critical intersection of a changing industry and a transformative technology, valuable
insight can be gained through an evaluation of the extent to which blockchain
startups are successfully disrupting traditional models for distributing music,
managing attribution rights and more.
Disruption Opportunities in the Music Industry
to identify problems in the music industry, the most problematic of which
- Middlemen. Artists rarely are able to distribute
their music directly to consumers. Instead, they must rely on intermediary
organizations that host distribution hubs on which music can be
downloaded. These middlemen typically receive a large cut from every
artist’s revenue. The middleman may also impose restrictions on the manner
in which artists can license their music.
- Payments. The music industry relies heavily on
a system of centralized payments. Sharing payments among large groups of
users is challenging because micropayments are
also difficult for artists to receive direct payment from consumers
because of the large number of intermediaries in the industry, as noted.
Copying and redistributing audio files is an easy process, but the digital
rights management systems designed to prevent unauthorized sharing of
music are brimming with flaws. For these reasons, artists experience
great difficulties in receiving not only credit, but payment, for their creative
technology appears to be well-suited to solve these challenges and others, and a
number of experts have predicted
that blockchain technology is poised to revolutionize the music industry.
Blockchain Music Startups
number of blockchain companies and organizations are already hard at work on revolutionizing
the music industry.
- Rethink Music, an influential
organization that provides thought leadership for the music industry, believes
blockchain technology may be a way
to solve industry challenges such as data management and ticketing.
- Token.fm is already offering a
blockchain and digital tokens to power new payment models for artists in
the music industry.
- Po.et is building a
decentralized digital assets management platform that could be used to
manage attribution rights and payments for audio files, among other types
of digital content.
- PeerTracks seeks to enable
peer-to-peer distribution of audio content to remove middlemen and place
more revenue in the hands of the people who produce music.
- Mediachain, whose acquisition by Spotify in April 2017 was one of
the first major success stories for a blockchain startup, created a
digital attribution system using a distributed ledger. Spotify bought the
company primarily because it needed an attribution-management solution.
just a few examples of blockchain startups that are working to revolutionize
the music media industry. It’s already a crowded market.
Measuring Blockchain Technology’s Success to-Date
successful has the blockchain revolution been within the music industry? That
depends on how you think about what disruption means and how far blockchain
startups need to go to make their mark in this space.
observers have expressed doubt about blockchain technology’s
ability to effect real change in the music industry. Among other criticisms, they
contend that music contracts are too complicated to be reduced to smart
contracts hosted on a blockchain and that blockchain technology lacks the security
sufficient to protect audio files,.
respects, these criticisms appear valid. Security remains a challenge across
the blockchain ecosystem, not just within the music industry. Until users can
rest assured that blockchain data will not be manipulated by malicious nodes or
compromised through software flaws, the applicability of blockchains in the
music industry, and any other industry, will be limited. The relative newness
of blockchains such as Ethereum, which is currently the most obvious candidate
for building smart contracts for music management, also casts a certain amount
of uncertainty over the long-term viability of blockchain-based solutions in
the music industry.
that the process of actually buying music through decentralized, blockchain-based
distribution systems has more than a few kinks that remain to be worked out.
other hand, blockchain technology’s ability to solve certain problems in the
music market is undeniable. Attribution and digital rights management can be
successfully implemented using a blockchain, as the Spotify acquisition of Mediachain
evident. Mediachain’s rights management system did not revolutionize the
entire Spotify platform, but it solved a clear problem within it.
also easy to imagine how the number of intermediaries that separate artists
from consumers could be reduced through blockchain-based platforms, as long as
those platforms can attract a critical mass of users. Attracting users is no
mean feat, since displacing the entrenched centralized music services (such as
iTunes and Amazon), to which most consumers currently turn when seeking to
purchase music, will be difficult from a consumer-awareness standpoint. And the
usability issues noted need to be addressed before the average consumer will see
a blockchain-based service as a viable means of purchasing music.
fair, then, to conclude that the reality has not yet caught up to the hype
about blockchain technology’s ability to revolutionize the music industry. At
the same time, however, real progress is being made.
the greatest hurdle that needs to be overcome at this point — before blockchain
startups in the music industry see increased adoption — centers on marketing,
rather than on technology. Consumer awareness of blockchain-based alternatives
to traditional music services remains low, and it will stay low if companies
like Spotify continue to acquire blockchain startups rather than facing real
competition from them.
Fortunately, for blockchain startups, marketing is an easy-enough
challenge to meet. Both the technology and the need to improve the music
industry through blockchains are there. The challenge is in convincing more
people to use the blockchain platforms that have emerged so far within the