The Problem
25 years ago, a song selling one million copies would earn around $45,000 in royalties. However, in today's streaming era, a million streams are unfortunately worth less than $1,000.
To summarize, the problems in the music industry can be broadly categorized into three areas:
- Limited Opportunities for Great Talent:
The cost of recording, marketing, and managing an artist is high, making it difficult for new and independent artists to break into the industry. Labels can only manage talents they can afford, which restricts investment to a select few, leaving many artists without the opportunities they deserve.
- Limited Connectivity for Great Music:
Traditional music streaming services lack social features and immersive experiences, which limits fan engagement and retention. Fans are looking for an experience that allows them to connect with their favorite artists and other fans on a deeper level. Additionally, artists have minimal control over how their music is distributed, and little visibility into who is streaming it.
- Limited Monetization for Great User Base:
Musicians only receive a small percentage of the revenue generated by the music industry, leaving them with meager earnings. Fans no longer pay to purchase music, and artists need to get massive numbers of streaming hits online to earn any tangible cash. The legal, publishing, and payment systems within the music industry only function well for the artists and businesses at the very top, leaving the majority of artists and businesses in unsustainable situations.
These problems have led to a centralized market and control, limited innovation, and a music industry that is not adapting well to the digital age. Furthermore, the industry has seen massive sector consolidation, leading to the production of formulaic music broadcasted to the public via a collection of small mainstream delivery channels. Despite the emergence of digital streaming services, the industry remains fundamentally challenged, and there is a need for more innovation in how musicians monetize their music, and how fans can connect with their favourite artists.
The Music Industry
Music streaming revenue has consistently increased every year since its introduction, with a staggering annual growth rate of 43.9% since 2014. As a result, it has become the primary source of revenue for most music labels. Despite generating nearly $18.9 billion in revenue, artists received less than 12% of it. Additionally, artists have limited control over how their work is delivered, and there is a lack of transparency and visibility regarding streaming royalties.
Since the emergence of Napster's music-sharing network in 1999, the music industry has been in a constant state of upheaval. It has been grappling with various issues such as dwindling profits, lack of transparency, piracy, and disputes over dividend distribution.
One of the main sources of conflict within the industry is the tension between streaming services and music labels. Meanwhile, file-sharing services are often looked down upon by streaming services. Additionally, artists and content creators are unhappy with the small portion of revenue they receive, while others profit from their hard work.
With so many competing interests, it has been difficult to find a business model that meets everyone's needs. However, the music industry now has the opportunity to embrace blockchain technology to address some of these issues. After years of struggling to navigate the internet sector, blockchain has the potential to revolutionize the industry and provide a more transparent and fair system for all stakeholders involved.
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