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Since the turn of the century, the way recorded music is consumed has changed dramatically. Moving first from the sale of physical copies of vinyl and CDs to digital downloads, the last 10 years have seen a dramatic shift into a subscription streaming model controlled by large tech companies like Spotify and Apple Music. Unfortunately, it doesn’t seem these companies have the artists best interests at heart, with only 12% of royalties generated by music on these platforms flowing back to the artist. The fundamental issue is there is no verifiable database of IP ownership of music in the digital space. Without this, the legacy financial infrastructure of the music industry is simply incompatible with the increasing size of the of the digital music world.
As the creative industries have transitioned into the digital space, artists have often been left behind in regard to their royalties. The music industry as it stands today is incredibly opaque, resulting in third parties adding costs onto the consumer as well as reducing the amount they pay out to artists. There is also no verifiable database of all recorded works, making it impossible for the centralised royalty distribution authorities to fairly payout all royalties to artists. This has resulted in what is known as black box royalties, large amounts of money that go unclaimed due to the lack of knowledge around IP ownership.
Beyond royalty splits, there is a plethora of solutions blockchain can provide to the music industry’s problems. Management contracts as they exist today are filled with complicated legal language, making it difficult for independent artists to ensure they are being treated fairly. Unnecessary complexities make it easier for bad actors to take advantage of those who may not know how to operate the system. Ticket sales to live gigs have also taken a hit since the transition into the digital environment. The two main issues are ticket scalpers and unjustifiable service and handling fees added by online ticket merchants. The correlation between all 3 of these areas of the industry is large corporations seeking to profit off works or performances that they did not create, creating an environment where artists have totally lost control of their art.
However, in recent years, there has been a slight rise in physical sales of music, pushed heavily by vinyl sales. This is evidence that fans enjoy owning their favourite artist’s work. This also draws parallels to booming NFT market currently, with fans being able to buy ownership of creator’s digital assets.
There has already been a number of attempts at implementing blockchain technology with music. Imogen Heaps 2015 release of Tiny Human was the first use of smart contracts in conjunction with a music release. This practical experiment utilised the Ethereum network for its smart contract functionality. There are many drawbacks to Ethereum however, including the exorbitant network transaction fees and the slow transaction process. These issues stem from the fact Ethereum currently uses a Proof of Work (PoW) consensus algorithm, a proof method that is incredibly harmful to our environment. These shortcomings are part of the reason we have not seen large scale adoption of a blockchain music network in the mainstream. The low amount of transactions per second that the network is capable of isn't equipped to handle something the scale of the music industry.
In more recent times, there have been successful attempts at implementing blockchain into music that resemble the current platforms. Async is a way of artists to share their music and their stems directly with their fans, allowing fans to have ownership of their favourite artists music. Smart contracts are used to create royalties’ splits between all artists involved in the creation of the record. Async music uses the Ethereum network for its smart contracts. As previously mentioned, this is a network that in its current state would not be able to facilitate mass adoption of something the scale of the music industry, without it costing the end user significantly. Async is however a more comprehensive example of how blockchain and smart contracts can be used compared to Imogen Heaps initial trial.
Another example of blockchains use in music is Audius. Using Audius, creators can generate immutable and time-stamped records for creative works and register assets to the Audius network, because the network is decentralized and secured by blockchain. Unfortunately, the platform has not yet implemented their monetisation program, therefore in its current state is not a solution for artists to generate income from their music.
Opulous is a Music NFT platform that has recently launched on the Algorand network. Opulous is the first platform to incorporate a security NFT, which is a legally recognisable asset, allowing artists to leverage their music in an unprecedented way. Security NFT’s (S-NFT) were developed by Republic for the purposes of tying streaming royalties to an NFT. With this method, artists will be able to access future funds through loan programs, with their music as collateral. The only way artists are able to do that currently is through record deals where they are forced to give up ownership of their music. Opulous have also announced that they will match the royalties generated by a song by distributing out the equivalent amount in $OPUL, effectively doubling an artist’s pay check generated through there steams.
What Opulous is creating will dramatically level the playing field for artists in a way that doesn’t require change to the way digital music is monetised. However, as previously outlined, digital music has not been monetised fairly. NFT’s and smart contracts have the power to solve the issues prevalent in the music industry. Future technologies that address these issues will be able to integrate with the Opulous platform.
With more development on top of the Algorand network, developers will be able to utilise the many benefits of the Algorand network. Algorands near negligible network fees and capacity for a high number of transactions per second will make it possible to host the worlds music in a way that is more balanced and fairer for artists. These benefits can be attributed to Algorands use of a specialised Proof of Stake consensus algorithm.
There are plenty more music related projects to be built on Algorand. There is set the be an explosion of DApps and NFT functionality in the coming months. The increased functionality will provide an environment for the development of blockchain enabled music platforms to succeed. Smart contracts on Algorand can be used for any kind of contract or transfer of ownership, meaning that this functionality can be extended beyond just royalties of recorded works, and aid in bringing fairness to injustices in the industry as a whole.
Why is Algorand the Blockchain for Music
February 23, 2022
News
NFT
Each quarter more and more music projects are popping up in DeFi and Algorand might be the best blockchain for them to build on.
