Transforming the Music Industry Through Technology
Advances in technology have helped get music into the hands and ears of more music lovers. As the tech evolved from CDs to streaming services, it’s easier than ever to find and listen to great music. As a whole, the music industry is generating record profits, yet music sales continue to fall. Even downloads, the logical progression from CDs instigated by the advent of Napster 20 years ago, have fallen 58 percent since their peak in 2012.
Author: Ed Schmit, AVP Product Marketing Management, AT&T Developer Program
Ed tracks new technologies for the AT&T Developer Program. His specialties include network technologies, technology enablement, and strategic marketing.
The Impact of Technology on Artists
So how are artists making out in all this? It would seem that with all the new streaming services and ways for fans to listen to music, artists would be making more money, right? Not quite.
In the past, payments were split between the composer and recording artist, with labels and managers taking their percentage based on agreements with everyone involved. Now, there are simply more payouts per song play, meaning that instead of 3-5 entities getting paid, there are now 10-15 entities taking a cut. According to one Spotify filing, artists only make between $0.006 and $0.0084 per stream (and the other streaming services like Apple Music and YouTube Music are pretty comparable). Which creates a significant chasm in earnings between the megastars like Drake or Taylor Swift and everybody else.
Another reason why artists aren’t making as much from streaming services is that the technology has become a bit of a “black box” for unpaid royalties. Payments are withheld because of faulty metadata for the songs in each streaming service or because of bad communication between the various tech services involved in reporting the proper data to all of the connected services. So each streaming service reserves these payments until the correct rights holders can be identified, yet they make no real attempt to identify the rights holders and continue to withhold the payments. The global value of these unpaid royalties is estimated to be $2.5 billion. No wonder artists like Taylor Swift, Prince, and Jay Z have pulled their music from these services (or tried to start their own).
Enter the Blockchain
One idea to help bridge this gap, repair the relationship between the industry and artists, and get the money flowing to artists again is blockchain. It can revolutionize the way companies handle digital data, including streaming counts, contracts, and payments. That’s because blockchain uses decentralized technology to track information, protecting it from editing, hacking, and any other illegal activity. It removes the middlemen or middle technology between rights holders and streaming technology.
Previously, record companies, publishers, and streaming service providers all had their own databases tracking music rights and royalty payments. Not only are these databases weren’t connected to each other, but they’re also not advanced enough to maintain real-time data transfers even if they were. So they couldn’t keep up with the complex nature of today’s music industry, leading to that $2.5 billion royalty black box.
With a blockchain distribution model, however, song metadata can be tracked correctly and consistently, and all of these systems would be connected to each other through the blockchain. Royalties would be paid directly to the appropriate entity (artist, record label, management, etc.) more efficiently, ensuring all rights holders were paid faster. Blockchain could not only disperse the royalty black box quickly, sending the back payments to everyone owed, but it would also prevent creating one in the future.
Additionally, blockchain would protect the music copyright against misappropriation and illegal hacking with better security. On a decentralized platform like blockchain, all transactions and data are secured through the chaining of each transaction block, the unique encryption keys attached by each network involved in each transaction, and the peer-to-peer safety of the network itself. A blockchain network does not have a single point of failure or attack since the entire network is kept in sync. This means that there is better security at all points for the music industry, so no information is hidden and cannot be changed without everyone knowing about it.
Music on the Blockchain
Musicoin is a music streaming platform built on the blockchain that supports the creation, distribution, and consumption of music in a shared economy. Developed for independent artists, listeners can stream music free and without ads, while musicians are compensated more fairly than other streaming platforms. Using their blockchain currency MUSIC, the platform operates on a smart pay-for-play (PPP) model, transferring money to artists and all parties of a group every time a song is streamed.
Image credit: VOISE
VOISE is a decentralized music platform based on Ethereum that helps artists monetize their work. Artists set the price for their music, and listeners buy the songs and stream them through the platform. All transactions are handled through the VOISE blockchain, ensuring artists are paid immediately for each purchase and stream. They currently only support purchases and payments on an individual song basis but are looking to create a subscription-based service for listeners.
Soundeon takes this process a step further and is looking to add blockchain to the entire music rights process. Using a patent-pending, blockchain-powered platform that’s based on Ethereum, Soundeon is creating a central music business ecosystem that would handle everything from rights registration and funding, distribution and live ticket sales, to crowdfunding music creation. Most music blockchain platforms aim to solve one portion of the process, and Soundeon wants to handle it all. Artists can take control of their work from creation to monetization, ensuring their rights and royalties are maintained every step of the way.
Artists Leveraging Blockchain
While new streaming services pop up every month, artists are starting to get involved in the blockchain revolution in the music industry. They’re keen to get involved in the building of the new era of music and protect the financial side of their creativity.
In 2018, Pitbull and Emerge Americas partnered with Zeppelin to launch Smackathon, a blockchain music app competition. They want to foster blockchain development in the music industry to disrupt the industry in artists’ favor. Entrants were tasked to create an Ethereum-based music project that handled some aspect of the industry, such as a decentralized streaming service, platforms that pay listeners for every second of a song they listen to, and other fan engagement ideas. The 2018 winner was HyperValence, which uses a Proof-of-Fandom (PoF) to enable fans to support artists by purchasing HYPE coins (which go directly to the artist) and other exclusive artist perks.
Four years ago, Grammy-winning British singer/songwriter Imogen Heap partnered with Ujo Music to release her single Tiny Human for $0.60 per download. Anyone could log on to the Ujo site for the song to see that after one year, it received 8506 transactions (mainly to keep the price of ETHER updated in the smart contract). 148 people downloaded the song, earning Heap a straight $133.20, however, when corrected for the price of ETHER at each purchase, it was closer to $1,500 from launch to the end of the first 12 months. Ujo took no cut of the earnings; it all went to Heap.
With that experience, Heap has created her own research and development hub for music makers called Mycelia. Its main product is The Creative Passport, which uses Ethereum-powered blockchain transactions to create a digital container for all the data required for each song. The Passport holds all the verified owner information, business partner information, and payment mechanism data to help music makers link their work to those that would pay for it. The Creative Passport is free for musicians and requires a subscription for businesses who wish to link in and use the data. Now artists can have more control of their work and understand precisely who’s using it and where.
AR and VR in the Music Industry
For most people, listening to music means pulling out their smartphones and streaming music from an app to a Bluetooth speaker. Or to their wireless headphones as they commute to work. Instead of buying CDs or purchasing digital singles, we’re buying subscriptions to a streaming service that gives us access to all the music we want.
While we can still access music reasonably easily at home, it’s getting harder to see live acts. Ticket prices for concerts are increasing every year, while bots and other software let scalpers buy up all the available tickets within minutes of them going on sale. It’s just too hard for music lovers to get to see their favorite artists live today. It’s one reason why some artists are starting to embrace technology to help get their music out to their fans. They’re leveraging virtual reality (VR) and augmented reality (AR) to create unique experiences for their fans.
The Evolution of Live Performances
Music labels understand that fans want to see their favorite artists and that it can be a challenge to get to live shows. Universal Music Group has partnered with Within, a premium AR and VR platform, to develop new experiences for artists on their roster. Classical music fans can journey deeper into Mozart’s Agnus Dei with the Insula Orchestra or travel into a world of imagination in an interactive VR music experience with The Chemical Brothers and St. Vincent in the song Under Neon Lights.
Other companies like MelodyVR want to bring the experience of the live show to fans through their VR music platform. The London-based company currently offers VR recordings of live concerts from a variety of artists (Blake Shelton, The Who, The Chainsmokers) and hopes to soon offer real-time, live shows in VR. Fans can watch the concerts live for free and then purchase the download to experience again and again whenever they like.
Oculus Go and parent company Facebook have been developing a variety of social VR experiences and created Oculus Venues so fans can enjoy live performances in VR with friends. Music fans can watch concerts in VR with the rest of the crowd and feel the authentic stadium experience, or they can stay in solo mode and enjoy the concert as if they were the only one in the audience. Their first even was a Vance Joy concert in late 2018, and they’ve since had live shows with The National, St. Lucia, and more.
With each of these platforms, music fans can move around to different spots in the venue, from the middle of the audience to being right on stage with the artist. Fans can choose to watch the show with the rest of the virtual audience or get a personalized experience by watching it solo.
Artists are learning more about VR and AR and the experiences they can create for their fans. Musician Brian Eno collaborated with software designer and musician Peter Chilvers to create Bloom: Open Space in Amsterdam. It’s a “ground-breaking generative audio-visual installation” enabled by Microsoft HoloLens where fans step into a physical space surrounded by screens. By tapping the air around them, they can create elaborate patterns and unique music melodies themselves.
U2 created an AR experience for their latest tour where fans could view unique digital elements of the show by using a U2-branded app during the show. Eminem has also embraced the AR experience and created an app that his fans can use during his last US and European tour. The Eminem Augmented app provides fans with a live show experience as Eminem performs, and also several unique visuals fans can see outside of the show.
Snap back to reality… Get #EminemAugmented – Augmented Reality app for visual AR experiences during 2018 live shows STARTING THIS WEEKEND AT COACHELLA. Bonus AR you can do anywhere also. https://t.co/etv8pxtlXf pic.twitter.com/D7FgOhguy1
— Marshall Mathers (@Eminem) April 13, 2018
Artists Are Using Technology to Reshape Their Careers (and the Industry)
Technology is shaping the future of the music industry. Artists are always driven to innovate creatively, so many of them are now embracing AR and VR to create unique experiences for their fans. ⸺ whether it’s at their live shows or anywhere fans are. These new experiences support the new generation of music fans that is used to experiencing media digitally. People are so used to bringing their smartphones with them everywhere, including concerts, so why not embrace the trend and create more content for fans to experience?
Not only is the technology driving the fan experience, but it’s also driving the artist experience as well. New technology is helping the next generation of aspiring musicians who create new music for the world. Learn to play the piano in VR with Music Everywhere or try out a new drum rhythm in The Music Room. Aspiring DJs can learn how to be a pro DJ with TribeXR DJ School, where they can try out professional-level tools to get the basics down and then sign up for 1-on-1 lessons with a professional DJ.
As technology evolves, so will the way music is made and enjoyed. Soon, artists will release singles, albums, and virtual experiences for everyone to enjoy wherever they are.