The music industry of the past has come and gone. The ebb and flow of disruptions over the course of the past two decades has left an industry begging for a new economic model. Improperly paying artists for their work isn’t a tradition relegated to the music industry, but it is an ongoing trend in 2018. Blockchain poses a potential solution to this century’s long injustice: help them receive their fair share, regain power from labels and platforms that devour their revenue in a hierarchical fashion with big corporations at the top and the actual creators of the profits, the artists, sitting at the bottom.
Implementing blockchain technology in the music industry could mean artists finally breaking free of the record company squeeze. One of the largest problems that continues to plague musicians, is also a problem in the digital content ecosystem at large: middlemen. These middlemen take such a large chunk of the money that content creators, or in this case musicians, cannot actually make a substantial living.
Historically, artists receive only 12 percent of revenue, while publishers, labels, and retailers get the remaining 88 percent. The solution to this problem is (you might have already guessed) blockchain. Blockchain will shift the revenue breakdown to be more fair and favorable to artists. The capability of automating royalties payments through blockchain makes publishing companies irrelevant. According to CNBC, the math shakes out as follows: “Spotify pays about $0.006 to $0.0084 per stream to the holder of music rights. And the “holder” can be split among the record label, producers, artists, and songwriters. In short, streaming is a volume game.”
The royalties angle is worth exploring. Tracking royalties is proven to be even more difficult in 2018. Even Spotify continues to struggle to get it right. The streaming giant was sued not once but twice recently, even after the acquisition of a blockchain company to solve that very problem. The music industry isn’t in any hurry to speed up these solutions, however. The antiquated tradition of major labels – bad data, late payments, and unpaid royalties – has worked well for ages.
As streaming services like Spotify seek to weave themselves into the fabric of the music industry, the music ecosystem will continue to have a need for platforms allowing more direct interfaces between artist/record companies and service providers; for a platform that allows for a fair reallocation of the money. Our non-profit, Contentos, is one among various projects seeking to provide solutions.
The vision of Contentos is to build a free and fair global digital content community covering video, music, images, text, source material, virtual gifting, gaming, and utility apps. A globally-distributed content incentive and distribution system will enable content creators to earn revenue without using a centralized platform; instead, the digital content can be freely produced, stored, and distributed to reach consumers or advertisers directly. This results in a system where value is fairly measured and pricing is open and transparent.
The other issue plaguing the music industry is the fact that diversity of artists and emerging creators is not supported. Centralized platforms distribute traffic based on revenues, distorting the overall data as a result. On the one hand, creators focus on quantity over quality to cater to the platform hoping they can obtain more traffic, which leads to homogenization and poorer content quality. On the other hand, the content of emerging creators can hardly be monetized due to lack of traffic, which has made it difficult for the industry to improve content quality. From the user’s perspective, what is seen is generally the content that the platform wants them to see, and their demand for personalization is not truly met.
As Apple aggressively works to phase-out of music downloads from the iTunes Store and as Spotify’s user base expands year after year, the music industry is ripe for continued disruption. As blockchain technology gains mainstream momentum, looking at innovative projects in this emerging sphere for potential solutions to antiquated and unfair traditions will prove an important place to start.