NewsGeneral5 Ways Blockchain Is Transforming the Music Industry

5 Ways Blockchain Is Transforming the Music Industry

By

Algorand Foundation

The internet changed the face of music. The way we currently discover, listen to, and pay for music would be unrecognizable to someone in the mid-nineties. Tapes became CDs, digital downloads were overtaken by streaming services, and now Web3 is looking to usher in the next era of music. While the industry has grown substantially in the age of streaming, there are underlying issues in the business model that often result in many artists not receiving a fair share of the profits their work garnered. Blockchain can not only bring democracy and transparency to music-related payments and royalties but also provide solutions to other challenges the music industry faces by way of copyrights, music ownership, and subscription-based services.

Decentralized licensing 

Blockchain can offer a clear and simple way for artists to license their music, where the transaction takes place directly between licensor and licensee – no intermediary required. Dequency, a decentralized licensing marketplace built on Algorand, allows anyone to purchase a sync music license and legally use the music in their audiovisual work. For instance, licensed tracks could be used with digital art to create soundtracks for the metaverse, or featured in an on-chain game. This framework gives musicians control over pricing and crucially, sends payment instantly, and transparently when a license is purchased.

A return to ownership

Amid peer-to-peer file sharing and illegal downloads of the early noughties, music ownership started to decline and with the birth of streaming services, it pretty much disappeared. LimeWire, one of the most prominent P2P file-sharing services, played a major role in the direction music took in the digital age. Once again the platform is disrupting the creator economy, this time with a revised mission to reinstate music ownership for fans and creators. Powered by Algorand, LimeWire is providing a space for creators to build communities, where fans can directly support their favorite artists and own pieces of music history. Creators can reward fans with exclusive content and drops, and fans can trade these exclusive music collectibles and engage in new ways directly with the artists as well as fellow fans. 

Reinventing the music ecosystem 

A decentralized music ecosystem can increase interaction between artists and fans in a self-sustaining way. Napster, a well-known peer-to-peer music platform founded in the late nineties, was historically decentralized since its launch. In the Web3 era, it is reemerging as a decentralized music ecosystem that can reinvigorate the interaction between artists and fans. Napster CEO Jon Vlassopulos described the new platform to Coindesk: “Every artist in the world has a storefront on Napster. Imagine them being able to program that and own that relationship [with fans] … We’re looking to give [artists] the lion’s share of the revenue.” Artists will be able to reward fans with digital music-related collectibles, meet-and-greets, and access to exclusive content. The ultimate goal is to build beyond access to music by empowering artists, engaging fans, and building communities.    

Fractional song ownership 

Blockchain can allow a song to have multiple owners and, in essence, become its own microeconomy. Through shared ownership, earnings can be distributed to artists, collaborators, and fans in an autonomous, transparent, and democratic way. The Song That Owns Itself is an experiment from the New Computer Corporation in fractional song ownership. “Honestly, I'm a Treat” by Jesse Boykins III was the first STOI song released on Algorand. Jesse Boykins III said, "stoi.org is helping me achieve my mission as an artist by bringing even more awareness to the messages I'm sending through my music and allowing me to connect deeper with my fans." STOI works through a smart contract (a coded self-executing contract built on the blockchain). The smart contract creates a fixed number of tokens that represent a portion of ownership for a song. Whenever a song is streamed or licensed (for use in an audiovisual project), the token holders can earn revenue, according to the percentage of the song they own. These tokens can be easily traded or sold on supporting blockchain marketplaces or held to continue receiving the stream of royalties. 

Rewards for supporting your favorite artists

Talented musicians often struggle in obtaining traditional bank loans to help get their music career off the ground. Blockchain can enable musicians to receive funding support and fans to benefit from the success of the artists they love. Opulous provides access to capital for artists without needing to go through a financial institution. Fans can invest in and support their favorite artists by purchasing an MFT (a musical non-fungible token). These tokens appreciate in value as an artist becomes more successful and continue to generate royalties for the MFT holders. Another Algorand project, ANote Music, has created a new asset class for music fans, with entire music catalogs tokenized on-chain and made available to purchase in the form of shares, allowing investors to earn a share of royalties from their favorite artists. 

Blockchain is proving itself to be the bedrock on which Web3 innovators can build platforms that improve the ways in which the music industry operates. Already waves of artists are exploring new Web3 opportunities to copyright and monetize their work, increase engagement with their fans, and explore the new ways in which they can build and engage with online communities. Blockchain unlocks ways for music fans to truly own the music they love listening to and even invest in it as an alternative asset class in a way that was never before possible. Of course, this is only the start of a Web3 transformation but as we progress, we can look to a future that empowers both musicians and fans in the next powerful iteration of the music industry.    

Learn more about projects reshaping the creator economy built on Algorand. 

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