Written by Johnny Pedro
A new paradigm is coming for every artist in the music industry.
Whether you are a producer, DJ, singer, or songwriter, the way you monetize or distribute your art, as well as the channels you interact with your fanbase, will switch toward something driven by scarcity, fandom, and access.
Actually, anyone caught up in the industry, such as managers, labels, agents, fans, and collectors alike, will be part of this movement, which is driven by scarcity, fandom, access exclusivity, and overall making the creator/follower dynamic much more interesting and beneficial for everyone.
The current global industry grosses around 40B per year, although only 12% of that ends up going to the artists; Blockchain can change this.
Some renowned artists have already joined the bandwagon, but we’re still early.
- 3LAU sells first-ever crypto album for 11.6M in under 24hrs
- Don Diablo sells NFT concert for 1.2M
- Anyma (Tale of Us) sells collaborative NFT for 222K
- Tory Lanez sells 1M NFT albums (e-NFTS) for $1 in 57 seconds
Understanding The Problem
To understand how much there is to do when it comes to the music industry, we must analyze the existing problems and the direction that musicians are tilting towards.
Let’s compare how a song was released before and how it is released now by comparing Michael Jackson and TwoFriends, who had a new approach of skipping the whole “business process” and going straight to the fans.
Michael Jackson – Before
- Creation – The artist writes/records/produces a song.
- Process – The song gets pushed into the industry supply chain (Song Writer – Producer – Publicist – Lawyers – Record Label – Manager | Engineer, and so on).
- Fans – The song gets released, and fans can finally stream it or buy the album.
TwoFriends – After
- Creation – The artist writes/records/produces a song.
- Process – Vocalist – Manager – Distributor – Streaming Platforms.
- Fans – The song is available on platforms for the fans to listen to and support the artist directly.
What’s the problem here?
There are too many people involved, too many steps, and too many people taking cuts that are not in the artist’s control. The final result is that the artist gets a super small percentage and is also not in charge of the end result.
The Operating expenses of streaming platforms are still relatively high and don’t leave a lot of room to reward the artists. On average, artists are left with around 0,003c per stream or 3000$ for 1 Million streams. That might cover for the vocalist, but what about the mixing and mastering? Videoclips? Studio Equipment?
What about artists that don’t have millions of streams? How are they supposed to thrive with their music? The answer is simple- they can’t. They just use music as a loss leader to get a fanbase and funnel that into tours and merchandise for revenue.
And the cherry on top of the cake- you still have to deal with social media algorithms, try to get playlisted on Spotify, and deal with deadlines, managers, contracts, and a number of other factors that could block you from having a successful release.
What benefits can blockchain bring to creators?
Blockchain will ultimately be used as the final marketing layer for an artist to build up his fanbase and provide value as a creator. Let’s take a look at how blockchain can bring a new dynamic to this industry.
Empowering artists – artists get more control, freedom, better monetization options, not drown in label contracts, etc.)
New revenue sources for artists – more control and percentage of royalties, new streaming solutions, creating scarcity through NFTs, creating and monetizing exclusive content such as albums, edits, visuals, tutorials, etc.)
As a fan, you’re able to invest in and crowdfund your favorite artists. You’ll have access to unique and exclusive content with lifetime value. You’ll also have a more direct connection to creators. Plus, you’ll be involved with what they’re doing and be part of the artist’s brand.
Blockchain will disrupt the music industry by giving more power back to creators. Labels and streaming services will no longer be able to dictate what artists create or how they share their music with the world. Artists will finally have the freedom to create exactly what they want without anyone interfering with their creative vision.
How can blockchain disrupt the music industry?
Blockchain is a digital ledger of transactions. Transactions are verified by a network of computers and then recorded in a blockchain. A transaction could be someone pressing play to stream a song or an artist uploading an album to the network. This way, there would not be the need to rely on established record labels and contracts to monetize.
The streaming process would be something like this:
The artist finishes a song and uploads it to a decentralized streaming platform. A fan can hit play, and a small royalty goes directly from their wallet to the artist’s wallet rather than 10$ a month upfront. This allows for a more efficient system where the artist is directly compensated for their art, and the fan only pays for what they consume. This setup also allows for a much better experience for the fan, as they are not tied to a monthly subscription and can listen to whatever they want, whenever they want.
Blockchain can disrupt the entirety of the music industry because in most cases it surpasses the traditional controlled model of artist > label > fan, to just artist > fan.
How does music streaming work in Web2?
- The artist makes a song and uploads it to TuneCore.
- Tunecore connects it to streaming platforms.
- Spotify hosts its data in the Google Cloud.
- Fans pay 10$ a month to use the platform.
- Spotify deducts operating expenses and sees how many streams you had and pays TuneCore.
- Tunecore pays out that amount to the artists.
How does music streaming work in Web3?
Once the artist finishes their song they upload it to a decentralized streaming platform.
Their fans can hit play and a small royalty goes directly from their wallet to the artist’s wallet, rather than 10$ a month upfront – less money is getting lost in the middleman like Spotify or record labels. You pay for what you get which allows fans to have a much better experience, resulting in a positive result for creators as well by providing a positive experience to their fanbase.
Ok, I’m sold! Where should I start?
There are a few projects that are already getting quite a lot of traction that would be a great starting point. Here are some of my favourites sorted according to how they fit in the music industry:
The future of streaming
@AudiusProject is a fully decentralized music platform where users can upload, share, and listen to music while earning $AUDIO Token Rewards, created in collaboration with artists like Steve Aoki, deadmau5, and 3LAU.
The future of royalties
@club_______bpm a music NFT Discord bot that can be installed into a Discord server to play music NFTs. It isn’t a traditional streaming platform and requires that a track be minted as an NFT to stream. This can be a useful tool when it comes to getting your music heard by the right crowd.
The future of funding
@viamirror is a robust publishing platform that pushes the boundaries of writing online, built on Web3, and decentralized by design.
The future of research
@water_and_music is an intelligence network where new music businesses and members can conduct research and get access to a private, like-minded community of artists, marketers, and entrepreneurs.
The future of fans
@soundxyz_ is a platform built on Web3 technology that allows users to directly support their favourite artists and stake their claim on being there before everyone else.
Web3 is redirecting the future of the music industry by giving more power back to creators. Labels and streaming services will no longer be able to dictate what artists create or how they share their music with the world. Artists will finally have the freedom to create exactly what they want without anyone interfering with their process.
With innovative artists and platforms already utilizing the benefits and reaping the rewards of Web3 for music, it is exciting to predict what these creatives will do next and where the music industry will go from here.