Blockchain Makes The Right Noises For Music Biz
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It’s official – music streaming is this generation’s vinyl. The International Federation of the phonographic Industry (IFPI) announced that, for the first time ever, streaming services such as Spotify and Apple Music have become the biggest financial contributor to the music industry.
This is a significant development for a number of reasons. Firstly, it puts to rest any doubt that on-demand audio streamlining is the future of music consumption.
Secondly, it is welcome news for the music industry as a whole, since it has been shown that there is a positive correlation between rising streaming subscriptions and the music industry’s revenue.
Thirdly, the relative ease of streaming music means that more consumers will be listening to a wider variety of tunes, benefitting independent artists who are unable to get much exposure on radio, television or just media in general. These artists can now release their songs on a streaming platform with confidence that they will be heard.
But there is still a dark undercurrent to music streaming that the music industry is desperately trying to eradicate.
No compensation for the musicians themselves
As the music industry continues to morph into one that is almost entirely driven by digital platforms, consumers continue to benefit. Sourcing the latest music tracks from favourite artists or finding the next exciting artist has become a relatively easy exercise.
However, for the musicians themselves, music streaming has become somewhat of a double-edged sword. On the one hand, music can reach a mass audience quickly and without much effort. But on the other hand, and a very important one, artists are not being fairly remunerated for their music.
For global music artists like Beyoncé, streaming numbers are largely insignificant from a purely financial perspective – music artists of her calibre and popularity make far more revenue from album sales and sold-out concerts.
However, for independent artists who do not have lucrative, record-label contracts, payment from streaming won’t even make minimum wage – not even close. For example, despite its massive popularity, Spotify only pays artists around $0.006 to $0.00084 per stream, depending on holds the music rights – which could be anyone from the songwriters to the producers. With this model, the music artists receive very little for all their efforts.
There is also the issue of transparency with music streaming. Complicated record contracts mask how much music artists are in fact receiving from streaming and how much other parties are keeping for themselves. Copyright ownership can be a convoluted with several conflicting interests among several parties. The recording contracts of yesteryear, when labels only had to worry about radio, TV, album sales and concerts, are simply not fit for purpose in today’s digital era.
Decentralising music streaming
The music streaming business model needs to become more transparent in how it pays royalties to artists. Record contracts, which incorporate revenue from streaming, need to become less complex. There are ongoing discussions in the music industry on how to achieve this, with some commentators suggesting music streaming services like Spotify become record labels themselves.
The other option is to decentralise the entire music streaming model, with blockchain technology at the centre.
Most of the noise around blockchain technology has been in relation to bitcoin and other cryptocurrencies. However, the technology, which has a built-in robustness by storing blocks of information that are identical across its network, has already been utilised in the music industry.
For example, Slovenian DJ Gramatik is one of the first DJs to launch his own cryptocurrency that fans could purchase to own rights and royalties to the artists music. For the launch of her new album, Icelandic artist Bjork integrated blockchain technology so fans could purchase her content using Ethereum or Bitcoin.
The above examples demonstrate how blockchain technology can be used by musical artists albeit on a relatively small scale. An entire music streaming platform powered by blockchain technology would bring a number of benefits to music artists and fans.
To tackle the complexity of contracts, blockchain music streaming services can introduce the use of Smart Record Contracts. Facilitated through the blockchain, Smart Record Contracts are an automated rights management system which distributes automatic payments to music artists when the agreements of the contract have been met. With this system, agreements between all parties involved in the production and distribution of music are simplified but also transparent to everyone, since this information lives on the blockchain.
Moreover, with Smart Record Contracts, artists can be certain, without a doubt, that they are being fairly compensated as per the terms of their contract. Even unsigned independent artists can see exactly how much money they’re generating per stream, as this data would be immediately available to all on a blockchain music streaming service.
This is a key fundamental element that enables artists to be paid as early as the day after their music was streamed.
The music industry has become one that is almost entirely digital. While this development has no doubt benefited music fans across the world, who now have immediate access to millions of music with a touch of a button, it is crucial that music artists, who don’t yet have the clout of Beyoncé or Bono, are also reaping the fruits of their labour.
With a blockchain-driven music streaming service, independent artists not only get a chance to have their music heard but are fairly rewarded for sharing their creativity with the world.