Blockchain For The Music Industry: 9 Possible Use Cases

  • 6 November 2018
  • Sam Mire

Experts project the music industry to grow from $1.4 billion to $17.2 billion dollars between 2012 and 2021. That’s a lot of dough, and it probably won’t all go to deserving parties. But what if there were a way for artists, producers, and labels to get paid on time, in full?

Global industry revenue grew by 5.9 percent in 2016. Streaming revenues increased by 60.4 percent, while digital revenues were up 17.7 percent. These numbers are a bit misleading though. The industry had experienced years of decline before streaming platforms breathed life back into music sales.

Physical music sales continue to decline (down 7.6 percent in 2016), and albums rarely sell for 10–15 dollars a pop anymore. Those albums were huge profit-makers for labels, and their demise has left a revenue void. Newfound revenues haven’t lifted all boats, either. Many artists still struggle to gain recognition or just make a living. The median income for musicians in 2017 was $26.96 per hour. It’s a meager wage when considering the worth of Beyoncé (who had a pre-tax income of over $100 million dollars), Adele ($69 million), and Taylor Swift (who earned $170 million in 2016).

Blockchain innovators are focused on narrowing the gulf between top earners and starving artists. Smart contract technology will make royalty payments and rights management more equitable. Technology will likely replace intermediaries, automating payment processes at a lower cost. The blockchain could also underpin a more secure platform for creatives to share their content in a way that discourages piracy. Some innovators envision entirely new ways  ways to stream music using blockchain platforms. Stay tuned (lol) to the projects changing the music industry through blockchain infusion.

Blockchain for the music industry - Possible use cases

Better Royalty Systems

Blockchain use cases in the music industry - Royalty Systems

Spotify paid a $30 million settlement in 2016 over unpaid royalties. The suit is evidence that digital music streaming hasn’t ended the industry’s financial squabbles. Royalty payments aren’t cheap for streaming platforms either. They cost Spotify $1.9 billion in 2017.

Industry-wide royalty tracking and payment powered by the blockchain will add transparency and value for all parties.It may also decrease royalty payment fees. Imagine paying rights holders as soon as songs are downloaded, instead of weeks, months, or years later. Automated payment with smart contracts could make this a reality.

Companies Trying to Solve This Problem

  • Ujo – Automating royalty payments to help artists get paid more fairly.
  • Vezt  Using blockchain to build more fair royalty solutions for artists.
  • Bjork – The artist famously launched her latest album giving away Audiocoins to help drive better outcomes for artists and fans. 

Greater Revenue Shares for Talent

Blockchain use cases in the music industry - Revenue Shares for Talent

Artists are no match for industry tricks like the 360 deal. It’s allure has duped countless artists into giving up critical rights — to their master tracks, ownership rights, and musical freedom — in exchange for “making it big.”

Too often artists and their managers don’t read the fine print. Even with the music industry doing well, artists received only 12 percent of $43 billion in revenue in 2017. And that was a raise. Artists got only 7 percent of the cut in 2000. That means that each time Adele’s smash hit “Rolling in the Deep” sold for $1.29 on iTunes, she likely took home about 20 cents.

Labels and distributors take on much of the financial risk, to be fair. But the revenue split still seems skewed. Blockchain-powered peer-to-peer platforms could reduce the number of unnecessary names on payroll. This will afford artists a greater revenue share from sale.

Companies Trying to Solve This Problem

  • Musicoin –  Creating better revenue share for musicians on the blockchain. 

Making Music Cheaper For Listeners

Blockchain use cases in the music industry - Affordable Music Platforms

You remember Kazaa, Napster, and LimeWire. If you grew up in the 90s and early 2000s, odds are you’ve ripped your share of music torrents.

While most have transitioned to paying streaming services, illegal downloaders remain frisky. Music piracy is “more popular than ever,” growing 14.7 percent  between 2016 and 2017. 35 percent of music buyers occasionally download at least one song from an unsanctioned source. There are plenty of reasons for this, including convenience, cost, and the limitations of legal catalogs. Plenty of people can’t justify paying for music.

The blockchain ledger automates processes to lessen the middlemen between music creators and consumers. Fewer DJs in the booth should produce a less costly song. In a perfect world, savings would trickle all the way down to the consumer.  

Companies Trying to Solve This Problem

  • Choon –  Currently in Beta, Choon is a blockchain powered music platform incorporating crypto payments.
  • Musicoin– To help provide better revenue for artists, Musicoin has a blockchain powered streaming platform.
  • Voise  Post-ICO decentralized music platform.

Creating a Universal Musical Elements Database

Blockchain use cases in the music industry - Universal Musical Elements Database

Hopping in a recording booth to lay down the ones and twos no longer costs an arm and a leg.

Studio time is far more affordable than it used to be. Sites like Studiotime offer small-scale venues studios at roughly $30 per hour. But when it’s said and done, the price tag to make and market a song can easily reach tens of thousands of dollars. Artists will continue to starve if they don’t find novel ways to change the traditional studio model

Some artists use services such as Dropbox, Google Drive, or OneDrive to share song elements. This method isn’t as secure as it should be. A mistake as innocent as leaving your email open could spring a leak. Sites such as Tunedly enable online collaboration between artists. But a more more secure alternative using private blockchains could be even better, with passkeys, identifiers, and permissions protecting audio files. If one artist chooses to leak a song on social media today, their collaborators would become financial victims. This must change.

It’s usually not feasible for all collaborators to occupy the same studio space. But music needs to be made, which means sending beats, verses, and technical features digitally. Blockchain databases for handling musical  elements could remedy data insecurity and sound flaws. Leaks would be less successful against multi-step authentication methods like passkeys. Some have even proposed storing songs’ metadata on a blockchain, making it a hub for artist discovery, collaboration, and payment.

Micropayments for Global Collaborators and Smaller Artists

Blockchain use cases in the music industry - Micropayments for Artists

The top 1 percent of musicians earn 77 percent of revenue from recorded music. It’s telling of an industry where the big fish gobble up virtually all of the major contracts, air time, and fame.

The recording industry’s value was $15.7 billion in 2016. Music streaming revenues were up 41.1 percent in 2017, totaling 176 million paying subscribers globally. Yet the average musician drew  only 6 percent of their revenues from sound recordings.

Some streaming services and record labels use micropayments. But artists and collaborators often get jipped while go-betweens snatch up the pie. Some services pay artists each time their  song plays by sending cryptocurrency to a digital wallet. The direct payment gateway cuts out intermediaries and lowers the cost of international transactions. It ensures that creatives receive fair earnings for their work.

Companies Trying to Solve This Problem

  • Mycelia  Founded by artist Imogen Heap, Mycelia aims to leverage blockchain to create an industry more fair for artists.
  • Vezt  Micropayments stemming from new digital rights platforms.

Fair Trade Music Database

Blockchain use cases in the music industry - Fair Trade Databases

The musician’s lifestyle isn’t as glamorous as it appears.

Spotify pays music rights holders roughly $0.006 to $0.0084 per stream. That measly sum’s then divided among several rights holders, usually including the artist. Artists received only 12 percent of the $43 billion in sales generated by the music industry last year. How could the blockchain help musicians make monay monay, make monay monay monay?

A fair trade music database is loosely imagined as a public database where artists can upload their music and receive a large cut of the sales. Songs would contain usage rights metadata. Consumers will discover up-and-coming artists. Talent recruiters will do the same.  

Contracts prevent most artists from signing up for this sort of database immediately. It would have far greater appeal to unsigned artists. This is the major question mark: who will pay for broke, unsigned artists’ database?

Companies Trying to Solve This Problem

  • AudioCoin Removing the middlemen between artists and fans.
  • Ujo Rights database on the Ethereum blockchain.

Fighting Piracy

Blockchain use cases in the music industry - Fighting Piracy

The music industry loses 70,000 jobs each year due to piracy. Music sales have dropped by more than 50 percent since file sharing emerged in 1999. An estimated 35 percent of users access music on the internet in copyright infringing ways, tallying nearly 108 billion visits to sites hosting pirated music files. That’s translated into an estimated $2 billion drop in annual wages within the industry.

Blockchain platforms can be an alternative to the punitive approach to piracy, which hasn’t worked. New platforms could grant users rewards for sharing music between peers in a way that will still create revenue for the industry. Blockchain can facilitate both payment and identity-related features of these platforms.

Companies Trying to Solve This Problem

  • Custos – Using the Bitcoin blockchain to secure digital files from piracy. 

Making Digital Rights Management More Flexible

Blockchain use cases in the music industry - Digital Rights Management

Digital copyrights restrict exposure to new music. When people can’t hear a new song, what will prompt them to purchase it?

The record label EMI saw a 10 percent uptick in sales after removing copyright protection from their digital music.

Instead of blanket policies restricting the copy and share of music, give the creator power. Let musicians and producers decide how music can be used. A lesser-known artist might choose to make purchased songs shareable. Ed Sheeran probably wouldn’t.  

The music industry lacks a system for storing these rights accurately and securely. They don’t have a proven way to alter rights on an album-by-album and song-by-song basis. The blockchain is secure and alterable, and might be a suitable framework for a musical rights management platform.

Companies Trying to Solve This Problem

  • Vezt Leveraging blockchain to make it easier and more affordable to get rights to individual songs.
  • Jaak “Smart content” licensing on the blockchain.

Securing Digital Songs, Albums, and Catalogs

Blockchain use cases in the music industry - Securing Digital Music

Jay-Z’s streaming platform Tidal investigated a possible data breach in 2018 that left 3 million subscribers at risk. Hundreds of Spotify user accounts and passwords appeared on the website Pastebin in 2016. A similar incident occurred again in December 2017. Reliance on outdated security measures is inexplicable for a streaming industry with a projected value of $34 billion. Hacks will continue pending structural upgrades…

Upgrades like timestamps and unique cryptographic IDs, found on blockchain-powered platforms ‘round the world. The blockchain provides unalterable proof of ownership. Its multi-layer security protocols are long-distance hurdles for any hacker. Music and metadata contained in a blockchain platforms is safer than songs in  a centralized network.

About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.