Cryptocurrency takes greater hold in music industry, as artists are drawn to controlling and increasing royalties
The cryptocurrency mania sweeping the world is being increasingly picked up by the music industry.
Bitcoin, the buzzword of peer-to-peer digital currency which is now worth US$9 billion, leaped in value last year.
In 2009, Lily Allen was offered hundreds of thousands of bitcoins in payment for a gig. She turned it down.
Five years later, as the price went up to $16,000 per bitcoin, she did her sums and worked out that if she’d been offered 250,000 in bitcoins, it would have been worth $3.2 billion.
“#idiot,” she tweeted.
An astonishing success story is Vibe currency, which is tied with live music Vibehub.
It was launched last October (making history by selling out its Initial Coin Offering in five minutes and raising $10 million) as a database of performing acts with tokens used to buy merchandise or get access to music industry contacts, and eventually expected to be accepted to buy tickets.
With a market capitalisation of $405 million, in one day last week, its value exploded by 400%.
The appeal of cryptocurrency and blockchain technology are its promises of greater data security (they’re impossible to change in secret), transparency of transactions and allows artists to take control of, and monetise, their royalties.
By removing the middlemen between the artists and consumers, they allow more money to flow in the pockets of the creatives, and quicker.
One, Viberate, allows music venues and live artists to work directly together – so one is guaranteed a performance and the other payment – without the need of a management or lawyer.
Because each transaction is registered on the blockchain, it also means that artists get a cut each time a ticket changes hands from consumer to consumer – and may benefit as ticket prices go up closer to the show.
“This completely upends the music model,” Rik Willard, CEO of Global Blockchain Technologies Corporation told International Business Times.
“In my opinion, music will be one of the first industries to be completely and thoroughly disrupted through the blockchain… The artist can now go directly to the public in every single way.”
Far sighted artists realised this over five years ago.
50 Cent was the first to offer bitcoin payments for his Animal Ambition album through his Shopify store which first integrated payments for its network of merchants in November 2013.
Snoop Dogg, Mel B, Childish Gambino Wu Tang Clan’s Ghostface Killah and hip hop act Ain’t No Love wanted to followsuit
Last November, Bjork began selling her album in four digital currencies.
Making similar offers were DJ Gareth Emery and merchandise company Project Coral Reef which lists Mariah Carey, G-Eazy and Fall Out Boy among clients.
Portuguese DJ and record producer RAC made history when he became the first recording artist to release an entire album (Ego) for sale on the blockchain (on Ethereum).
English singer and record producer Imogen Heap wrote an article for the Harvard Business Review in which she commented, “Blockchain has the potential to provide a more quick and seamless experience for anyone involved with creating or interacting with music.”
The appeal for artists is that the blockchain is offering artists financial returns at a time when streaming is not.
2018 is seeing new deals being struck.
Last week blockchain asset management firm Bitmark set up a partnership with major four year old Taiwan-based Asian streaming and concerts service KKBox to create a blockchain-based music rights platform that promises to pay Asian artists immediately.
Another talked-about blockchain startup is StreamSpace for on-demand video streaming.
It cashes in on the fact that the younger generation is moving away from paying cable subscriptions to streaming videos on Netflix or Hulu, and additionally gives content creators protection from piracy and the ability to control distribution and set prices.
Choon aims to tokenize the total music streaming and discovery experience.
Startups Ujo Music, Fanmob and SingularDTV are working to tokenize the artists themselves.
About to launch in beta is Los Angeles-based blockchain startup Vezt which raised than $4.7 million and has bought 30 hits by Dr. Dre, Kanye West, Jay-Z, John Legend and Drake.
Music fans and brands can purchase part-ownership of these songs. Vezt will track and collect royalties in 137 countries, and pay these to the artists and the investors.
They can store their profits on the platform. If they want to cash these in on anything other than Vezt tokens, they’ll be hit with a 5% charge.
Vezt co-founder Steve Stewart (a former manager of Stone Temple Pilots) told The Huffington Post, “We wanted to give artists an immediate and direct way to financially benefit from the fruits of their labour, to put them in control of their destiny at little or no cost to them.
“Prolific artists with sizable fan bases can monetize their songs directly through Vezt and see an immediate income stream.
“Established artists with huge followings may have a stable income, but might be unable to tour or secure a record label deal.
“Vezt allows them to offer a fraction of a song in their catalogue to their fans and other investors for immediate revenue.
“Artists with favourite causes can empower their fan bases to buy a fraction of a new or catalogue song and contribute to charity without reaching into their own wallets.
“Vezt allows the unsung heroes of the music business – producers, engineers, co-writers, lyricists, and others to monetize their rights in some of the most popular songs, quickly and easily.”
Analysts warn that the downside to these transactions include legal, tax and song ownership issues, as well as the fact that the promoters are promising that a marketplace will be created, that the idea of instant royalty payments can’t be that instant because of the volume of data that has to be processed, and that the investment in a song may spike in a year and not be an evergreen source of revenue.