The music industry is becoming increasingly democratic

Denis Doeland
Sep 28 · 5 min read

The music industry is becoming increasingly democratic. This already commenced with the advent of the internet, which broke the power of record companies. With the arrival of a speaker that makes it possible for fans to remunerate an artist directly, another step has been made in the right direction. The music industry benefits from this Volareo, a smart speaker that uses the blockchain.

Two types of music rights

Record labels and music publishers often invest in songs, not only by financing the marketing and production, but often also by paying advances of the future earnings of artists.

In addition to selling clothes, organising concerts or meet & greets — the additional cash flows of artists — musicians earn money thanks to two types of music rights:

Copyrights

The music publisher is busy with publishing music (exploiting it) and makes money from the copyrights. Put simply; he or she earns money getting music played on the radio and TV, or from getting music into films, TV series, programmes, games and commercials. Furthermore, it concerns collecting the rights (earning) for the artists’ live performances, where music of affiliated composers is performed.

Master rights

A record company’s (or label’s) primary goal is to supervise artists in the exploitation of recordings. These are the master rights. The record label ensures the production, financing, marketing and distribution of the recordings: the so-called masters. This used to primarily apply to physical units (CDs, DVDs, vinyl). Now it increasingly concerns the digital distribution, via music platforms such as Spotify and iTunes.

Innovations in the music industry

The master rights in particular are relevant in the digital era. Initiatives such as Spotify and Deezer see the artist earn more, as their music is streamed more often. This is good news for artists and fans. Artists are rewarded quicker and more directly for a success with their fans and are less dependent on third parties such as Buma/Stemra (for example for radio streams). Fans can ‘vote with their feet’: by streaming a song, they can show that they like it and it is picked up by the charts. Before the internet — and before Spotify — streams were not included in the charts. This has only occurred since 2013.

The next ‘evolution’ of this streaming model has now been launched. The founder of this smart speaker, Volareo, claimed that the all you can stream model has certain shortcomings. Nick Yap: “People can discover more music, but do you value the ‘food’ you consume? Was it really tasty? And: one percent of the artists on Spotify receive 90 percent of the revenue.”

Smarter remuneration

Yap wants to solve two problems with Volareo. It should be easier for independent musicians to be able to develop and maintain their connection with their fans. That is why these relationships must be transparent to prevent becoming dependent on other parties — and make a direct relationship possible. An optimised relationship with (potential) fans and customers is essential in the relationship economy, as you have read in previous chapters.

How does Volareo tackle this? Artists receive, just as with Spotify, payment per stream, when their music is played on the voice-activated music player. Here, Volareo has clearly been inspired by the success of Amazon’s Echo. In addition, listeners are encouraged to give musicians tips (micro payments).

These payments run via the blockchain. For example, this digital, decentralised accounting system pays musicians in Musicoin — a cryptocurrency. Tickets for concerts can also be purchased via the blockchain service of GUTS tickets, another blockchain initiative in the music industry. The blockchain guarantees the transparent and direct nature of the communication; the speech technology ensures ease of use.

Responding to the relationship economy

“Consider the CD or the T-shirt that you buy when you go to a concert. You do not buy this because you simply want it, but it is also a way to show your appreciation of the band. Every dollar counts, particularly for younger bands. If you earn a few hundred dollars, you are able to pay the rent. That money should not have to arrive 6 months later, via various constructions that are not transparent for you as an artist”, says Yap. Here he highlights a development that we cannot avoid: it is the relationships with fans that have been developed which predict future cashflows. It does not matter as a fan whether you want the CD or not, you wish to show your appreciation of the band.

To develop relationships with fans, one must get into contact with them. To know where they are and what they want. Thanks to the blockchain, musicians know exactly who, and how often, they are being listened to. You can also see where the listeners come from. A strategy can be devised for this. If it appears that you have many fans in Friesland, then you should organise a concert or tour there.

Conclusion: get to work with the data

Yap states that musicians must approach their band as a start-up. “Imagine that you are fresh out of music school. How do you then create a following and define your scalability? Do you have to specialise for example in a certain niche or region?” A few words about these questions — and who better to offer them than Hardwell, who managed to ‘hack’ his own career as a real growth hacker? The way he made smart use of data and approached his own career as a start-up can be explored in the presentation below.

Hardwell also says in his presentation that the last days of the music industry are in sight. The direct relationship with fans is emphasised by the use of his bot. That is why artists strive towards fully automated communication. Only artists that optimise their relationship with their fans digitally will have a chance at success in the long term.

More than simply blockchain technology is required for this. Voice assistant applications and augmented and virtual reality are the logical successors for Hardwell in the increasingly far-reaching digitisation. A further overhaul of the music industry is therefore unavoidable. Would you like to read Hardwell’s presentation at The Next Web 2017 once more? Request it from his bot. You only have to type ‘NextWeb’.

>>> Go to the next chapter

Digital Assets by Denis Doeland

In order to get started with digital change, it is important to realize that this change consists of three fundamental core elements. Force, Power and Potential. Learn through this publication to make optimal use of of the digital capacity of your organization.

Denis Doeland

Written by

Author, Blogger, Disruptor, Maven, Numerati and Transformer. Check more on: denisdoeland.com

Digital Assets by Denis Doeland

In order to get started with digital change, it is important to realize that this change consists of three fundamental core elements. Force, Power and Potential. Learn through this publication to make optimal use of of the digital capacity of your organization.

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