If you read our title and thought Bitcoin and Blockchain were going to take the music industry by storm because they’re the hottest new hip-hop collaboration, you’d be wrong. While there may actually be two artists out there called Bitcoin and Blockchain, we’re not talking about them (if they do exist). What we’re talking about is technology from the financial world that looks set to redefine the way the music business operates.
And today we’re here to explain the how and the why.
Bitcoin Brought Equality to Online Betting
Surely something to do with finance couldn’t help the music industry? Consider this, when online casino gaming first came to prominence back at the turn of the millennium, everyone around the world was forced to play in one main currency: USD. After making a deposit in their native currency, the casino would then convert it to USD for use at the tables. Then, once a player had finished, they’d have to request a withdrawal that would then have to be switched from USD to their own currency.
Fast-forward a few years after the advent of Bitcoin (launched in 2009) and players don’t have this issue anymore. Because Bitcoin is a decentralized, online currency, it’s not restricted by geographical borders. Essentially, players from anywhere can ante-up using Bitcoin. For example, two players, one from the UK and one from Sweden, were to visit VegasCasino, they’d both be able to deposit, play and withdraw in the same currency: Bitcoin. In an industry where small margins count, avoiding currency conversion charges (which occur during deposits and withdrawals) is something all players want to do.
Were it not for Bitcoin and platforms like VegasCasino, the iGaming industry would be stuck in its old ways. So, if it can have a positive impact there, it can certainly do something good for the music business. What that is at this stage is still up for debate, but there are two companies currently exploring the potential value of Bitcoin or, more specifically, the system behind it, known as blockchain.
Blockchain Creates a Secure, Indelible Record of Events
In simple terms, blockchain is a virtual ledger that records each Bitcoin transaction and encrypts it at the point of transfer. This basically means that each transaction is locked in place and, while it can be viewed, it can’t be modified. The benefit of this is that it cuts down on fraud and makes all kinds of data a lot more secure.
Taking this technology, Ujo is looking to create a smart contracts system that allows artists both new and established to have more control over royalties and licensing. The system will be open-source so that businesses can plug in and create their own models, but the basic premise is that blockchain-style technology will allow revenue from a track to be divided up according to a real life contract (X gets this, Y gets this etc) without the need for an intermediary.
For aspiring artists, a system like this will not only allow them to get a fairer share of the pie, but it will stop 12.7% (an average) of royalties going towards “operating costs” of performing rights societies. Moreover, the artist will have more control over the distribution of funds and, once set, the system can’t be changed, which will help alleviate potential legal contract disputes.
Artists Can Take Back Control thanks to Bitcoin
Like Ujo, PeerTracks wants an artist to get more for their worth with a Bitcoin-style token system. In essence, PeerTracks will be a streaming platform where blockchain technology allows artists to earn revenue directly from each user that listens to their tracks. Each artist on the system creates a set amount of tokens which then can’t be changed.
Once these tokens have been distributed, users can then create subcurrencies which will then have their own value. Over time, the value of the subcurrency will determine the value of the artist. The most popular they are, the more a token will be worth. The fewer listens they receive, the less the tokens are worth.
For up and coming R&B artists, this system is fantastic as it allows them to earn what they’re actually worth and not what a record label says they’re worth. Public opinion has always been the lifeblood of artists, but record labels have often sucked novices dry. These new systems put the power back in the hands of the artist and it’s all thanks to Bitcoin. Although we’re not quite there yet, it seems as though an innovation from the world of finance really is going to chance the music business for the better.