How blockchain can change the music industry
Given all the change in recent years, it is easy to forget that the launch of the digital age was not so very long ago. Digital music files opened the door to new ways to consume music, which, within a few years, gave way to streaming services, each step offering unprecedented access to songs and albums to more people in more places. However, the current system has also brought with it an excess of middlemen, centralization, and archaic reporting technology which has driven costs through the roof, and squeezed artist earnings to a minimum.
So how do we use technology to reinvent the industry and give artists the fair pay they deserve? This is where blockchain emerges as a means to solve the problems inherent in music distribution, monetization and fan-artist interactions.
The music industry today
The industry can be divided into two distinct yet interlinked categories: creation and distribution. New technologies are constantly enhancing both how music is made and the way we enjoy it via streaming. According to the latest IFPI Global Music Report, physical music revenues in 2019 accounted for around a fifth of the global market, while streaming revenues soared by 22.9% to $11.4 billion, making up more than half of global recorded music revenue for the first time. This contributed to the total market growing by 8.2% to $20.2 billion in the year. But for all the revenues generated, the new distribution platforms have been built on an outdated and flawed model and the underlying infrastructure supply chain, tracking and reporting has not kept pace with the evolution in creation.
Many of the contracts negotiated between rights holders and the streaming platforms are built on a model that has remained relatively unchanged over time. Since the 2006 launch of Spotify, streaming providers on average pay out 70% of every dollar earned and are tied into ongoing contracts based on the 9.99 all-you-can eat model. That may have been sustainable initially, but over time they must continue to retain and grow their customer base in increasingly saturated developed markets and price-sensitive emerging markets. Within these constraints the platforms are understandably incentivized to promote those artists that are most lucrative for them — in fact the top 10% of artists make up more than 99% of the streams. In addition, the algorithms and company performance metrics are designed specifically to drive continuous playlist streaming, built on a reliance for engagement and advertising revenues to support freemium models and retain paying customers. The result is an experience that is less purposeful and artist driven.
This hurts the artist because, unlike intermediaries and agencies that are paid on a percentage of revenues, artists are paid per stream of what remains after deductions, relative to their share of the total streams for the period. This disproportionally rewards top artists and labels and leaves very little for emerging and mid-sized artists that don’t have marketing budgets and contractual guarantees. Finally, inefficiencies, incomplete or mismatched metadata and disparate systems make it impossible to see the cohesive streaming and financial data needed to manage a career in the music industry.
Forced to part with bloated contractual pay-outs, and seeing the saturation of the 9.99 a month all-you-can-eat subscription, the platforms are loss-making and the artists are struggling. Evolution? Without doubt. Enhancement? Not exactly.
How can the music industry benefit from using blockchain?
What if a system or technology could keep all the benefits of streaming but make it more transparent, fair and trustworthy? In this respect, blockchain is far more than a buzzword — it is a solution that is primed to disrupt the industry.
Blockchain is a new way of framing how systems are run. It decentralizes transactions to improve efficiency and accountability, all in an a highly secure environment. This is what makes blockchain stand apart from other similar technologies — it reduces risk, automates inefficiencies, and can promote fairness by bringing transparency in a way that is scalable and flexible.
Take Coca Cola for example. It runs a vast operation comprised of multiple, disparate franchises that manufacture, bottle and ship nearly 160,000 orders a day. The company that manages this process is now implementing a blockchain solution to strip out intermediaries, making the process more efficient and transparent. Ultimately, this is expected to lead to a more streamlined and profitable operation.
By introducing a blockchain system, we can achieve a similar outcome for the music industry. We can build a decentralized community of artists, fans and developers to ensure more of the proceeds go to the people who deserve it and the ability to follow the full value throughout the supply chain.
In the context of the current industry, this means blockchain can help musicians and producers sell their music without the need for unnecessary intermediaries squeezing their share of the revenue. In the music world there are many parties involved in the process of producing the end product. The more people involved in the production of a song; the more people there are to pay. Thankfully, we can use blockchain to remove these needless inefficiencies.
In fact, there is a double benefit from embracing blockchain. Last month, eMusic became the first major music service to launch a digital token, the eMU, which can be used to transact value on our own blockchain platform. By using it, not only are you reducing costs and providing more value to artists in eMusic’s split 50/50 with artists and rights holders, you are also furthering its adoption and helping to build a sustainable future. It enables more value to be created than in other models such as streaming, as well as in related artist to fan interactions such as ticketing and merch sales.
Music fans can now purchase eMU tokens on digital asset exchange Bibox, one of the world’s leading sites for buying and trading digital tokens. The tokens can be used immediately to buy your favorite songs and interact with your favorite artists on the eMusic service. In the long run, the eMU token and blockchain platform will provide a revolutionary distribution alternative for artists, one that gives them more control of their content, and brings transparency to the flow of funds, so they can build sustainable careers in the future.
Thanks to blockchain, musicians will be able to generate time-stamped records of all their creative content, making ownership publicly verifiable and immutable. With a network that is decentralized and secured by a blockchain, content cannot be tampered with. If an artist wants to, they can make their content live forever.
Let’s enable artists to distribute what they like, when they like, to whom they like — with a fair and direct payment to reward their creative work.
