A majority of revenue the music industry generates goes to the production and distribution divisions, rather than music artists. Audius, an audio streaming service, has decided to employ blockchain in music industry to reclaim this value for audio creators as well as listeners.
The San Francisco-based Audius is a digital music and audio creation, distribution and attribution company. It is co-founded by a platinum-selling Sri Lankan pop artist, Ranidu Lankage, a seed investor in Blockchain and AI companies, Roneil Rumburg and Forrest Browning, a recipient of Forbes 30 Under 30 award.
The company aims to build the first decentralized music sharing model which is owned by its community and where creators get bigger stakes for their content.
“The biggest problem in the music industry is that streaming is taking off and artists aren’t necessarily earning a lot of money. And it can take three months, or up to 18 months for unsigned artists, to get paid for streams,” said Lankage.
Revenue Model in Music Industry
The biggest barrier to the financial growth of music artists is the music industry itself. Only 12 percent share of $43 billion the music industry made in 2017 went to music artists, and a majority of that revenue came from concerts and touring, as mentioned in a Citigroup report.
The results are quite shocking knowing that the US listeners are spending more capital on listening to music than ever. So where is all the revenue going? The truth is – nearly all income gets eaten up by intermediaries standing between a music artist and a listener.
This includes the “big expense” of producing, distributing and selling musical content. Steps like charges of recording labels, streaming platforms, satellite radio stations and other such midpoints exist before the harmonic notes finally reach to the ears of music fans.
However, in the music streaming era, the content creators can directly share their music with the world without any need of middle-income absorbers. The big players, though, are reluctant to adapt to the changing dynamics in music ecosystem. The industry is still operating on a traditional system of licensing and leasing music content via recording companies instead of directly linking to the Internet.
Blockchain in Music Industry
Audius’ founders have endeavored to oppose the financial imbalance in the music world by developing a SoundCloud or Spotify alternative based on blockchain technology. For this, it has raised $5.5 million in Series A round led by General Catalyst and Lightspeed, with contribution from Kleiner Perkins, Pantera Capital, 122 West and Ascolta Ventures, all US-based venture capital firms.
Audius will act as a bridging platform between music artists and their listeners. In fact, the blockchain-based music platform will distribute content to the listeners exclusive of any middlemen fence. Music creators can compose, save, promote, and engage with music lovers directly on Audius.
Meanwhile, their account will be backed up for always via blockchain without any concern of any third party closing it down. The music artists will have a complete transparency and real-time visibility into their streaming content. They will know who, from and at what time is listening to their compositions.
The users of this Audius’ service will either pay for crypto tokens or earn them by listening to ads. Eventually, their digital wallets will pay out a small part of a cent per song streamed from the decentralized storage available on the platform.
Audius estimated that by integrating blockchain in music industry, the music artists may receive up to 85 percent royalty on the platform when compared against 70 percent earned on leading music streaming apps.
Because of blockchain technology, the music artists will get paid instantly, thus resolving “the worst elements of traditional music-sharing platforms – namely the lack of artist control and transparency,” mentioned in the statement.