Blockchain is all the rage these days. If you’ve been hibernating and missed it, blockchain is a digital ledger of transactions that is duplicated and distributed across a computer network, ensuring a secure and decentralized record of transactions. Every new piece of information is added to a certain block, with blocks eventually being filled and becoming part of a chain of other filled blocks — a “blockchain”. Blockchain technology’s appeal is that it is virtually impossible to alter or hack information stored on the blockchain, unlike traditional databases.
While blockchain technology is best known for underpinning cryptocurrency systems, it has a very convincing use case for something else: the music industry. Companies like StarCoin have caught onto this early on, and have harnessed the potential that blockchain technology has to improve the music industry for artists. StarCoin is the first cryptocurrency offering a crypto-backed record label that offers a far superior record-signing model than the way things are today.
Typically in today’s music industry when artists are signed onto record labels the label provides the artist with a loan or an “advance” for the artist to produce their album. The artist essentially becomes indebted, having to pay back those funds in the form of a recoup. Artists generally do not generate any revenue from their album until they have paid back the advance. For example, if the label invests $1m towards an artist, the artist is responsible for creating the album within that budget and also sees nothing in revenue until the $1m has been paid back. Once the $1m is paid back, the label takes the majority of the revenue that continues to accrue through an album, usually through an 80/20 or 90/10 split favouring the label.
Starcoin benefits artists by taking money generated through a token tax and uses these funds to support the artists and their album. As a result, the artist does not have to undergo any debt and they can begin accruing revenue from their album as soon as it is released, with a 50/50 split between the artist and the label. StarCoin community members can also vote on who they believe deserves a record label, reducing the risk that they would be choosing an artist that they feel would not be able to make a return on their initial investment within a certain amount of time. This risk is reduced because the money generated through the project does not have to be paid back at all.
Blockchain technology also has the potential to enhance the visibility of artists. For instance, StarCoin has an NFT marketplace that focuses specifically on music. StarCoin’s marketplace is also planning to integrate with a bigger platform that would distribute its NFTs to partnered websites for maximum exposure. Artists will be allowed to create music NFTs, giving them greater autonomy over their work compared to a record label while offering them with a much higher revenue stream compared to traditional streaming websites like Spotify, Tidal and Apple Music.
If you don’t think that the music industry will increasingly shift to blockchain over the coming years, think again. Did anyone envision the success that Bitcoin would have when it was created in 2008? The same holds true for blockchain and the music industry. People ignoring companies like StarCoin are sure to have some regrets several years down the line.
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