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Blockchain-Related Trends I’m Seeing Take Shape in the Music Industry

Over the past decade, the music industry has changed drastically, rocked by key technologies that seek to install the artist in the driver’s seat. Even so, it’s not been a smooth ride.

The Benevolent Internet
From the phonograph to the digitization of audio tracks in MP3 format, music has undergone several technological revolutions. For decades, music and its medium were inseparable, but the digital evolution shatters this dependence, dematerializing art and triggering both challenges and opportunities for artists.

Today artists use social networks to grow their careers. The internet transcends the limitations of TV and radio, connecting fans to their favorite artists — their art, homes, relationships, finances and everything. With streaming, there has been success in many aspects. According to findings from MIDiA Research, the recording industry generated $18.8 billion in 2018, an increase of $2.2 billion over 2017 — with streaming contributing nearly half of that, or $9.6 billion. The reservoir of social media users being so immense, with 2.85 billion Facebook active users and roughly 300 million users on Twitter, labels are taking advantage of it to increase the notoriety of their artists.

From my perspective, blockchain technology is a development that could help revolutionalize how indie artists are compensated and recognized. I’ve personally been involved with crypto since back in 2015. I hold bitcoin and other cryptocurrencies such as XRP, VET, HBAR, ETH, XLM and others. I also founded an entertainment news blog related to artist services, and to me, the combination of both blockchain and music is a unique opportunity.

A Pandora’s Box
While digital technology revolutionizes music accessibility and consumption, it raises critical challenges concerning distribution. It’s a cinch to access, download and use music for free via YouTube and other platforms.

For subscription-based platforms such as Spotify and Apple Music, how artists are compensated for the music they create hasn’t changed substantially — meaning that even after service providers and labels divvy up their respective cuts, some artists are still paid little. Moreover, anyone can modify available music on these platforms with decent software, mislabel and reupload them under a different account.

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Hope in the Blockchain and Other Technologies
The blockchain has gained traction across industries over the past few years. With blockchain technology and tokenized artworks, independent music labels and artists are slowly but steadily taking advantage of regaining control over their money and art.

All eyes are on the blockchain. There’s hope that decentralizing the music industry could eliminate music production and distribution elitism and put the money back in the pocket of artists — the actual owners. Here’s a look at some of the current blockchain- and technology-related trends in the music industry I’m seeing evolve and take shape that provides indie artists unique opportunities:

The non-fungible token (NFT) is an electronic ID that authenticates the existence of a digital asset in the art world. The concept of an NFT is to represent items such as music or paintings using digital tokens. The same software that underlies most cryptocurrencies is used to encode these tokens. The codes are unique such that the owner of the code is the owner of the original artwork. NFTs create the virtual scarcity that elevates the value.

Music professionals can create NFTs for their songs and album artwork and sell these digital products. Further, the artist can receive royalties whenever someone buys a digital copy and sells it. This new system gives artists greater control and an opportunity to get every penny from the sale of their artwork and digital merchandise. There have been NFT purchases totaling $174 million since November 2017.

Increasing costs, content deletions and a lagging user experience have musicians and fans displeased with various music platforms. Audius is a blockchain alternative emerging that will reportedly (via Twitter) give artists 90% of the revenue earned. The startup can’t delete or edit songs and functions as a decentralized streaming music platform for musicians, fans and developers to consume, share and collaborate on artistic projects. The music isn’t hosted by Audius but is spread across several independent nodes. A time-stamped record of each artist’s work is generated once the content has been uploaded to the company’s platform. Audius equips artists with direct access to consumers by eliminating the need for third parties.

Additionally, the website uses smart contracts to ensure the payment of artists is fair and prompt. Audius currently holds original Ed Sheeran songs and songs registered to labels like Dim Mak Records and Spinnin’.

Open Music Initiative
The Open Music Initiative (OMI) is a nonprofit organization advocating for a standard open music protocol. To ensure that music rights holders and originators receive fair royalties, its goal is to generate API specifications that allow music platform interoperability, which can help artists get paid fairly by enabling transparency and data insights. The data points are stored on the blockchain, meaning ease of access. Spotify, Sony and YouTube have also partnered with OMI to streamline and modernize royalty payments.

Choon aims to pay artists fairly and on time using blockchain technology combined with music streaming. On the Ethereum-based platform, artists can create smart contracts that guarantee 80% revenue. By tracking how many streams Choon recorded for a single day, Choon doesn’t need to wait a whole year to pay artists. The technology can be used both to provide crowdfunding and to reward listeners for creating playlists.

Bottom Line
From my position in this space, I’d recommend creatives and indie artists in the music industry keep an eye on these technology- and blockchain-related trends as they evolve and as others take shape.