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  • Writer's pictureLawrence Cummins

How Blockchain can change the Music Industry

Updated: Aug 21, 2023


How Blockchain can change the Music Industry

Since launching Napster's music-sharing platform in 1999, the music industry has faced numerous challenges, including declining revenues, piracy problems, and disputes over the fair distribution of dividends. This has resulted in a complex and strained relationship between the industry and the tech sector. However, the emergence of blockchain technology, which powers Bitcoin, offers a potential solution that could transform the industry for the better.


Conflicts of Interest

The music industry is characterized by a long food chain of intermediaries, often resulting in artists receiving limited revenues long after their work is released. Traditional methods of revenue distribution have become increasingly inefficient, with primary music services paying only a tiny fraction per stream. This has reduced artists' earnings to the value of a pizza. As a result, the industry needs to collaborate and create a more sustainable ecosystem that benefits all stakeholders.


Lack of Control and Transparency

Artists have also faced challenges regarding control over their work and a need for more transparency. Big technology companies and streaming services have taken a significant share of profits, leaving artists with even fewer earnings and limited audience knowledge. Some artists, like Taylor Swift and Jay-Z, have even withdrawn from streaming services in protest. Blockchain technology offers a solution by enabling artists to register their intellectual property and establish proof of ownership at a fraction of the cost of traditional methods. This empowers artists to cultivate direct relationships with their fans, offer special privileges, and provide more transparency to potential clients and partners.


Complexity and Concentration

The music industry has become highly complex and concentrated, with a limited number of major players controlling a significant portion of the market. This concentration of power has led to major artists taking themselves off specific platforms to regain control. However, for most artists, there are more viable options. The blockchain can create a decentralized system open to anyone and operates on millions of devices, allowing for secure and private transactions. Trust is established through collaboration with participants running the blockchain software, removing the need for intermediaries and promoting a more equitable distribution of resources.


Fair Distribution and Immediate Payment

By leveraging smart contracts, artists can set terms of service, usage, and revenue distribution for their work. All transactions associated with the work are recorded on the blockchain, enabling artists and stakeholders to track payments and rights ownership. This eliminates opacity in accounting, delays in payment, and confusion over rights. Through the blockchain, artists can be paid immediately to their Ether wallets, offering a more efficient and fair payment system.


Collaboration and New Opportunities

While there may be concerns regarding the impact of blockchain on labels, collection societies, and distributors, these entities can also benefit from the technology. Blockchain shifts skill sets, opening up new opportunities for curation and marketing. Record companies, publishers, and collection societies can help music lovers navigate the vast content and verify data accuracy. Artists will still need to work with these entities, but the ecosystem will place artists at the center, ensuring their sustenance and success.


Conclusion

The implementation of blockchain technology in the music industry has the potential to create a fair, sustainable, and frictionless ecosystem that benefits all stakeholders, from artists to labels and distributors. Artists can establish ownership and control over their work, enjoy greater transparency, and receive immediate payment. The industry can overcome conflicts of interest, complexity, and lack of transparency and create new opportunities for collaboration and growth. By embracing blockchain technology, the music industry can find a positive direction and transform itself.

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