Why the Music Industry Needs Blockchain?
The music industry offers a peculiar paradox. The streaming market, by far the biggest revenue generator in recorded music, is also the biggest growth market, increasing by nearly 23% in 2019. By the end of that year, there were over 340 million subscription users of streaming services across the globe.
However, despite the increasing demand for streaming, it’s becoming increasingly difficult to carve out a career in the music industry. According to a poll conducted at the end of 2020 by The Ivors Academy and Musician’s Union, eight out of ten musicians earn less than $200 per year from streaming platforms. In fact, one online calculator estimates that a song generating 1,000 listens on Spotify will net the musician under $4.50 in royalty payments.
Meanwhile, streaming revenues for the platforms themselves amounted to over $13 billion in 2020. Of course, other participants in the recorded music industry will account for a share of the difference between streaming platform revenues and artist’s royalties. Nevertheless, there are undeniable issues that result in revenues simply leaking away.
Copyright theft is an issue that predates the shift to digital music, but advances in technology have made the problem exponentially worse. Napster may have been the instigator of music file-sharing services and was shut down for breaching copyright in a landmark ruling relatively quickly.
But the genie wouldn’t go back into the bottle. Now, the Recording Industry Association of America estimates that music piracy costs the US economy around $12.5 billion annually, while workers in the sound recording industry and downstream retail lose out on $2.7 billion in earnings.
Outright copyright theft is one thing, but there are also issues with royalties payments even when recordings and plays are legitimate. Metadata has been called the “biggest little problem plaguing the music industry.” For royalties to be attributed correctly by streaming platforms, each music file must have a set of metadata that allows the platform to identify the song, the artist, producer, publisher, record label, and more.
Early in the days of streaming, platforms focused on growing their music libraries, and user bases had little interest or incentive in ensuring a complete set of metadata across all the files they hosted. To date, there are no comprehensive industry standards for music metadata, meaning it’s often missing or inaccurate.
The net result is that rights holders are missing out on an unquantifiable sum of lost or misattributed royalty payments. Furthermore, in the age of big data and algorithms, not having this metadata in place represents a huge missed opportunity for the industry.
Performance rights organizations exist to ensure that their members receive a fair share of their royalty payments. Still, their jobs are near impossible without standards for metadata or a comprehensive means of listening for plays.
Ultimately, the paradox is that in a growing industry where recorded music accounts for the biggest share, most participants are seeing their margins squeezed by lost revenues. Furthermore, the music industry has suffered more than many due to the pandemic with mass cancellations of live events. Fixing the issues with recorded music would create more resilience in the event of any such future crises by returning these lost revenues to artists, producers, studios, labels, distributors, and other industry players.
BitSong is Changing the Tune
BitSong, an Cosmos-SDK based Ecosystem, offers two game-changing propositions to music industry participants.
1. To help solve the existing challenges by allowing artists to connect their music directly to audiences and introducing standardization for music metadata to ensure attribution every single time. In doing so, reduce the value leakage that happens via existing channels
2. To introduce new ways to monetize music and a musician’s brand through innovations such as fan tokens and NFT-based digital collectibles.
Tackling Existing Problems
Blockchain was designed to allow peers to exchange value — in the case of Bitcoin, the value is bitcoin, the cryptocurrency. In the BitSong blockchain ecosystem, music is the asset of value. Transactions, such as when someone listens to a track, are stored on the blockchain. Each music file is uploaded with a standard set of metadata, allowing the full and correct attribution of royalties.
The features of a blockchain offer several advantages in overcoming existing challenges. Once a file is uploaded with the correct metadata, it cannot be duplicated or pirated, offering the opportunity to recapture those lost revenues.
Blockchain-based smart contracts allow programmable rules, so you could imagine a song or an album as a vending machine — once the listener deposits their digital coin, they can listen. Royalty terms can also be coded into a music file itself so that each rights holder receives their share automatically and within hours or minutes rather than weeks or months. Each play is stored on the blockchain as a transaction and cannot be altered or deleted.
Capturing new opportunities
What we describe above is the idea of a music file as a kind of digital token with terms attached to it. BitSong will also offer plenty of other opportunities to create revenue and fan engagement opportunities using tokenization.
Non-fungible tokens have recently started to come to the attention of the music industry, with artists including the Kings of Leon and Eminem dropping their own NFT collections. NFTs offer the opportunity to create premium digital merchandise that’s provably scarce, so think exclusive B-sides, album artwork, video clips, or even branded in-game items like skins for cross-marketing campaigns.
Along with NFTs, BitSong will also provide the ability to mint Fan-Tokens. Portugal: The Man is one band that’s pioneering this model, likening it to the pre-digital idea of a fan club in a piece they wrote for Rolling Stone. Fan tokens can also be considered as a kind of loyalty point system, allowing fans to accrue digital points that could be redeemed for rewards such as merchandise or tickets.
While it’s traditionally the image of the “starving musician” that encapsulates the challenges of making a career in the music industry, at BitSong, we recognize these issues affect all participants. We’re building an ecosystem of tools and technological solutions designed to overcome the challenges while creating new and innovative ways to engage listeners.
To find out more, visit BitSong Website