It was only a matter of time before cryptocurrency  pervaded the music industry. The proliferation and potential applications of blockchain seem to be the perfect fit for the challenges struggling musicians face. While musicians are the creators of their art, it’s the record labels that distribute the music who tend to own the songs. It is for this reason Paul McCartney has now been fighting for 40 years for the rights to The Beatles albums. As technology evolves, some crafty music executives have been devising new ways for musicians to protect and sell their songs.
The Crypto Solution
Hakim Draper, cofounder of Boogie Shack Music Group, has been creating a new means for every artist in the music industry to have their very own digital currency. Boogie Shack has teamed up with Tao Network, a blockchain-based content distribution platform for the music industry, and plans to use XTO tokens (XTO = Tao Network’s abbreviation for it’s cryptocurrency) to create a unique currency for music artists. Each artist will be able to sell rights to their songs in exchange for XTO tokens.
The potential for musician’s intellectual property (IP) to be converted into monetized data will serve as a direct pipeline between artists and their fans. Artists and fans may very well collaborate on songs, merchandising, and tours, meaning the level of fan involvement will directly correlate to an artist’s success. The more artists rely on other funding sources, the more of their rights they are forced to give away. This has the potential to be a great step forward for artists in the music industry assuming that the fans who support these artists using cryptocurrency will have the artist’s best interests in mind. It should also be noted that cryptocurrencies such as XTO—especially in their early phases with limited funding—are controlled by a very small number of people who could potentially thwart/control the artist. It should also be noted—even despite all the traction it has been gaining—cryptocurrency is not regulated by the SEC, so it is new ground that many are skeptical about. There has been no legal entity or other organizational form that governs and protects the ongoing developments and ensures fair decision-making for cryptocurrencies in the United States.
Current Issues in the Music Industry
Most issues stem from the complexities around who “owns” a song. Ownership is critical as it secures the right to royalties for any use of the song for the owners fortunate enough to be royalty holders. As we are in the year 2018, it’s not surprising that streaming has emerged as the most important source of incoming royalties representing 62% of royalty revenue in 2017 (worth about $5 billion). Record companies tend to walk away with the lion’s share of revenue, while only the most popular artists and songwriters gain relatively small sums of money relative to the popularity of their output. To put it in perspective, struggling artists have complained that a million listens on a streaming service are worth about $100 to the writer of the song once the music industry has taken its cut.