Artist Development and Incentive Structures for Content-Driven Cryptocurrency Platforms

Ryan Tanaka
Jan 20 · 11 min read
My Wurlitzer/Seaboard/Streaming Setup for my upcoming YIMBY Arts project!

While cryptocurrency and blockchain technologies are still in its infancy stages right now, the possibility of creating economic “incentive structures” in the content space has a lot of people excited about what the future of new media has to offer. Research into this area, however, tends to be sparse since it’s a brand new field and (as of today) no real models of a sustainable ecosystem, as of yet.

The fact that the content industry will have to model user-incentives in an effective way in order stay relevant for the advent of “Web 3.0”, however, seems to be a given by industry insiders at this point. How exactly will this play out, however, is the question. These models are not easy to create, even in less subjective fields like finance and accounting, so how is the content space going to take advantage of the powers that this new technology has to offer?

This article will focus on music (since it’s my area of expertise) but since it will be looking mostly at fundamentals there should be many cross-over applications to other content areas as well.


Why Incentives Are Needed: Artist Development

In the music tech space, Musicoin currently holds the title for the most “developed” music-crypto-platform out there right now — they have a fully-working streaming platform powered by a stable crypto-economy that runs completely on Musicoin tokens in order to pay artists at the highest royalty rate in the market. For what it is, it works very well and can be considered an impressive feat in it of itself. (Disclosure: I’m an early supporter and investor in the Musicoin project and foundation.)

The platform currently may have maximized its growth potential at this point, however, due to the fact that it’s missing the key ingredient that will allow the platform to take it to the next level: Artist Development. While streaming probably *is* how people will distribute and consume music in the foreseeable future, content creation is a field entirely different from that of distribution — something that music tech platforms often overlook before claiming themselves to be a viable “career path”. It’s yet to be seen if Musicoin can make the next steps happen — but I’m still holding out hope that it might be able to make that leap somewhere down the line.

What does Artist Development actually mean, though? Unfortunately that’s not an easy question to answer — it means a lot of different things to a lot of different people. It might be direct training on the artist’s instrument or skill, teaching the business/management aspects of arts projects to the artist, or providing legal/marketing support to the artist for issues surrounding their practice in one way or another.

The overarching idea among all of this, however, is that it takes a village to make an artist successful — not going at it alone. If we want to make Artist Development a real thing in the digital space, the use of a cryptocurrency/blockchain model is almost mandatory since it requires a split-revenue or split-ownership system in order to keep the interests of multiple parties and members in check. The devil is in the details, of course, but once we start to conceptualize artists as a team of people rather than a lone individual, the landscape in the content space starts to make a lot more sense.

More traditional institutions in the music space currently have an absolute advantage when it comes to Artist Development — mostly because the vast majority of music tech platforms out there don’t even bother acknowledging that AD is actually a thing. (YouTube is trying to do a little bit of this but had severely underestimated how difficult it was going to be so they’re struggling a lot with it, imo.) There’s some talk about trying to change this attitude within tech companies recently but it’s going to be a long journey getting there since it requires an entirely different mindset that Silicon Valley may not be prepared to handle at this point.

In this regard, Netflix and Amazon actually has the right idea by getting into the content space directly — after having gotten tired paying exorbitant amounts of royalties to Hollywood, they decided that it would actually be cheaper to just create shows of their own. And some of these shows feels fresh and exciting because they’re coming at it from a genuinely different point of view. But where is the equivalent of this in music? We’ve yet to see this shift there — which is kind of odd, given that making a music album is a *lot* cheaper than trying to get a fully fledged movie or TV series off the ground.


Earning the Artists’ Trust

So in the music industry right now (both new and old) there is an atmosphere of mistrust between the artist and…well, everyone else, if we were to be honest about what’s actually going on. The nature of the current model (both new and old) puts the artist in a position where they’re taken advantage by basically everyone — including the fans themselves — which is largely why we haven’t seen any “breakthroughs” in the industry for a very long time. While fans usually have the best of intentions, there’s not much they can do if the infrastructure itself isn’t conducive to healthy artist-fan relationships, after all.

Artists often get depressed because they’re working against overwhelming odds and a business model that’s largely hostile to their interests — all of which are true, yet, they’re not allowed to speak about these things in public without being seen as a Debbie Downer. So most of the time they keep these frustrations to themselves while the rest of the world goes on, blissfully unaware. Doubly hard to bring it up as a topic since people see artists as their “job” to “make people happy” or “bring joy” etc. and some listeners will actually get very angry if you try to taint their “happy place” with stories of what’s actually going on.

You’ll be surprised at the number of artists out there who appear to be doing very well (sold-out shows, winning awards/competitions, lots of publicity) who are actually just barely getting by. One of the greatest tragedies in the music industry is Zoe Keating — her husband passed away a few years ago due to health issues, and she has been struggling to make ends meet perpetually due to low streaming payouts and the lack of tracking on her existing works. (Her career is worth following if you’re interested in music tech since she brings up many of the pain points that artists are facing right now.) And these are just the stories that we know about — I’m sure there are many more like hers out there.

So it’s absolutely necessary for music tech advocates to have this basic understanding and empathy of where artists are coming from or they risk building entire projects around misconceptions and projections from a consumer’s point of view. This unfortunately happens way too often in the startup space since you see all kinds of music products emerge that rise and fall for reasons that should’ve been obvious from the beginning.

(Honestly speaking: as an artist I’ve told lots of market research people what they wanted to hear just so they’ll go away, btw — hate doing it but when they ask pointed questions trying to validate their own “correctness” it’s really not a good use of anyone’s time. I’m pretty sure I’m not the only one who’s gone through this type of thing.)

But one thing is very clear here — Artist Development is clearly the largest gap in the music industry right now, waiting to be filled by either an enlightened new wave or a reformed old tradition. Who’s going to be the one to do it first?


Wealth = (Tokens) = Labor

Before talking about incentives there’s a need to clarify what type of utility a cryptocurrency token actually provides to us in general. What makes crypto “useful”? Why bother with the blockchain to begin with?

One important aspect of cryptocurrency tokens is that they should be conceptualized as either a representation of labor, or as a representation of wealth. There’s a lot of debate in the crypto community right now about what a token really *is*, but at the end of the day a token is either a representation of someone’s wealth, or someone’s labor. Fiat currency systems were explicitly designed to act as a bridge between wealth/labor and this conceptualization does not change, even with the new technologies that we have today. That’s the whole point of it, really!

With this in mind, as with fiat exchanges, there’s primarily two ways to gain crypto tokens — either by paying for them directly with fiat (buy your tokens through an exchange system) or by “earning” them through “work”. “Work” means something very different when talking about purely online environments (it’s a different thing than say, working at a coffee shop as a barista) but there are a few “jobs” out there that lend itself very well to these types of models — data entry, validation, QA — to name a few.

For music and content based projects, the concept of “work” will probably take on a different meaning since the “product” itself focuses on entertainment rather than utility, in most cases. We can find a few examples of how these issues were dealt with in gaming platforms, however.

The massively popular video game League of Legends has an interesting model where in order to get a few in-game “perks” you can either choose to pay for it (wealth), or “work” for it by playing the game or promoting the brand of the game itself (labor). Sure, if you’re rich you can get all the good stuff right away, but if you’re willing to put in the time you can compensate for it by working hard for it. (Money won’t make you happy but it will save you time, btw.)

Part of the reason why League of Legends is so massively popular is because they have incentive structures that allow both the rich and the poor to participate in the process on more or less equal grounds. (Money will get you a slight advantage in-game, but not so much that it overcomes good performance.) Money helps, sure, but it doesn’t mean that just because you don’t have any, your situation is hopeless. If we want to get away from digital systems that reward money and money only, we need to acknowledge the value that labor can provide to the space as well. I do believe that crypto models built with this type of universality in mind will perform much better in relation to those that don’t, because it brings back a sense of balance in the business world that has been missing for quite some time.

The main hypothesis of the crypto-music-content space is that if you incentivise your users correctly, you can delegate a lot of the work that artists don’t want to deal with (admin, legal, marketing), allowing them more time to work on their craft. Using tokens as rewards, we should be able to create support systems that work to the advantage of both the artists and their fans. The jury is still out in regards to if it will actually pan out this way, but that is the hope that keeps us crypto-people going day to day — while the old guard reflects on how they’ve been going about their labor practices up until this point (#metoo, the absolution of corporate responsibility), cryptocurrency projects will probably be the ones leading the way towards what comes next.


What is an Incentive?

The problems in the content space are massive and a “permanent” solution will probably come out of a mixture of technologists, business communities, and government regulators working in tandem to achieve a result that works for everyone involved. If that seems far fetched, it definitely is: in today’s partisan political climate it’s hard to imagine anyone working together on *anything*, much less something as complex as creating a decentralized infrastructure that works for both public and private interests at the same time.

In this regard, Asia is much further ahead of the West right now, since they’ve already gone through the regulatory hurdles and have already begun to implement these solutions into business practices directly — with the blessings of the governments themselves, more often than not. The crumbling infrastructure problems we see in the US in the physical world is a metaphor for where we stand digitally in the world right now, as well — while the West fights among itself, other countries are making steady progress in ways that we can only imagine at this point.

In the US, we have to build a lot of these infrastructure networks from scratch — which can be a pretty overwhelming task if you’re just starting to look into the potential opportunities and hazards in the crypto/blockchain space as a whole. We can, however, simplify the problem somewhat by focusing on incentives — what are people going to actually “do” with their crypto tokens once it’s in place? This is something that even Asia hasn’t figured out yet, so the race to find the right model is still far from over.

I’ve been doing some research on existing and hypothetical models of making incentive structures work — send me a DM on one of my social media profiles (Instagram, Facebook) if you’re interested in talking further!


The Future Will Be Weird

I do truly believe that cryptocurrency projects will require a huge departure away from the “move fast and break things” model (along with a greater emphasis on roles over skills, imo) that has characterized the Web up until now — probably much further than what most people are comfortable with. The reason why the crypto space feels weird and uncomfortable is because it is a huge technological, methodological, cultural — spiritual, even — shift in the way we think about technology in an overall sense. Nobody expected the meteoric rise of the field in 2017, and future developments in the space will probably be equally unpredictable since products that solve real problems in the space will challenge our sensibilities just as much (if not more) than our intellect as a whole.

Web 2.0 projects have been characterized by speed, size, and uncontrolled, asymmetrical growth — where as Web 3.0 will (hopefully) emphasize rhythm/pacing, balance, diligence, and authenticity as its foundational layer. Aya Miyaguchi, Vitalik Buterin (who often emphasize that projects do not have to be big to be successful), and the rest of the ethereum team stands out in that they’re taking the exact opposite approach to the tech philosophies that came before them—which provides a ray of hope for many people working within the space.

Thoughtful contrarians, unite? I do think that this culture is part of what keeps people’s interest in the Ethereum project going, despite all of crypto’s ups and downs. But is the unicorn-shirt wearing Vitalik a little bit weird? Hmm, maybe.

And if you think about it, isn’t the fact nobody even knows who Satoshi Nakamoto is — the inventor and originator of this whole thing — kind of weird, too? While the rest of the industry obsess over the latest gossip and personalities in the space, Bitcoin floats around everywhere, almost like an insect that had lost its head but nonetheless is still remains alive, somehow. To some people, the idea that a project can run on its own without a master might come across as unrealistic, unworkable…maybe even a little creepy. It’s been interesting seeing the tech industry try to normalize some of these developments as if that’s how it’s “supposed to be” but they’re not doing a very good job of it, honestly.

The future will be different — it will be weird. And we should probably prepare ourselves for when that time comes. Change always takes way too long but at the same time, always comes way too soon, after all.

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