Jamming in the Web3
Can blockchain solve the problems in the music industry?
About a week ago, a decentralized music protocol Audius was hacked and approximately $6 million worth of AUDIO tokens were stolen. Luckily, the attack took place when most of the developers were awake, thus preventing further damage. You may have not known, but along with the NFT hype in paintings and arts, blockchain technology is rapidly being implemented in the music sector as well — people are coming up with blockchain solutions to solve the problems that currently exist in the worldwide music industry.
So what are the problems? First, there are too many stakeholders in the process of publishing a music. For example, after an artist finishes a music album there are agencies such as recording labels and distributors that are involved, and streaming platforms such as Youtube Music or Spotify that comes in the latter process to take the platform fee from the overall profit. This is a serious problem for artists because ironically, they usually take the least — 0.003$ per stream, which is only 10% of the whole profit per stream! The second problem is that there is no such way for artists and fans to communicate or form a mutual relationship.
What if blockchain can solve this problem? What if there are no intermediaries to take majority of the profits? Musicians will be able to receive a fair payment for their work and create a bond with their fans by connecting directly via Web3 platforms. Let’s take a look at two major projects in the music industry that are trying to solve these problems.
Audius
Decentralized Music streaming protocol on Solana
Investors: Coinbase Ventures, Blockchange, Multicoin Capital, Binance Labs
Artists: Katy Perry, Chainsmokers, 3LAU, deadmau5, etc.
Audius is a decentralized music streaming protocol that allows artists to freely distribute and monetize their music. Fans can also be rewarded with $AUDIO tokens for their contribution to the Audius network — a win-win for both parties.
However, Audius is currently free, and it is not easy to find an appropriate monetization model at this point of stage. Also, because Audius is a decentralized protocol, there is no specific way to solve the copyright issues such as famous songs being uploaded without permission from the artist — however this may be easily solved with Soulbound Tokens that I have previously talked about.
Royal
NFT music rights marketplace founded by Justin Blau (3LAU)
Investors: a16z, Coinbase Ventures, Paradigm
Artists: Nas, Chainsmokers, Diplo, etc.
Royal is a marketplace where artists can sell portions of their songs in the form of NFTs, and the NFT owners can receive a portion of the royalties from the song. Similar with Audius, it is a win-win model where artists can raise money by selling a portion of their songs, and fans can collect the songs in the form of NFTs and receive royalties.
Of course, there are many other projects such as Melos, Sound XYZ, Gala Music, or music label DAOs such as Good Karma Records. However, the point is that blockchain technology is finding its way into the music industry to solve the problems that existed in the past revenue model — artists are trying to connect more directly with fans and receive the compensation that they originally deserved.
Last year, Audius formed a partnership with TikTok, and about two months ago, there was a news that Spotify is testing a way for artists to display their non-fungible token (NFT) collections. As we move forward, let’s hope we can hear more news from big Web2 companies joining the crypto music scene. 😎
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