How Blockchain Will Disrupt The Music Industry (Part 1) – The Problem

Blockchain technology is disrupting many industries and business models around the world. The technology is constantly evolving and while it might not be ready for mass adoption just yet due to technical difficulties that need to be addressed before thinking in transacting worldwide with cryptocurrency, is worth knowing that lots of companies, developers, institutions and even governments are working hard to develop a solution to scalability, decentralization and security issues inherent to blockchain. Blockchain's transparency, security, immutability, independence and efficiency are the qualities that can improve any industry and today I will talk about how those qualities improve the music industry, specifically about streaming platforms and will provide a list of platforms that are already providing emerging solutions.

A little bit about the music industry

I think the music industry is one of the most outdated industries mainly because the participants are not interested in changing how the game currently works. A very small amount of companies dominate the market by monopolizing the presence an artist has. From recording, to mixing, mastering, publishing, promotion and partnerships, live event management, you name it; all are controlled mainly by a few participants. For example, Live Nation and AEG, both live entertainment companies in the United States, manage and own a very big amount of popular venues and festivals. There's 3 major record labels (Sony, Universal and Warner) they control 80% of the market and revenue an artist generates. They also control other record labels as well in a vertically integrated business model. These companies branch out or push their monopolistic tentacles to other areas of the industry absorbing most of the market share and revenue that can be made. All of this have been changing through history, as technology develops new opportunities like streaming music and online sales, political decisions regarding monopolies and economic growth that allows people to spend more on entertainment can be an advantage to the musician, but as long as the participants are not willing to change the game, these opportunities will only be taken advantage by then and not the musicians directly.

The truth about radio stations

Ever heard of an indie artist on the radio? Probably you always hear the same music playing on popular radio stations. Commercial radio is a business for the labels more than a tool for the musician. Almost all songs on the radio were paid to play by record companies and the budgets for this are insane easily in the 6 figures range. There's laws to prevent payed airplay, but also there's ways to work around them. Mainly, record labels hire indie promotion companies that are willing to take the risk but in reality there's no risk because everyone is comfortable with this model. Everyone makes money and the artist won't complain because they're also making “enough” money. Fair? Not at all. The artist usually repays the record label for promotional costs from CD royalties.

Legacy streaming services

As I mentioned above, technology allows new opportunities to be explored and streaming services tremendously increased in popularity because it makes music accessible to anyone, everywhere, reduces distribution costs almost to zero and the listener is more comfortable paying a subscription fee to access millions of songs rather than spend the same amount of money on one album. Of course there's differences and exceptions, people also like to support the artist by buying merchandising, online songs, and albums. Even then, within this streaming service model, there's still flaws and guess what? The monopoly still runs. How? Well, there's multiple streaming platforms and some differentiate mainly because of geography, but who gets the most market share currently is Apple and Spotify. Let's take Spotify as an example. A user pays a subscription fee of 9.99 dollars a month. This money goes to a pool that then gets distributed among all plays in the platform. The problem with this model is that, big artists (supported by big companies) get so many more plays than other small artists so the pool starts to flow more to them than the rest. We still have the 80% problem. 80% of the pool goes to big artists and 20% to the rest. The same problem that radio faces is also seen on streaming platforms. Record labels have enough budget to promote their artist hoarding streams from free accounts. Like, if you don't have a premium membership on Spotify and you want to listen to music on your phone, you'll have to listen to ads, are only able to skip 6 songs per hour and are forced to listen to promoted songs before even being able to listen to the song you wanted to hear in the first place.

So there's lots of things that can improve in the music industry because the musicians are not being rewarded as they should, even big artists, but the current business model doesn't allow small independent artists to get the exposure and revenue they deserve. That's where blockchain music platforms come into place as they are addressing multiple issues like smart contract licensing to increase transparency and protect the musician in a more efficient way than conventional systems, a middleman free business model that allows the artists to be directly rewarded and interact more intimately with their audiences and a more fair distribution of wealth among all participants. How? In the next part of this series I will describe some of the blockchain music platforms out there! Thanks for reading.

And by the way, if you guys want to support my music or just check it out, I make different type of instrumentals but currently I've been working in instrumental synthrock/synthpop experimental. Each song has its own thing so if you're interested stream the EP in legacy platforms if it's your preference here:

https://smarturl.it/mfoarq

or give the emergent blockchain based streaming platforms a shot! (I'll talk about them in part 2 of this post):

https://manylink.co/@Flocculent