The music industry has been rocked by the digital age, and both artists and labels have struggled to tune into the trials and opportunities it presents.
But blockchain technology offers the industry valuable opportunities to control how their product reaches fans.
Here’s why the music industry should move to the beat of blockchain.
Understanding blockchain technology
One of the biggest attractions surrounding blockchain technology is transparency. Let’s take Bitcoin as an example. Bitcoin was created to become an alternate payment system that is electronic and distributed on a peer-to-peer basis. Any transaction that occurs will be displayed on the blockchain.
A blockchain, then, is essentially a ledger. It is a form of distributed ledger technology that is immutable. To sequence ‘blocks’ of information (for example, financial transactions) onto a blockchain, data miners must solve cryptographic puzzles to successfully verify and add the block.
Part of the reason a blockchain is immutable is because the majority of people in the network must reach consensus to verify blocks. Since a blockchain network is distributed, many nodes (computer devices) are linked across the world to support it.
This means there is no singular location for a blockchain. If one person were to retroactively alter the blockchain, it would be inconsequential because every other node would still be displaying the ‘true’ blockchain.
Furthermore, there is a special function that can be implemented into blockchain technology known as a smart contract. Smart contracts can be written into the code of a blockchain and can only be executed once all parties have honoured the contract.
We will explore how this can impact the music industry a bit later on.
Blockchain music distribution
So how can blockchain redefine how the music industry conducts business?
Blockchain can give power back to music artists. Since a lot of factors play into distribution (a music label, sponsors, and streaming platforms), artists will more often than not receive only a small fraction of the money generated by their music.
The process is made more complex by the fact artists need deals with recording studios, music labels, publishers, and so on to get their project off the ground.
The money their music generates must then be distributed according to the deals signed.
But blockchain would allow artists to have full control over distribution – they would have no need for a label nor a publisher.
Streaming platforms such as Spotify and Apple Music pay their artists depending on how many times their songs are played.
If an artist is not hugely successful, the rates they are paid are shockingly low. This issue becomes even more prominent when you consider that actual album sales are down drastically since the age of streaming came about.
Supporting artists directly
A smart contract could alter this dynamic. If an artist were to take control of their music distribution, they could place an album for sale on a blockchain for a set price.
A smart contract ensures the fan will only receive the album once they have paid.
While this may seem like a bad deal for casual music listeners who prefer to have access to a wide range of music on a streaming platform, it will also allow other fans to support their favourite artist directly.
It allows artists to take control of distribution and connect with their fans in a more personal way.
A smart contract is not limited to two people either.
Music labels, or sometimes a single artist in a group, have not always distributed money evenly.
Famously, NWA split up over disagreements centred on payments.
Blockchain technology and smart contracts could remedy these issues.
By implementing a smart contract, it allows for all parties involved to be paid fairly, including the recording studio and sound engineers.
Limiting illegal downloads
Blockchain technology could also limit the possibility of illegal downloads. This is because the album or money would not be distributed until the legal requirements of the agreement were met.
Illegal downloads have been the bane of the music industry for a long time. While artists and labels alike still generate billions worldwide, the sum total could be a lot more if illegal downloads were halted.
You say you want a revolution?
Blockchain technology won’t resolve all of these issues overnight.
Illegal downloads will persist regardless. And while top-tier artists could handle distribution themselves, lower-tier artists might struggle.
A talented artist who is struggling to connect with fans could use the help with promotion if their marketing skills are lacking. Equally though, Chance the Rapper made himself famous over SoundCloud, so it is certainly possible.
Chance the Rapper had never sold a single album when he first started. Instead, he made his fortune through partnerships and sponsorships. By releasing his first two albums on SoundCloud, fans worldwide were able to experience his work for free, which in turn generated a big fan base.
If artists can continue to exploit technology and platforms in this way, we could see future artists take advantage of blockchain technology to do something similar – owning their distribution.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.