Music-backed tokens: a new approach to digital currencies

new approach to digital currencies

Alex Onufriychuk, the head of growth at Corite, a blockchain-based music crowdfunding platform

Every time someone listens to a song on Spotify, SoundCloud, YouTube, etc. the creator of the content receives a small amount of money from the platform. So, the model I’d like to tell you about is all about capturing and redistributing this revenue through a platform that is built on cryptocurrency and Non-Fungible Tokens (NFTs).

Artists launch ‘fan campaigns,’ which seek to raise a predetermined amount while specifying a streaming goal and a time frame. For example, an artist may seek to raise $5,000 with the goal of providing a 2x return for backers by amassing 2.4 million streams over the next three years. If the streaming goal is surpassed, users will continue to receive revenues for the entire three-year period. Of course, if the streaming goal is not met, the end user may end up earning less than they contributed.

NFTs and cryptocurrency could play a central role in crowdfunding. Corite’s users fund campaigns with stablecoins in exchange for song shares. Non-fungible tokens, such as digital certificates of authenticity, can also be used for this purpose, tying ownership to song shares. This system grants full transparency of revenue shares for fans and funds raised for artists. Our model also benefits artists because they are able to raise funds upfront and use them for promotion while retaining full rights to their music and master recordings.

We launched our platform in late 2019, and we have already completed hundreds of successful fan campaigns. One highlight has been the “Unity” campaign, launched in cooperation with EDM superstar Alan Walker. The campaign had a break-even goal of 6.7 million streams by June 2027 and has already surpassed the 9 million stream mark. The users who participated in this campaign have already made back more than their contribution amount and will continue to benefit for the next 4+ years. Successes like these demonstrate how real value can be captured and shared through the union of music and blockchain.

Various paths to the transformation of the music industry

Over the last couple of years, several projects have launched with the aim of combining music, cryptocurrencies, and non-fungible tokens. While these projects are technically competitors, we are still in the early stages of awareness and adoption, where there is far more value in ‘growing the pie’ than fighting over every inch of territory. While I am biased toward the advantages of our model, other platforms are bringing their own ideas to the table.

Audius is one of the leading blockchain projects in the blockchain music sector, which is taking a different angle by building a standalone streaming platform powered by a native token. Top-performing artists are rewarded by the platform, while end users can also earn by interacting with the platform. A recently added tip feature also allows users to use the native token to pay their favorite artists directly. Some platforms employ a tiered NFT system that awards different royalty percentages and additional perks. I would describe our industry as being in an experimental phase, in which several different ideas are competing to see which ones will ultimately succeed. 

The Corite token ($CO)

Owning a blockchain music platform’s native token is a bet on both the individual project and the belief that artists and their fans will embrace technology that allows them to connect and share content and value in a more direct way.  Our $CO token was launched in September 2022 and will be a central part of the platform moving forward. The token will have multiple functions, such as unlocking early access to fan campaigns and VIP experiences, granting governance rights, and rewarding users for interaction. For an investor who sees potential in the larger idea of music-backed tokens but doesn’t want to choose between particular artists or songs, acquiring a platform token can be an interesting option.

Fan campaigns as a new way to support your favorite artists

I am often asked how to choose which fan campaigns a person should contribute to. The truth is, there is no shortcut to surefire success. One of the main concepts to understand is the risk/reward of backing an obscure artist with a small campaign versus a more well-known one with a larger fundraising goal.

While the upstart artist may be a longshot, their smaller raise means you are able to capture a larger part of the streaming revenue with your contribution. In the age of TikTok, you never know when a song might catch on and experience a massive breakout. If you found yourself at the right place at the right time, you could stand to benefit in a big way from taking a risk on a relative unknown.

Ultimately, I would advise people to trust their instincts and their ears. If you like something, chances are that other people will like it too.

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