Independent Artists Need Help — Here’s Why Blockchain Is The Answer
As music consumers, we are listening to more music than ever before — on our commute, at work, the gym, home, and everywhere in between. In fact, US listeners listened to an average of 32.1 hours of music per week in 2017 — nearly eight hours more per week than just two years ago.
How are listeners feeding their insatiable appetite for 24x7 music? Welcome to the era of streaming. Streaming dominates download and physical sales, accounting for 62 percent of US music revenue in 2017. That’s a staggering 47 percent rise compared to 2012’s 15 percent of revenue.
Today’s Music Economics
While streaming might dominate the way fans listen to music, the economics behind streaming present a much harder reality for indie artists trying to make a living.
Compared to when artists recorded a new album and sold the physical copy of their music to fans either directly or via a retail outlet, the economics around today’s unlimited streaming models are not so simple. Giving consumers almost every piece of music ever recorded for an all you can eat low subscription fee has come at a steep price for artists. Additionally, in the wake of losses sustained during the explosion of peer-to-peer (P2P) and ad-supported digital music, content owners, including labels and publishers, have fought hard to maintain financial control over the industry, applying pressure to all aspects of the supply chain — squeezing artist’s profits even further.
At an average payout of a fraction of a penny per stream, it takes millions of plays before artists see any significant revenue from these services, and with the major labels’ dominance in market share and negotiating power, there’s little opportunity for independent artists to get the number of streams needed to achieve true fandom and garner a meaningful income. As an independent artist myself, I know how hard it is to get your music heard in this new environment, and I’ve seen how the vast majority of artists today aren’t making nearly enough to quit their day jobs.
Along with declining revenues, artists rarely have full insight into when, where and who is streaming their music. The level of transparency throughout the industry is sorely lacking, and it is in desperate need of a more streamlined, clear and autonomous structure that will benefit everyone — not just musicians, labels and service providers, but the music fans too.
The disparity of streaming consumption rising and artist profits declining, coupled with a lack of transparency, hints at a larger reality within the industry — the supply chain for independent music is broken. Inefficiencies, middlemen and other obstacles are creating real barriers for artists’ music to get from the studio to fans’ headphones.
Blockchain has the potential to transform nearly every supply chain or economic structure that is often complicated by intermediary processes. Yet, no other industry exemplifies the problem blockchain was designed to solve more than the imbalance within the music industry.
As a longtime executive in the music industry, working both with labels and artists directly, I’ve seen the challenges musicians are up against. That’s why I’m so confident in the future of blockchain and blockchain-enabled music providers like eMusic, an industry champion of independent artists and its fans for over 20 years.
Blockchain’s real-time, decentralized nature promises to provide four things that artists need the most.
Blockchain economies function thanks to smart contracts, which can represent real-world processes, business logic and rights owner agreements. In the case of independent artists, this means intelligent music files, contracts and royalty payments.
Using smart contracts, every interaction with a song or album — from upload to purchase and stream — is documented within the blockchain, giving artists full visibility into rights and rewards associated with their music. Artists and labels will be able to better view, track and manage music royalties and data, providing quicker access to funds and the flexibility to redistribute rights. Because the transaction is recorded across the whole blockchain, consisting of thousands of nodes making up the chain, this record is immutable (which means it can’t be hacked!) and unambiguous.
While some of the current streaming services offer artists visibility into how their music is being consumed and by whom, many artists and labels rarely see any of this data and when they do, it lacks the detail to offer any real value or insights.
It remains nearly impossible for artists to get a consolidated view to help them understand how their music is being consumed across all platforms. That’s where eMusic and the promise of its transparent structure comes in. eMusic’s proposed reporting structure will provide a cross-platform view that will help artists to better understand their fans’ listening behavior, which in turn will help them to optimize their distribution strategy, as well as adjust the rates they charge for their own music in real time.
eMusic will provide the blockchain infrastructure for royalty management as well. As consumption of music across external service providers and various business models is recorded by the platform and blockchain ledger, entries are updated on a regular daily cycle — the platform will ensure that rights holders get a continuous flow of fully transparent data and revenues.
Artists sometimes wait months or even years to receive royalty payments in today’s music landscape. With blockchain distribution this is a problem of the past. Smart contracts execute transactions and agreements automatically, therefore artists and rights holders can be compensated for download and streaming royalties almost instantly by service providers. This level of liquidity can directly support the majority of musicians and creative professionals that need the funds immediately to sustain a living wage as a musician and, more importantly, make more music.
At eMusic, artists are able to sell their content immediately via the existing eMusic retail store, as well as as through a newly developed distribution network of service provider partners, including both streaming and download-to-own services — allowing artists, performers, songwriters, and other music rights-holders to dramatically increase the speed in which they receive compensation.
It’s not just artists and streaming services who will reap the financial benefits of blockchain; labels will too. With blockchain, small, mid-size and even large labels will be able to retain more direct revenue and monetize their back catalogs, get rid of unnecessary intermediaries and simplify their contracts — all leading to reduced costs and additional profit.
Greater Fan Engagement
While social media has brought artists and fans closer, many fans are looking for a more meaningful connection to the music and artists they love. For some of the biggest fans, true support and loyalty can be communicated through something that many artists are lacking: direct funding and promotion of a new release. Knowing that funds are going directly to the rights holders when digital music is consumed and purchased through blockchain, music fans are contributing more directly to the long term success of their favorite artists and the overall sustainability of their artistic vision.
Crowdfunding is another exciting potential of blockchain. With eMusic’s upcoming blockchain project, artists will be able to allow individual fans to become partial owners of the recordings and compositions and therefore, royalty participants. The shares are recorded on blockchain, and royalty payments then start going to fans for any downloads and streams. Now there can be a true financial reward for fans of their favorite artists, as they enjoy in the upside of music that they have helped create.
Independent artists today have a variety of services at their disposal that enable them to distribute their content to digital music services and collect revenue from sales and streams of their music. However, distribution does not guarantee marketing, promotion or exposure on these services. In fact, of the 377 billion streams in 2017, the top 5 percent accounted for 95 percent of all streamed music.
The beauty of the eMusic blockchain platform is that it will serve both the needs of the artist and the service provider, by providing the right incentive to promote independent music. By sharing gains from inefficiencies removed from the process and championing an equitable split of revenue, music distributed through the eMusic blockchain will be given more weight over profit-driven algorithms that drive music recommendations on major music service platforms. Not only will artists earn more per stream, but they will benefit from preferred rates paid to the service providers.
In addition to distribution on 100+ digital storefronts, artists will be able to immediately offer their music in eMusic’s retail store, which already has a proven credit-based platform and plan structure that is easily converted to a new token-based system. New eMusic tokens will provide artists and fans with new, innovative ways to engage as this underlying currency will be used for royalty payments, fan loyalty, as well as for an array of artist products and services.
As a longtime industry executive with a front row seat to the ongoing challenges within the space, I’ve seen how technology has dramatically changed the music industry over the years. As independent artist’s livelihood continues to dwindle, the timing for the transformative power of blockchain could not be more appropriate or welcome.
eMusic hopes to tackle these challenges and better support the industry at large with their new blockchain-driven infrastructure. By providing artists with a toolkit for today’s constantly evolving digital world, they are helping artists and rights owners experience real transparency, faster compensation, greater fan engagement, and fair promotion.
Independent artists need an ally in this new digital music ecosystem and eMusic is here to champion the cause of independent artists and rights owners, empowering them with all the benefits that blockchain can provide.