What is happening today with cryptocurrency and blockchain technology is how I imagine the dot-com gold rush in the 90s felt.
Since I was too young to experience those years (I was 5 years old), I am paying extra close attention to what is happening today. And for those that don’t realize it yet, Bitcoin and Ethereum are quickly changing the world. Age-old industries are being disrupted, the first (and potentially most foundational industry of all) being money.
Anyone who thinks Bitcoin and other cryptocurrencies are just a fad falls into the same category of people who thought “that Internet thing” was just a fad back in the 90s. That’s what makes these innovations so interesting is that they seem to be eliciting all the same reactions, meanwhile showing all the same signs of future success. Remember when we thought the concept of sending each other pictures over the Internet was “crazy” and would “never happen?” I swear, I have a family video from the early 90s of my uncle showing my dad his brand new laptop, and making a joke that one day they would press a button and the digital photo would just appear on the other person’s laptop. They both started laughing–as if that would never happen.
And then it happened just a few years later.
That’s what’s happening today with blockchain technology. It’s so dense and do difficult to explain (similar to the concept of the Internet back in the 90s) that it has yet to really become a mainstream topic of consideration. But to those paying close attention, blockchain has all the potential in the world to disrupt some very old, very big industries: banking, big pharma, insurance, voting, and entertainment, to name a few.
Here’s what interests me about blockchain technology and the entertainment industry:
How many times have we heard the infamous case study of a band being signed to a major label, only to sue them (and usually their manager) a few years later after realizing they’d been skimped on millions of dollars in royalties?
That has been happening since the days of Elvis.
What’s interesting about blockchain technology is that, by using what are called “smart contracts,” those contracts are executed on automatically through the blockchain. So, if a band signs to a label and their contract states that they receive 70% of every dollar made, with the label receiving 30%, those distributions happen every time a dollar enters the door–assuming all of this is being done on the blockchain. No more relying on a person to count the dollars. No more trusting other people to deliver on the contract. It all happens on the blockchain, and is validated through math.
The whole idea behind blockchain technology is trust. Transparency. Everything is out in the open, and anything that gets processed through the blockchain can be seen and validated by anyone on the blockchain.
Take that concept, and you can see why this is such threatening technology to such big industries. A lot happens behind closed doors, so to put it all out into the open is groundbreaking, to say the least.
Another way that blockchain technology is impacting the music industry is with royalty distributions on digital platforms.
As it stands, artists are victims of the system. If they want access to the massive user bases on Spotify, Apple Music, Tidal, etc., then they have to be OK with getting paid pennies on the dollar for people to listen to their music. What an artist makes on these streaming platforms is nothing compared to what artists in the 90s made on CD sales.
One startup that is looking to tackle this issue with blockchain technology is called OPUS, a streaming platform for artists to upload their music and receive 98% of the revenue. For those that don’t know, 98% is unheard of, and is leagues above what an artist would make selling their music on Apple Music, for example.
The idea behind OPUS is to solve for three massive issues in the music business: revenue share, censorship, and transparency. This is the beauty of using blockchain technology, because all three of those can be delivered on. The revenue share issue is solved by giving artists 98% of all royalties, the censorship issue because the power remains in the artists hands, and the transparency issue because labels can no longer hide money from the artists. And because it is built on the blockchain, none of these parameters can be changed down the road–whereas other services may decide one day to cut the percentage given to artists.
OPUS is currently raising funds through an ICO to continue working toward this vision of artist empowerment.
When you look at the landscape of digital music, I really do believe decentralizing the industry is the next logical step. Even SoundCloud, one of the most popular streaming platforms on the Internet, has reported that they are quickly running out of cash and exploring potential acquisition deals (not so much out of choice, but by necessity) because artists have no way to monetize their audiences. But with something like OPUS, artists still have to do the heavy lifting of marketing their own music, except they’re more handsomely rewarded for their efforts.
Blockchain technology will fundamentally change the way business is done in industries all over the world. I would encourage you to start paying attention now.