Blockchain in the Music Industry

How Blockchain is impacting the Music Industry

What's Happening ▾


The music industry has many key players:

  • Songwriters
  • Recording artists
  • Record producers
  • Record labels (Sony, Warner, Universal, EMI, independent labels)
  • Streaming services (Spotify, Apple Music, YouTube Music, Tidal, Pandora, Amazon Music)
  • Performance rights organizations (BMI, ASCAP, SESAC)
  • Promoters (Live Nation, AEG Live, OSESA-CIE)
  • Agencies (CAA, WME, Paradigm)

Revenues from album sales, digital downloads, streaming services, concert tickets, merchandise, and other sources get divided among these key players plus a few smaller ones. But revenues are divided in ways that lack transparency and leave little for the recording artists — about 15% of the label share.

Just how complicated are things? For a song that becomes a worldwide hit, there might be 700,000 different lines of revenue and a lot of it doesn’t reach the people who deserve it.

Music Industry Challenges Blockchain Can Help Solve

  • Data on everyone who holds rights to a track are fragmented across different, incompatible systems that can be out of date and contain conflicting information. We don’t always know who made a track or who owns its rights
  • As a result, rights holders often don’t get paid
  • When they do, royalty reports are difficult to understand, and rights holders can’t tell if they’re being paid fairly
  • Artists don’t know how or where their songs are being used
  • Rights information in digital files can be tampered with by people who want to get around paying for music
  • Certain platforms, including AM/FM radio and digital radio, pay artists below fair market value
  • Streaming services such as Spotify and Pandora pay fractions of a penny per stream
  • Consumers have little incentive to  promote their favorite artists
  • Payment arrangements are hidden behind  nondisclosure agreements so fans have no idea how much their favorite performers get paid when they purchase their music (contrast this with professional sports, where everyone knows how much their favorite players earn)

With so many problems, there are lots of incentives for artists, entrepreneurs, and music lovers to seek blockchain-based solutions. Blockchain allows us to create permanent, tamper-proof, transparent records.

Rapper 50 Cent was one of the first recording artists to accept bitcoin when he accepted it for purchases of his 2014 album Animal Ambition. Then, singer-songwriter Imogen Heap conducted a groundbreaking experiment in 2015 when she released her new single, “Tiny Human,” using blockchain technology. Fans could purchase the song for an amount of the cryptocurrency ether that was worth about 60 cents at the time, after which a smart contract would deliver the track to the fan for download and divide the sale’s revenue among Heap (91.2 percent) and the other performers who worked with her (1.3 percent each to six people).

Grammy-winning DJ RAC released the first full-length album on blockchain in July 2017. He partnered with Ujo Music, the same platform Heap used to release her single. While still far from a financial success, it earned about 10 times what Heap’s single did.

More recently, Bjork accepted multiple forms of cryptocurrency as payment for her November 2017 album Utopia. That same month, DJ Gramatik launched his own token, GRMTK, that will allow purchasers to share in the artist’s future revenues. It raised 7,500 ether in 24 hours. In December 2017, as bitcoin’s price surged toward its all-time high of $20,089 and mainstream interest in digital currencies surged, artists including Mariah Carey, Kaskade, the Lumineers, and Sia decided to accept the Monero cryptocurrency for their music.

How Blockchain May Disrupt the Music Industry

With blockchain, we can:

  • Use creative passports to store all pertinent data about a song’s owners and rights
  • Create a central database to store information about music ownership and rights
  • Simplify the licensing process and provide transparent pricing
  • Quickly verify whether a song is being used in an authorized way
  • Provide near-instant micropayments to stakeholders when fans play or purchase their songs
  • Let more money flow directly to songwriters, performers, and musicians
  • Help artists raise money to produce new content through token sales

How It May Impact Consumers

Shifting music to blockchain could:

  • Strengthen bonds between fans and artists by allowing fans to help promote their favorites and get rewarded for their efforts
  • Allow artists to reward fans with free concert tickets, early access to new recordings, and exclusive access to special recordings, directly or via tokens
  • Help fans invest directly in an artist’s success by purchasing cryptotokens
  • Let consumers easily buy a track’s individual stems (i.e., drums, vocals, strings, etc.)

How It May Impact Employment

With blockchain, the music industry may:

  • Improve possibilities for artists to make a living from their work
  • Experience reduced employment at record labels, and record labels may need to work harder to prove the value of their services to artists, such as helping them stand out  in an increasingly crowded environment
  • Benefit from the help of data arbiters for conflict resolution
  • Need more developers to build and maintain music-related platforms that use blockchain technology

Amy Fontinelle

Staff Writer

United States