Can Decentralization Transform the Music Industry?
Music can be a go-to activity during leisure hours for some but for the music nuts, it is so much more than passion while for others still, it is the ultimate survival therapy. However, what goes unnoticed are the deep-rooted challenges faced by the industry and the artists who depend on this art form for a living.
The recorded music market saw a 9.7% annual growth with a total revenue of USD 19.1 billion in 2018. Even amid the industry’s buoyancy, there remain some hurdles along its way.
Beethoven may be decomposing but composers and artists have been suffering from a loss of royalties since the decline of traditional records. From global piracy hitting 190 billion visits in 2018 to legitimate streaming services such as Spotify receiving serious backlash for their treatment of artists, the industry is still in dire straits. Terry Matthew, Managing Editor, 5 Magazine stated:
“Spotify’s obsession with squeezing every penny of profit from a product that is already nearly free has turned it into one of the most overtly anti-musician companies out there.”
Flashback to 1999, the music industry hit rock bottom after the launch of the controversial music service, Napster. The platform dispensed the luxury of free streaming and downloading of music. However, a few months later, the company was sued by RIAA (Recording Industry Association of America) along with the then superstars for lack of supervision over transfer of copyrighted material. Following this, Napster shut down in 2001 but another acquisition, Rhapsody gave momentum to the service by acquiring its subscribers and assets. In 2016, Rhapsody re-branded internationally as Napster.
While some believe that Napster is an integral part of transformation of the music industry into what it is now, others are of the opinion that it gave birth to long-term fiscal challenges due to the increased piracy during its era, the symptoms of which have been endured by the industry till date. Amid the need for a new model, Apple launched its media player, iTunes which reaped financial benefits for the industry through the sale of digital media. Followed by this, other streaming services such as YouTube, Spotify, Apple Music, Tidal were launched which continue to proliferate even today. Undoubtedly, these platforms benefited the consumers to a great extent. However, despite the turning points in the industry, distribution still remains a challenge and the authority dispensed to the intermediaries has withheld power from the creatives (artists and producers) who painstakingly produce music and yet somehow are the last ones to reap royalty credits.
Benefits of Decentralization
Although centralized intermediaries add value to the supply chain through promotions, they have disturbed the balance between musicians and the end-consumers. The middlemen in most cases end up garnering more profits than the artists.
Generally, a single project involves contributions of writers, producers, sound engineers and a technical team. It becomes important to recognize the contributions and reward the stakeholders accordingly. As easy as it might sound, this is very challenging due to the lack of a verified global registry of music creatives and their works.
So where does blockchain come into the picture? For starters, this decentralized technology can be used to manage ownership rights and offer quick and efficient royalty distribution. Smart contracts allow credible royalty payments to the artists and other stakeholders, addressing the fact that many artists are severely underpaid or just not paid on time.
The transparency offered by the technology has proven to serve as a close tie between the artists and the consumers. As reported by BitcoinNews.com, a blockchain-based model rolled out by a social entertainment company to connect K-pop artists with their fans across the globe turned out to be a hit with both artists, fans and producers. This exemplary model showcases the vast potential of blockchain in the music realm.
The real idea is not the complete elimination of the middlemen but confining their power to marketing support and technical assistance. This can be achieved through a transparent network to keep a check on the intermediate shares and royalty payments.
Blockchain music models
As discussed earlier, blockchain has a massive impact on the music ecosystem thanks to its decentralized infrastructure. The emerging technology is being tapped by several platforms to revolutionize digital services. Many cryptocurrency projects have been launched in recent years to combat the issues faced by the music industry from decentralized music platforms to music-specific tokens to pay royalties.
Accenture Consulting stated, “With blockchain on the horizon, every company of every industry must re-evaluate their role in the value chain—where once again, the music industry is leading the pack.”
Some revolutionary platforms incorporating blockchain technology:
- VOISE is a cryptocurrency-powered platform that provides a P2P network hosting feature. VOISE tokens based on Ethereum’s smart contract technology is the primary medium of value exchange over the VOISE music infrastructure. The website claims that artists earn nearly 100% of the profits without intermediary leakages.
- Ujo Music offers a decentralized ecosystem to build “resilient, sustainable and accessible infrastructure for artists, supporters, and developers”.
- Viberate is the world’s biggest live music database with 460,000 musicians and 100,000 venues at the time of writing. The platform uses blockchain to put emerging stars and hot venues into the spotlight; with real-time rankings and profiles. It also runs a rewarding system for its participants in the form of VIB tokens.
- Musicoin is a platform endorsed by a majority of the audience to create a true sense of revolution in the industry. The website states: “95% of internet users don’t have access to music online, unless they subscribe to an expensive and closed streaming service. With the power of MUSIC blockchain, they can now stream independent music for free, from a constantly growing catalog of labels and artists. There’s no ads, it is free, easy to share, and artists get paid instantly.”
The music industry has reaped the burgeoning tech’s benefits at a plethora of occasions. Singer Imogen Heap acknowledged the upper hand offered by cryptocurrencies in her recent projects, particularly with the song Tiny Human on the Ethereum blockchain in 2015, allowing people to download the song in exchange for Ether.
In 2017, Islandic singer, Bjork collaborated with London-based Blockpool, allowing her fans to exchange Litecoin, Dashcoin, and AudioCoin for her album Utopia. Moreover, the far-famed American singer and visionary change-maker, Akon, launched his own cryptocurrency dubbed AKoin while building a crypto city in Africa.
Ashton Kutcher, a blockchain enthusiast, co-founded A-Grade Investments, which financed BitPay. His company has been closely involved with several blockchain platforms. He said:
“The bigger thing with bitcoin is: what can that decentralized technology really do? […] Imagine if we could decentralize that issue of security, and if we can decentralize security. The notion that we could civically monitor each other in an anonymous way actually keeps the anonymity of the Internet, we don’t have to worry about Big Brother and that same infrastructure that built out Bitcoin could be used in the security industry for mass good.”
Although the paradigm shift to blockchain technology is enormous, it is anticipated to remold the world of finance and make significant changes in every other industry it can extend its applications to. Perhaps someday with the right research and resources, it can be a panacea for the music world, releasing artists from the unfair hold of the current system. Worst case scenario, it can provide momentum for better innovations in that direction. Either way, given the current state of the industry, a successful transition to a better paradigm is indispensable.
“Blockchain will not be a perfect answer to all the problems that the music industry is facing. But at the very least, it will level the playing field to some degree.” – Ben Dickson, TechCrunch.
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