The Remix: How Crypto Changes Music

A quick history of the music industry. The search for meme-market fit for blockchain music. The real potential of audience-centric music DAOs.

“If I should ever die, God forbid, let this be my epitaph: The only proof he needed for the existence of God was music.” - Kurt Vonnegut, Jr.

To be human is to be in love with music.

It is both our most personal and our most social art form.  It’s sad songs on a lonely walk home.  It’s the collective roar of a crowd bellowing a refrain back at a lead singer.  

Yet the music business is one giant tragedy of the commons. Music creates massive value in our world. But capturing that value has bedeviled artists and entrepreneurs since the classical era. For hundreds of years, it was only the gifts of the upper class that kept professional music alive.  A single Austrian baron was the patron that allowed Mozart and Beethoven to practice their art. Even today, artists struggle to make ends-meet by mixing streaming, merch sales and performing.  

It’s a rite of passage for every technology to claim it can fix this state of affairs only to ultimately put profits in the hands of a new middle man. And that reality has made the relationship between the music business and technology industry an uneasy one for over a century. 

In 1906, John Phillip Sousa – composer of America’s best-known marching band music and the Jack Antonoff of his day – worried that records were an existential threat to the artists.  In 1942, the American Federation of Musicians announced a general strike against recorded music on the radios.  And of course, the recent trials of musicians in the streaming eras needs little introduction.

But with their signature lack of regard for history, crypto’s innovators have emerged to promise that, “This. Time. Is. Different.”

I’m skeptical.

But after researching the intersection of blockchain and music, I’m confident the era is going to shake things up in both how we listen to and pay for music. What’s less clear is whether it will benefit the next generation of musicians or just the next generation of middlemen.

The 20th Century in Music: The Private, the Public and the Profitable

At the turn of the 20th Century, the consumption and commercialization of music was simple.  You paid to hear an artist perform live.  

Records were often derided as a niche novelty. In 1886, Harper's Magazine wrote that Mr. Edison’s device “failed to make a success, for the reason that the machine was not only a clumsy piece of mechanism, frequently getting out of adjustment.”  Only 4 Million records were sold in 1900.  In contrast, Taylor Swift’s most recent lead single, “Anti Hero” received 60M plays in its first week.   

Because music was largely only consumed live, there were endless jobs for musicians. Every bar that wanted music, every theater that needed an orchestra, every Church that needed an organ player had their own musicians on staff. 

Mass Music

By the 1920s, that was starting to change.  The direct relationship between creator and community was severed by new technology.  Instead, we created an unprecedented concentration in the music market. 

As phonograph and radio sales increased, recorded music overtook live performance as our preferred mode of consumption. We needed less live musicians.  We just needed a few major musicians and a massive distribution network to put their records in audiences’ hands.  

Mass Media culture was born and with it came the record industry.

In this era, distribution was king. A talented artist needed the cooperation of a major label to get their art into record stores or on the radio. A select few artists lived like Kings, but the entire “musical middle class” that had powered bars and theaters during the nineteenth century was eliminated. 

That was a rough state of affairs, but the market adjusted. 

Record labels perfected a business model that involved scouting for talent, producing their projects, promoting them in record stores and radio stations and profiting off of every performance – radio rights, album sales and live concerts.  There were less artists, but more suits that managed the industry.  

But the art was still good! We got the Beatles and the Backstreet Boys. We got NWA and Nirvana.

Streaming Splinters the Industry

The distribution moat that had been dug by the labels was bridged by the nerds that built Napster, iTunes and Spotify.  With no middlemen between the artist and their listener, any listener could find any artist that appealed to them. This powered the rise of small labels and indie artists.  It sought to disrupt the concentrating power of the music industry. In the place of mass culture, we had massively divergent subcultures that could support many more musicians.

That solved everything then, right? We had unlimited access to music and new artists could rise based on merit, right?

Well, no, not quite.

90% of Spotify’s royalties in 2020 went to less than .8% of its artists – and only .2% earned over $50,000.  A survey of working musicians shows that most have to turn to alternative means from streaming to earn money:

The Streaming Era was an incomplete revolution.  It brought thousands of new artists into the public consciousness, but it did not offer a path for these artists to earn a sustainable source of income.  The question confronting the creator class today is whether a smaller, but highly engaged audience is capable of financially supporting the artists they love.

Web3 claims it has the solution. Well many solutions actually.  

Block n Roll

Every technology struggles to find product market fit. That’s not unique to blockchain. But what is unique is that blockchain seems to also be searching for meme-market fit.

In fact, in each of the three Bull Runs of the last twelves years there has been a new narrative about how blockchain will revolutionize music.  None is a panacea.  But each provides an interesting signal on where things may be headed…

The Enterprise Blockchain and The Open Music Database (2014-2018)

In 2013, Bitcoin prices spiked above $1000 for the first time.  The digital currency – long accused of being mostly a tool for nerd sniping or drug dealing – started to attract some real attention.  But this was the era of “Blockchain but not Bitcoin” – the soundbite that made every investor sound smart without really meaning anything.

It also was the beginning of Ethereum and the first programmable blockchains.  People (ok, cryptonerds…) began to understand the idea of a “shared ledger” (an open database not owned by anyone) and “smart contracts” (self-executing agreements). Berklee College of Music’s Rethink Music Initiative imagined an open blockchain that tracked every song ever written and allowed easy licensing/tracking of usage on a collectively owned chain.

That idea captured the imagination of indie fav Imogen Heap of “Hide and Seek”/”Goodnight and Go” fame.  In 2015, she announced Mycelia.  The project was intended to be an open registry of all recorded music rights on the planet. Heap imagined that a global, open, blockchain based registry would allow anyone to directly license or play music and that the funds would flow through smart contracts directly to the artists rather than through the middlemen that populate the industry.  She put her own project where her ideals were – releasing the single Tiny Human on the platform.

She wrote about the decision in the HBR in 2017, 

“I began by posting everything about that track on my website for anyone to experiment with and for fans to enjoy. Phil Barry at the Ujo Music platform joined in, which resulted in Tiny Human being the first song ever to automatically distribute payments via a smart contract to all creatives involved in the making and recording of the song.”  

Heap’s enthusiasm and experimentation were the first instantiation of two big ideas that continue to animate blockchain exploration in music: open data and smart contract based ownership.  But she also encountered the reality that the hype on blockchain far outpaced its real usage. 

”It was very basic — no licensing terms were exhibited — and it raised little money, due in part to the fact that you had to have an Ether wallet with Ether in it (the crypto-currency used on the Ethereum platform) before you could purchase the track, which lost some people along the way.”

Heap encountered a very-real network cold start problem.  To move artists, you needed enough fans using Ethereum.  To move fans, you needed enough artists releasing music exclusively on the platform.  

That’s a problem for blockchain based apps that would linger until the next crypto bull run offered a solution.

The ICO Boom and Artist Owned Platforms (2018-2020)

In 2018, the tech world was captivated by the quick rise and fall of ICOs.  Projects seemed to come out of nowhere, raise millions of dollars through token sales, then collapse into the ether again.  For many, the appeal was getting rich quick.  But for others, the projects were philosophically bound to the idea that ownership should be more fairly distributed.

As a blowback against the major tech platforms started to form during the late-10s, the crypto community began to imagine community-owned alternatives.  

What would it look like if drivers owned Uber or video creators owned YouTube?  

A musician owned Spotify/Soundcloud seemed like a natural fit. Audius, which explicitly positioned itself as a Soundcloud alternative, emerged as the market leader.  Artists earn the platform’s $AUDIO tokens/ownership for publishing music.  Fans use these tokens to unlock experiences or compensate artists.  

The user-owned platform has solid traction – and has even crossed the chasm — by appealing to EDM and hip hop artists, they have 7M monthly listeners.  Most impressively: only 10% of those listeners are active crypto users, otherwise.

Audius is an attractive option for new and emerging artists. It’s important work. But it is a business model innovation rather than a medium-shift.  Records and streaming both changed the way fans listen rather than just the way artists were paid.  The next interesting question for Web3 is whether it can disrupt more than ownership.  

Can it change the way we listen to and create music?

The NFT Boom and the Search for Community “Utility” (2021-2022)

The 2021 Bull Run was the era of the NFT.  If visual artists could make millions on digital monkey JPEGs, surely we should have a musical analog. But owning music NFTs just didn’t seem to capture users’ imagination in the way that profile pictures did.

The Music NFT market is not trivial.  According to research by Music and Water DAO, 1240 artists have sold over $182M in Music NFTs since June 2020.  That’s a lot.  But despite some worthy experiments – Kings of Leon offering lifetime concert access to NFT holders and Royal offering a split on song royalties – none of these projects has broken through into widespread awareness in the way that a Bored Apes or Cryptopunks has. 

I think that’s because musicians needs to look less at the work of visual artists and more to their own history.  Visual art has always associated status with ownership.  Status in music has always worked differently. The streaming revolution showed that people were perfectly happy to “rent” the rights to listen to music.  That’s because status in music does not come from ownership. It comes from being a creator or a curator.

We can earn status by creating music or remixing the music of others. We can also earn it by being a tastemaker that’s the first of a social group to discover a new artist.  So an NFT that actually reflects this status would need to work differently than just “owning” a song.

The core framing of the debate around the music industry has recently been How do artists get a larger share of the pie?  But what if that’s the wrong question. What if the better question is this:  How do we create a system that reflects and compensates the value that each contributor – creator and curator – add to the ecosystem?

That’s a job for the economically incentivized networks called DAOs.

This idea – that music should be a collective creative project that rewards contributors with social and financial capital – animates Songcamp.  

The group convenes a community of musicians, engineers, marketers and other contributors to collectively create and distribute an album.  In one “season” or creative chapter, groups of Songcamp artists worked for two weeks to produce songs, then shuffled themselves and produced again until they had assembled an album.  In another, they produced an interactive game with music at its core.

Members are compensated using a combination of UBI from crowdfunding grants, peer-bonuses and NFT royalty shares. 

Songcamp highlights what Web3 music could look like.  It is a project that breaks down the dichotomy between artist and audience.  Instead, it centers the creative collaboration between members of the musical subculture.  

It invests fans with agency and ownership.  It rewards artists with a built-in community of zealots.  It is a return to our roots – a group of musicians entertaining and collaborating with their community to create value for all involved.

If Web3 can help us to cement this dynamic, while also leveraging the open platforms and data of past bull-runs, the potential value is limitless.  It could actually be a way to make music personal, public and profitable – all at the same time.

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