology can store many types of data, including digital rights, digital certifications, intellectual property, and more, all of which can translate into music-related forms of data when it comes to song ownership and rights.
Erasing the Middle Man: Decentralizing a Centralized Market
Today, record labels and agents still run the game. It’s true, they decide where the money is going and how much. The reason is, essentially they are taking a huge risk in investing in musicians and artists, because the chances of making it big are slim. Because of that, they usually go on to take about 70 to 80 percent of the proceeds. Yes, advancements are also offered based on success, but think of how much the artists will need to split their 20 percent on. Chances are they will have other people to pay along the way, like a manager, PR team, booking agent, and whoever else gets in on the journey. Yes, sometimes some expenses will be covered by the record label, but most likely the manager will be taking a cut.
Oh, you wanna make your money back and get rich by putting music on a music streaming app? Guess again.
In music, subscription-based platforms of music streaming companies run off with the potential gains of artists by taking an unfair share of streaming revenues. For example, Spotify controls 51.51 percent of the U.S. music market and is valued as a $19B company. Despite a user average of 1,300 song streams per month, which at a $10 price tag comes out to $0.00769 per stream, Spotify only pays $0.00397 to its artists — in other words, taking 48 percent for themselves on each stream based on the average user streams.
But from the artist’s side, the average artist makes roughly 70 percent of a cent (.70%) on leading streaming apps such as Spotify and Apple Music. To put it in a bigger perspective,Taylor Swift earned between $280k and $390k for her song “Shake It Off,” which got 46.3 million streams. But that’s for one of the world’s biggest pop stars. Most musicians won’t generate that many streams in their lifetime. Calculations shows that a million plays on Spotify translates to around $7k.
The fact of the matter is, these days, the only way artists can really have a say is if they build a big fan base before they come to the negotiation table, so they have some sort of leverage.
But whether that’s the case or not, the risk that the record label takes on an artist is still immense. But imagine if the artists were to be backed by a decentralized fund. With blockchain, there could be more than one stakeholder and funder. This would allow the risk to be much more spread out to the fan base and less on one person — aka, the record label.
By an artist using blockchain, he/she would have complete control over their content and sell directly to fans by using smart contracts. These high-level computer programs are stored on the blockchain and can carry value, and can conditionally transfer that value according to complex business conditions based on the latest state of the distributed ledger. By using these smart contracts, the transaction and the transfer of content directly to each listener and fan opens up a whole new world for every artist everywhere.
But there’s more.
With the ability to connect directly to fans, there’s not only no need for someone else to stand in the way of getting the full profits of the song, there is also no longer someone besides the artist deciding what content is or isn’t released based on what is or isn’t “hot right now,” giving artists true full power over their content.
By freeing the creator from the chains/leash of record companies, we will hear less stories of artists “selling out” to a record label’s demands. The artist will now release what he or she considers “good work,” hence decentralizing a centralized market.
Creating Trust by Erasing the Option of Dishonesty
As noted before, blockchain technology can store a copy of the data on each node, and each node must form a consensus on the information, transaction, or change that is going through the ledger in order for anything to happen. This also helps with honest transactions, and unfortunately, in the music industry, there is the occasional dirty business going on. If the record labels used the decentralized network, every cent of every dollar that came through the record label would be transparent, and there would be no room for dishonesty.
But transparency goes further than that. Royalties are some of the biggest money-suckers in the business. If you look at some songs today, the list of people and companies attached to it is often longer than the average family of five’s grocery list for the week. Each one of those names on that list is most likely getting a cut of the royalties.
In addition, it’s hard to believe that every person that has somehow contributed to the come up of the artist has gotten their piece. Many times, not everyone is given the credit they deserve or any credit at all when a song is released. It’s not too uncommon to hear stories of how songwriters or producers have never gotten the royalties they deserved on a song for the work they have done with an artist at the beginning of their career, and then somewhere along the line as the artist gets big, they are completely forgotten and cut out of the picture.
This is also where the transparency comes in. Being able to track ownership, digital rights, documents, digital assets, and more, would mean no one ever not “eating.”
If an artist would tokenize each project, each person would get their share, fans would be able to help fund the artist directly, the artist would get their true share of their money, and the days of someone getting left behind would be…. behind us.
Music doesn’t just match well with blockchain. It NEEDS it.
