Web3 and the Future of the Music Industry
How will blockchain technology change the music industry for the better?
Much has been said about the disruptive powers of blockchain technology. It seems that every industry, from tech and finance to e-commerce and supply chain, has discovered new ways to successfully incorporate blockchain into their business practices and help bring Web3 to the mainstream. But in order for new technologies to fully integrate into everyday reality, they need to turn their attention toward the stuff that populates daily reality, the stuff that makes our lives worth living — pop culture, film, art, TV, literature, music, and more.
Perhaps the number one rule regarding technology and adoption is this: new technologies become dominant when they seep into our personal lives. Recall the advent of Web2 streaming platforms like Spotify and Pandora. When they arrived in the late 2000s, the platforms were met with popular suspicion if not total derision. Many music fans questioned the lack of ownership built into the streaming service model, complained about sound quality, or wondered how streaming platforms could compete with their own personalized music libraries.
After all, Spotify emerged within the age of iTunes, and music listeners had grown accustomed to storing thousands of songs on their iPods and computers, building custom playlists, adjusting album artwork, and burning MP3s to CDs. iTunes’ greatest success was developing a marketing strategy and interface that rendered digitally-stored music personal and cool (take a look at this 2008 iTunes commercial to see Apple’s genius here). Indeed, Spotify and other streaming platforms did not win the hearts of the iTunes crowd until replicating the Apple model by building their own extensive music libraries, customizable and shareable features, and easy-to-use interfaces. Spotify even took some cues from Apple’s marketing playbook and began releasing innovative TV spots that clearly owed debts to Jobs and co. Gradually, Spotify became a household name and replaced iTunes as the leader in music listening technology by the mid-2010s.
Though Web2 music streaming services changed the way we listen to music, they also ushered in various issues that require new modes of thinking to solve. For example, their centralized business models grant them total control over creators’ presences and their content. They’ve also initiated other issues related to data privacy and free speech that have made headlines in recent years.
With Web3, however, such drawbacks are eliminated, as its technologies promise to decentralize platformed control and place power back into the hands of creators. Below, we’ve compiled three ways in which Web3 is going to disrupt the music industry and change the way we consume music.
Web3 technology bridges the gap between fan and artist.
From the 1950s onward, models of commerce in the music industry have remained fairly static, even as technological innovations such as CDs and MP3s became commonplace. The relationship between fan and artist has always been a closed circuit, based entirely on transactional, one-sided exchanges. For example, in the ’70s, a Neil Young fan would go to a record store and purchase Harvest. When CDs became commercially available in 1982, the same logic prevailed but the preferred medium changed — people replaced vinyl with CDs. When MP3s took over in the early aughts, the record store moved online and the logic of purchasing music remained the same but the experience became digital. The streaming era further pushed music consumption online while simultaneously eradicating ownership, as individual payment models gave way to subscription service fees. Ultimately, music consumers have mostly existed separately from artists throughout the last 70 years.
Web3 changes this lopsided model by ushering in new ways of commerce that encourage direct, more meaningful relationships between consumers and artists. The peer-to-peer nature of blockchain technology allows artists to cut out the middlemen and directly reach their fans. So far, this paradigm has been most clearly exemplified in the world of NFTs, predominantly in the genres of dance music and rap. In early 2022, deep house stalwart Diplo released a much-anticipated single through the crypto-based music startup Royal. The release included a bundle of 2,110 Diplo LDA tokens equipped with unique ownership privileges and streaming royalties that fans could directly access. Similarly, Chicago rapper Chief Keef attached an NFT package to an album release that gave fans access to exclusive merch, special access to events, privileges to future NFT drops and more. Unlike previous models of music consumption, Web3 gives fans access to their favorite artists’ orbits and allows them to participate directly in their careers.
Blockchain technology ushers in new, more equitable models of compensation.
Music fans are not the only party currently enduring the unbalanced commercial relationships of the music industry. Artists, too, have found themselves locked in unfair models of compensation, especially during the age of streaming. Generally speaking, much of the friction surrounding compensation in the music industry involves the knotty process of splitting revenue between the labels, distributors, writers, artists, etc. Artists often get the short end of the stick within these payment distributions, and it’s seemingly gotten worse in the age of Spotify. In 2021, The New York Times published a now-seminal article about the ills of compensation in the streaming era that uncovered the lopsided revenue percentages distributed to artists by giants like Spotify and Apple Music. The article paints a damning portrait of streaming compensation, highlighting artist boycotts, emerging artist advocacy groups, and raw data to ultimately argue that payouts in the music industry today is “a business of pennies (and fractions of pennies).” It’s clear that the revenue war continues to rage.
So, how can Web3 help extinguish the flames? Blockchain technology’s decentralized exchanges usher in new, more equitable models of compensation where the terms are transparent and the revenues are fairly distributed to each party. Consider the New York-based startup Mediachain. Started in 2016, the blockchain-based company set out to “build a more connected world for creators and audiences” by using open-source technology, cryptography, and smart contracts to validate authorial identity, build revenue maps, and distribute royalties. In fact, Mediachain’s more equitable way of business was so compelling that Spotify acquired the company in 2017 as a way to begin creating better economic models. (Take a look at the image below for a more detailed explanation of how Mediachain works.) To be clear, Mediachain is not the only company that’s emerged in recent years to help solve the compensation puzzle. Vezt helps artists streamline royalties for songs and recordings and Musicoin offers a transparent, free streaming service, to name a few.
Web3 pushes the boundaries of music itself.
Technology always changes the nature of music itself. Electric guitars gave birth to rock ’n’ roll; synthesizers started synth-pop and dance music in the late-’70s and early-’80s. In the early-2000s, the democratization of production via the emergence of DAWs (digital audio workstations) like GarageBand and Logic helped push rap and dance music into the mainstream by placing the tools of production into the hands of anyone with a MacBook or the means to purchase the (fairly affordable) software. As the old media theory standard goes, “the medium is the message” — technological developments always influence content itself, and music is no exception to this rule.
While blockchain and decentralized technology are still very new, there are a handful of instances where such vanguard tech can be seen making its way into music itself. The experimental composer Holly Herndon, for example, launched Holly+ in 2021, a blockchain-based production tool that uses voice data to replicate Herndon’s real-life voice. Essentially, the tool works as her digital twin, allowing users to theoretically compose Holly Herndon songs. Profits from purchasing the tool go to the Holly+ DAO where they can be used to generate new tools and approve works using the replica. Similarly, the startup Crowd Records has developed a platform where musicians can crowdsource the development of songs using cryptocurrencies, resulting in a creative lab that runs on blockchain technology. And finally, it’s easy to see the traces of Web3 in the recent hyperpop phenomenon, a suped-up take on electronic pop music that emphasizes global collaboration and futuristic aesthetics redolent of DAOs and NFTs. Take a look below at the video for “Idyll” by A.G. Cook, arguably hyperpop’s preeminent forefather. Fifteen seconds in and it’s easy to see that this is the future, much like Web3 itself.
Learn more
This article examines three key changes blockchain technology is making on the music industry. Read more about how Cardstack will help develop Web3 below.
From Net Art to Non-Fungible Token: A Brief History of the NFT
From App to dApp: How Web3 is Reshaping the Internet
Beyond NFTs as Collectibles
