The Internet vs. The Music Industry – by RACAndré Anjos "RAC" •
This isn’t about music. This isn’t about blockchain. This is about the future of art, creativity, livelihood, and everything in between.
But first, a little context. I was born and raised in the small but beautiful country of Portugal. It’s one of the oldest countries in the world, with an incredibly rich history that spans a thousand years. Despite all that culture, most music there and in Europe has been heavily influenced by the US and UK. Growing up, people my age looked down on music sung in Portuguese. Successful artists were often measured by how big they were outside the country. I’d like to think that has somewhat changed, but that was the music world I grew up in and that shaped me.
As a child, my access to music was severely limited. This is partly what drew me to writing my own material. I would record tapes off the radio or borrow a CD from a friend. When visiting my local record shop, all that was available was the typical major label Top 40 acts – not an independent artist in sight. I had a cassette of OK Computer that was a copy of a copy, passed around like contraband.
Access. Everybody in the West takes it for granted.
18 years ago, Napster launched. Everything changed.
Suddenly an entire world of music opened before my eyes. One without gatekeepers, without bias, and without permission. I can’t emphasize enough how big of a deal this was for the music world, and for me in particular. I was free. I could finally discover music that meant something to me. My terrible 56k modem could not keep up as I downloaded everything I could possibly get my hands on. It wasn’t about stealing, it was about access. “Right” and “wrong” was not on my mind at that time. Even today, I consider it a morally grey area. It is hard to emphasize enough; Napster made an entirely new world available to me. And it got the best of me.
“Peer-to-peer” (P2P) was the core revolution of Napster. Instead of accessing music through an intermediary like a record label, people were able to share directly between one another. Instead of embracing this peer-to-peer technology, the industry set in motion one of the worst business decisions of all time: suing and shutting down Napster. What was the industry so afraid of losing? Control of content. Centralization of access.
Didn’t Peer-to-Peer hurt artists?
At the time, yes. In the short term, yes. Piracy, however, is a symptom of a problem, not the problem itself. It exists because the industry failed those it was meant to service – artists and fans. Napster wasn’t born from corporate brainstorms, customer panels, and strategic market introduction. It emerged overnight and changed the model without asking. It takes time for people to adjust to a new paradigm.
What about iTunes?
In the face of the music industry’s inability to see the importance of Napster and its evolutions, Steve Jobs punished the industry for its lack of imagination. A clean 30% off the top. Props for seeing weakness and taking advantage of it, but iTunes was not built to be a long-term solution. Also, the iTunes store launched two years after Napster was shut down. What was the industry doing for two years? Peddling more plastic CDs to Best Buy and suing grandmothers for copyright infringement.
What about Spotify?
I personally use it on a daily basis. I think they have a great working product and their playlists are great. They’ve actually been very supportive of my work. Unfortunately, I don’t know a single artist that makes a living solely from streaming. What does that say about how we as a culture value art? Spotify is a massive player; they basically run the show. I suspect that in a few years we’ll all realize that $10 a month isn’t enough to cover the value of recorded music. Recording costs have come down dramatically, but not fast enough to counter the rampant devaluation of recorded music.
Altogether, the music world has become a network of broken and disconnected incentives. Artists have created this false narrative that if we sell enough t-shirts and play enough shows, it all kind of works out. Well, for most of us it doesn’t. Touring has become a race to the bottom and there aren’t enough t-shirts in the world to save musicians from this broken system. Even advertising, which was once the cash cow for many artists has become something we do for “promotional value.”
Napster disappeared, but the idea survived, mutated, and grew into Kazaa, Soulseek, Morpheus, Limewire, Audio Galaxy, and more. Eventually, the industry succeeded in shutting these down, too. However, the core tenant of P2P – of decentralization of access – that enabled these platforms to gain traction proved unstoppable. Peer to peer, person to person, fan to fan, me to you. This was called BitTorrent.
Ok, but what does BitTorrent have to do with blockchain?
Not much, except they share the core idea of decentralization.
BitTorrent’s key flaw was that there was no way to monetize music natively. There was no way to exchange value. There was no benefit to sharing, only to taking. Sites like what.cd and oink were pioneering quota systems that incentivized people to share music in exchange for downloads. This was a step in the right direction, but without financial incentives built-in into the protocol itself, no artist or label saw it as a viable option.
Enter the public blockchain.
A modern technology with similar properties to BitTorrent in the sense that it is P2P, permissionless, and censorship-resistant. What does this mean? We can now exchange value without the need for intermediaries. Why is that important? Blockchain technology has the potential to repair broken business models by giving individuals far more control over their intellectual property and removing the need for central authorities who primarily serve to take money from artists and creators. I can’t emphasize enough how radically revolutionary the potential of this idea is for the music industry. This isn’t a system that enables piracy – we already have that. This is about creating a better system that bypasses all the current systems in place. It’s about creating a fair ecosystem.
I personally believe the most compelling option for building this platform is the technology known as the Ethereum blockchain. Building off the same core concept as Bitcoin, the Ethereum blockchain allows for much more utility. It can be built upon, like the Internet, and it is completely open and available for people to create their own projects. It’s far, far ahead of any competitor and has a massive developer base. Last I checked, 94 of the 100 top tokens by market cap are built on Ethereum. Ethereum has more transactions per day than every other blockchain combined. The Ethereum community is working through a variety of scaling issues and, while it may not be ready for primetime, it has the best chance to achieve widespread adoption.
For the first time, an open-source software has an edge on legacy, proprietary systems. The music industry will not be the only sector of our society to feel the impact. Silicon Valley is about to experience real competition for the first time. What happens when an open source project can match and exceed legacy tech, music, and business salaries? Where do you think the next generation of developers will go? Probably not Google or Facebook.
What does a music industry on blockchain look like?
I personally envision a global automated system that pays creators and delivers content in the format that the consumer wants in an open and inclusive marketplace, without today’s exploitative Digital Rights Management (DRM). I can see a kid in Delhi uploading a song and being paid for it by someone listening to it in Denmark, instantly. If I allow people to remix my songs, I can let them benefit from it, too, with minimal input. If you make a bootleg remix/cover and it gets 500 million plays, clearly you’re adding value and you should be compensated for that. Measuring the value of something like remixes can be achieved today with a combination of Ethereum’s unique protocols and a blockchain-based file management system. In fact, we’ve done this already with my latest record.
I think labels might take on more of a marketing and product management role. Labels often get a bad rap, but I find most indie labels to be very supportive of their artists. I think there will always be a use for that kind of support infrastructure. I could see a lot of management/label combo companies spring up. With that said, this tech enables a label to be built as a Decentralized Autonomous Organizations (DAOs). These “labelDAOs” are labels that are physically distributed and made up of individuals who self-organize to support one another in a structure that resembles today’s labels – without the risk of exploitation. Additionally, crowdsourced releases would be an interesting experiment. Especially if fans and musicians participate in the profit.
I think licensing should be automated and as simple as clicking a button. A small YouTuber with 200 subs shouldn’t be charged the same amount as somebody with 20 million. A small indie filmmaker shouldn’t pay the same fee as a Hollywood studio. This is obvious, but the licensing process is still manual, and the friction means less opportunity for tailored licensing. Eliminating red tape means the creators make more money.
I think event ticketing is one of the first areas to be disrupted. It’s already happening. Provably unique tickets in the form of tokens that you have full control over. Goodbye, Ticketmaster fees.
A proof of purchase on a public blockchain is so much more than a receipt. It could be a badge, a way to show your friends what artists you’re into. On the other side of the equation, artists can reward those fans with the most badges exclusive content. Imagine a tiered system with super fans having first dibs on tickets. If somebody bought both of my albums, maybe they should get a discounted ticket for my shows. What if you got a discount for bringing your friends to a show? You could even do a subscription model like Netflix/HBO.
Metadata is another huge issue. Today, if there is a typo in one of the song titles or in the album credits, you have to manually go to each digital retailer (50+) and update everything manually. This process can take months. If everything was in one public, transparent database, every system can pull updated information from that ledger.
What we’re really talking about is a global, public, shared infrastructure that anybody can access and no single entity can control.
This is good for music. This is good for everybody.
The good news is that this is all being built right now. While everybody is talking about the price of crypto, most don’t realize the revolution happening right under their noses. With that said, it’s still extremely early. People often compare today’s blockchain technology to 1994’s Internet – clunky, not quite developed, but full of potential. Who in ‘94 could have fully envisioned the Internet as it is today?
The music world I grew up in is not the world I live in now. Today’s music accessibility is extraordinary, but it can be improved. We are rapidly leaving behind the creators and musicians who are crucial to our livelihood. We must find a better way, and I firmly believe blockchain technology is our future. I, for one, cannot wait for the music world of tomorrow.
Categorised in: Op-Eds