And what blockchain means for the future in the business of music, film, and art.
The shifting sands of technology and economics have created unique challenges across segments of the entertainment industry over the past quarter century. Much of the change in how business is done in music, film, and art boils down to one key catalytic factor — the internet. How artists, labels, studios, and corporations alike have adapted to ever-changing distribution and revenue models has often been a deciding factor in long-term survival in this new media landscape.
Although advents like peer-to-peer sharing, streaming, and the immediacy of relation between artist and fan made possible by social media were once seen as obstacles or novelties to industry establishments, recent statistics and figures from across segments suggest that the legacy corporations that have survived the internet shift are now thriving by utilizing iterations of those platforms and technologies that once haunted them.
Although the market for physical and digital ownership of music and film continues to decline rapidly, live events, royalties, and expansion into new markets have shown new paths to success. Both the music and film industries have now surpassed prior peaks of revenue and many of the legacy institutions at the center of them are edging ever closer to monopoly.
On the other end of the media spectrum, the disintermediating effect of platforms ranging from YouTube to Kickstarter is a massive and worldwide phenomenon. The barrier between consumer and creator has been abolished. However, there is a major imbalance in established revenue models, for which homespun content creators are valued significantly less than corporate counterparts on the same platform. The result is a predictably lopsided revenue share that is neither sustainable nor equitable.
Below are some recent figures from the entertainment industry that provide a picture of the current economic landscape. Afterwards, we’ll go further into what these numbers mean, and how the impending avalanche of blockchain technology in the music and film industries may affect the status quo:
- Research firm PwC anticipates revenue from media and entertainment will reach an estimated $2.2 trillion by 2021
- The music industry earned $43 billion in revenue in 2017. Musicians only received 12% of that figure.
- $43 billion was also the all time peak revenue of the music industry, all the way back in 2006
- 70.1% of the music industry market share is split between three major companies — Universal, Sony, and Warner
- U.S. music royalties reached record levels in 2017 at $7.3 billion. But new artists will typically collect only between 13% and 16% of the published price of their music.
- There are 11,500 AM/FM radio stations in the United States, and they generate $17.3 billion a year in revenue — down from a peak of $20 billion in 1998.
- Less than 15% of music listened to in 2017 was owned by the listener.
- $9.99 — mode price of online music streaming subscription services
- The average price paid to the artist per stream on Spotify is $0.0043. On Apple Music, it’s $0.0078. On YouTube, however, the average per stream rate is $0.00074.
- In the U.S, 93% of music consumption is from U.S. artists. And, in Japan, 87% of music consumption is from Japanese artists. Even with the internet, our industries are siloed.
- Events industry behemoth Live Nation sold 52.5 million tickets in 2017 — almost 40 million more than closest competitor AEG.
- Movie theater admissions in the U.S. and Canada hit a 10-year low last year, dipping 6%.
- The most pirated film of all time — Avatar — was illegally downloaded on over 21 million occasions.
- Domestic box office now accounts for less than 25% of revenue for film studios, while foreign distribution nets 36.1%.
- Seven major studios control more than 80% of total film industry revenue, led by Disney (18.2%), NBCUniversal (16.4%), Time Warner (16.2%); 21st Century Fox (12.9%) and Sony (12.1%).
- The American film industry generated $43.4 billion in revenue last year, and wages accounted for 18% of that figure.
- The DVD market has crashed. Sales and rentals of films in physical formats in America has sunk from $25 billion in 2005 to $12 billion in 2016
- 54.1% of all films produced last year were action and adventure films
- The median return on investment at the box office for films released in North America with budgets of less than $10m — that is to say, independent films — has been 45 cents on the dollar.
- There were 4009 successful music-based Kickstarter projects in 2016, raising 34 million with a success rate of 51.5%
- There were 3846 successful film-based kickstarter projects in 2016, raising 66.4 million with a success rate of 37%
- The biggest crowdfunded film so far is the Veronica Mars movie, which raised $5.7 million.
- 16.7% of all crowdfunding campaigns are for music, film, or entertainment projects, while 41.4 percent is for business and entrepreneurs. On Tokit, is there a difference?
- The video for Luis Fonsi’s “Despacito” now has over 5.22 billion views on YouTube.
- The monthly traffic to streaming video services accounts for over 30,000 petabytes of data. That number is expected to rise 50% by 2021.
- YouTube reports mobile video consumption rises 100% every year.
- By 2019, online video will be responsible for 80% of internet traffic.
What Blockchain Means for the Economics of the Entertainment Industry
What the internet revolution in entertainment achieved is placing media and content at the fingertips of the audience, removing the distance between creator and fan, and sowing seeds for disintermediated creation and consumption of media. Despite these positive developments, legacy institutions, middlemen, corporations and faceless, billion-dollar tech companies have siphoned all the value created by the internet revolution in entertainment back into revenue-churning monopolies.
However, just as revenues for the music and film industries have returned to peak levels as legacy corporations finally got to grips with the internet, it’s time for another evolution: Blockchain technology.
It’s clear that revenue and value from music and film will continue to grow at a remarkable rate as worldwide audiences gain further access to content and media, both as creators and consumers. As this is taking place, there are scores of blockchain startups approaching solutions for the entertainment industry that are building platforms, apps, and models to ensure that more of that growing revenue ends up in the pockets of the creators, rather than the intermediary institutions.
Using just one project as an example: SingularDTV is building decentralized entertainment ecosystem, a network of interlinking apps and platforms like Tokit that enable filmmakers and musicians alike to crowdfund their work via tokenization, create their work embedded with immutable and programmable intellectual property protocols, and distribute their work on platforms that distribute all of the revenue directly to the artist.
The trend towards the progressive economic models and next-generation tech applications made possible by blockchain and digital currencies is already reaching a fever pitch. Artists like festival-favorite dance DJs Gramatik and 3LAU, filmmakers like David Lynch and Ruairi Robinson, and countless independent, homespun projects have already begun experimenting with what blockchain can offer the entertainment industry via SingularDTV platforms, and more are joining every day.
Independent artists around the world now have the tools to create an industry for their creative work that exists to benefit the artist over an intermediary. As the statistics and figures above show, the market for entertainment is forever growing, and blockchain technology may provide a framework for a dramatically wider inclusion into that growth than has ever been possible before.