A blockchain can generate and maintain hashes of digital music files, as well as a smart contract outlining the music’s and its owners’ rights.
What is Blockchain?
A blockchain is a distributed database or ledger that is shared across computer network nodes. A blockchain, like a database, keeps information electronically in a digital format. Blockchains are best recognized for playing an important part in cryptocurrency systems, where they keep a secure and decentralized record of transactions. The blockchain’s novelty is that it assures the correctness and security of a data record while also generating trust without the need for a trusted third party.
What are the benefits of Blockchain?
Blockchain architecture has two major advantages:
- It is immutable: It is very hard to modify a block after it has been added to the chain since doing so would need modifying all other blocks in that chain (the updated block’s hash would then no longer be valid).
- It is a database that is distributed: Its security does not rely on any centralized server, authority, or organization.
What applications may blockchain-based technology have in the music industry?
A blockchain can produce and store hashes of digital music files, as well as a smart contract specifying the rights of the music and its owners. Customers may pay for streaming music, in the same manner, they do today, but utilizing blockchain networks. They’d then have the same access to their music as before, but with a closer link to the artist, who would be compensated instantaneously in the same currency. Artists might advertise their music and give unique incentives to customers, such as additional downloads or rights. The blockchain incentivizes the creators to create and incentivize on various platforms.
From the perspective of music consumers, the adoption of blockchain technology would change nothing. Except the ability to file share and steal copyrights would be eliminated.
In the case of artists, the difference would be profound: direct control of intellectual property and fast payment are two obvious examples. Furthermore, by connecting every component of each digital composition to the blockchain, musicians are effectively registering their intellectual property and building a certified, global peer-to-peer music library.
This huge database offers collection societies, distributors, and labels several advantages and prospects. This massive volume of material would need improved marketing and curation, as well as data verification.
How Blockchain is disrupting music?
It’s no secret that the entertainment business is one of the shadiest and most corrupt in the world. The music industry is notoriously cutthroat and violent in the entertainment sector. It’s an industry where gatekeepers make the majority of the money and musicians make pennies.
For many years, record companies were the gatekeepers and king-makers in the music industry. The way we all consume music has evolved. In 2021 streaming replaced radio as the method we listen to music.
The appeal of streaming is obvious across all age groups. As seen here, the majority of persons aged 18 to 44 listen to music via streaming.
However, only the majority of persons aged 65 and up listen to music on the radio.
Blockchain disrupting Music: Success for Third parties
This is why Spotify has had such a successful few years. Spotify’s subscription growth has been 15% year on year, as shown below.
Because of this rapid subscriber growth, the company’s revenue has increased dramatically (by a CAGR of 40%).
Spotify has also made some astute financial decisions, such as acquiring exclusive rights to podcasts such as the Joe Rogan Show. The Joe Rogan Show attracts 11 million viewers, far more than any cable news show. Having exclusive podcasts attracts more listeners and gives Spotify a larger moat.
However, there is a disadvantage to streaming. During the age of physical record sales, the musician received 10 to 20% of all album sales. However, the economics of streaming are different. In the case of streaming, all of the income generated by the individual artists is pooled and distributed to the artist’s record company. The record label is compensated based on the number of songs streamed by the label’s signed artists. This implies that for an artist to get paid, his or her music must be streamed numerous times, as well as the music of other musicians on his or her record label. In this economic framework, musicians receive 46% of streaming earnings. While the rest goes to the streaming provider, musicians only receive 7% of the money from streaming.
A better alternative to streaming music
This is the issue that Audius plainly identified. Audius intends to cut out the music “middlemen” and pay musicians what they rightfully deserve. Audius also wanted musicians to communicate directly with their fans.
How Audious Works?
Every time a listener hears the song, the artist gets compensated with Audius tokens. Musicians may also win Audius tokens by being the top listener on Audius. Audius gives musicians 90% of its earnings.
The market capitalization of the AUDIO currency from its inception in comparison to Bitcoin (in orange) and Ethereum (ETH) is shown below (in red).
It is unclear how and to what degree blockchain-based technology will be accepted or controlled by governments. While the technology is not yet completely mature (there are no industry-wide standards, and there are occasional difficulties with databases functioning beyond their capacity), it has the potential to disrupt portions of the music business and allow artists more control over the commercialization of their music.
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