We all use music streaming services quite often. But have we ever wondered how the creators or artists get paid for their music? More often than not, music artists are forced to make do with modest royalty income. Nevertheless, the advent of blockchain technology has ushered in a new era, and this technology has the potential to ensure that music artists are adequately compensated for their efforts and talent.
Everyone has enjoyed music throughout the ages. The music industry has evolved from EPs to cassettes to CDs to MP3s. Currently, music is mainly enjoyed via digital streaming platforms such as Spotify and Apple Music, and closer-to-home services such as Airtel Wynk, Times Music, JioSaavn, etc.
However, the growth of streaming services such as Spotify has not benefited individual artists who typically receive very little overall royalties due to slowing album sales. Taylor Swift, a famous musician, removed her music from Spotify due to the low royalty per stream.
The advent of blockchain technology has set the stage for the music industry to undergo a new evolution. With the blockchain, artists can create a token-based economy where value is derived from an artist’s work. Once a token is created, the artists convert their intellectual property into a financial asset that we can all buy. All holders of this token receive a share of the artists’ earnings. Therefore, the more consumers of the content, the higher the token’s value. An artist can thus obtain income through the launch of a token.
Tokenization of the asset also helps in removing the middle man. For now, record companies take most of the profits. Record labels also act as barriers many times to new artists entering the business. A system based on blockchain eliminates the middleman, thus putting the power back in the hands of the creators. Funds are raised by the fans instead of the record label via tokenization. The downside of this model is the lack of users.
There are a few platforms such as Theta.tv, YouTube of Web 3.0 or Audius (which is said to be equivalent to Spotify or Apple Music). Having used these platforms, it is safe to say that although there is a large scale, their success and similar platforms will depend on the consumers or users.
Artists can also use Non-Fungible Tokens (“NFT”) to create a new vertical for monetizing their work. Buying music as NFTs has a lot of value for both the creator and the collector. First, there is a transfer of ownership.
In a world driven by music streaming, the conundrum arises as to why buying the rights to music would be necessary. The answer, as always, lies in the monetization of the asset. The buyer sees value in buying the rights and reselling them later for a potential profit. Such music NFTs benefit artists both at the first sale price and at the secondary sale. Artists can profit from secondary sales in the form of royalties, especially if the underlying smart contract associated with the music NFT is such that they can earn future royalties from such sales.
Platforms like Async.art help artists create NFTs of their musical works, and Catalog Works allows music fans to bid on digital records. The award-winning artist, Ross Golan, who has worked with renowned artists such as Ariana Grande and Justin Bieber, and rock bands such as Maroon 5 and Linkin Park, has also recently shaped the world’s first NFT musical, The Wrong Man.
There is still a lot of gray area when it comes to the synergy between blockchain and music. But the benefits, as well as the different paths, are something that cannot be denied. In time, we are confident of innovative music-focused NFT projects, which will hopefully allow the creators or artists to receive the compensation they deserve for their craft.
