Alternative Internet: Part II

— By Edward Roumoulian and Strange Ape
→ Read Part I here:

I am a huge fan of music. It’s my favorite hobby. Because of that, I got bored of commercial and pop music very early and dived into underground genres and scenes. I also like to know the history behind a specific genre or style, how and in what context it was born, and its societal and cultural relations with the artists and listeners. Now the music industry has gone through many disruptions in the last decades, starting with electric instruments, electronic instruments, digitization, the internet, and now we’re about to see the web3 disruption on the music market. A friend of mine is a musician with a passing interest in Cryptocurrencies. We were discussing how hard it was to make a living as an artist since, after labels, platforms, and other management fees you’re left with barely anything. A Rolling Stone report found that among the top performing 0.8% of artists on Spotify, 76.49% made under $50k in 2020. From my understanding, this is just the revenue they got from Spotify and doesn’t deduct other fees they have to incur. Finding the perfect opportunity to turn the conversation into a crypto one, I confidently told him that “Web3 fixes this”. When asked “How so?”, I said “Decentralisation”. You could tell from the blank look on his face that he was expecting a bit more. This article is that: a bit more on how decentralized apps could fundamentally change the relationship between creators (mainly using musicians as an example but it could be any content creator really) and consumers.

How Music Became Centralized

In 1932, the electric guitar was invented and was mainly used by jazz musicians. In the following 2 decades, rock and roll were born, and at the end of the 60s, pop music was created (we now call it pop-rock or classic rock) in parallel with the hippie movement. With the growing interest in music at that time, and the advancement of media technologies that made it easier to distribute it (records, radio, etc…), record labels saw a huge opportunity to make a lot of money and started building their empires. Today, only 3 record companies own 75–80% of the music industry. The rest is owned by much smaller independent labels. After the monopolization by the major companies, the dynamic between them and the independents goes as follows: independent and small labels are always looking for “the new sound”. They keep pushing emerging artists, and they’re the actual ones who discover new genres and trends. Then the big companies come and hijack the trend. They don’t want to risk investing in new artists, they only adopt what’s already working. It’s important to mention that even the smaller labels don’t give much freedom to the artists in their music. They should obey the directions of the record company so they can get released. That is the case of the genres that emerged in the 80s and 90s (new wave, funk, disco, hip-hop, electronic music, etc…). Small labels gave birth to them, and the big guys rode the waves.

Now, What Does That Mean To The Artist?

If you grew up in the ’90s, your favorite artist might have been playing local gigs or even selling mixtapes out of the trunk of their car (if they’re lucky maybe they’re already signed to an independent label). If they were lucky, they were in an area with other talented artists and could collaborate together. Else? They were stuck collaborating with whoever was within driving distance (If that). A talent scout probably came across them and told them they had talent and they could make them famous. Label execs listen to their music and think “This has potential” and maybe add “but it’s a bit niche. We need to change up a few things about you”. Then their new work starts playing on the radio and MTV with the artist hoping for certain “prime time” slots for max exposure to their most relevant audience. Eventually, a single catch on and the artist becomes famous. They sell millions of albums to their fans (and go on tour but let’s focus on the album selling piece because Metaverse concerts that could replace physical more expensive concerts are out of the scope of this post) but, after deducting all intermediary fees, are left with a relatively small % of the proceeds. What were the earliest fans left with beyond bragging rights of having known about the artist years before they made it? Not much really. So, Artists didn’t have direct access to a platform with a large audience and when they did, there was finite inventory (TV and Radio slots) to serve during and intermediaries were essential. Being an early fan was not really anything of value.

Then Came The Internet

With the internet, the industry surely changed but remained centralized. Here are the major changes:

1-Distribution: Music is no longer distributed in a hard copy format (CD, cassette, record…), but digitally. In the beginning, we were able to buy albums or tracks, now we pay a certain monthly fee to a platform and stream whatever we want (if it is commercial enough).

2-Community and scalability: It is much easier to communicate online. Artists can find other artists across the world for collaborations, they can also communicate with their fans by talking to them on social media platforms (most of the time not the artist personally). It is also much easier to reach people with their work by posting it on a platform with millions of users.

3-Semi-independence: Emerging artists seem to rely less on labels and can release their work themselves (ie Chance The Rapper). They can sell their music on platforms like Bandcamp, or monetize their content through a streaming app, market themselves on social media, etc… However, platforms like youtube don’t give you rights to your work (as discussed in part I), and you still need to sign with a label at some point to achieve real fame since they have better resources (capital, marketing channels…) and connections. In other words, it may have become a bit easier for an artist to get famous through the internet, but other corporate giants have joined the game making the industry even more centralized.

Blockchain and Web3.0 Giving The Music Back To The People

We discussed that artists have become a bit more independent with the internet. Web3 can push this forward:

1-Decentralisation: Smart contracts mean intermediary costs are minimized (if not removed altogether) thus allowing more revenue to flow to artists. Audius, a decentralized music streaming platform, claims that 90% of the revenue flows straight from listener to uploader. (The remaining 10% flows to nodes that host Audius content). This makes streaming more profitable for artists.

2-Micropayments: Pay per second is another interesting avenue. Instead of consumers paying a monthly subscription fee or watching ads and then artists getting a pro-rated (based on streams) share of available revenue, each artist could get a small payment for every second of content played.

3-Ownership and NFTs: This is perhaps the most interesting change and the one with the most possibilities. Here is one scenario that got me particularly excited : artists create NFTs of their songs and sell them to their own fanbase. This creates an “upfront” source of income for the artist and then (depending on the smart contract) a % of revenue from subsequent streams. As a fan of an emerging artist, this is both a great way to support and also earn a return on having discovered a talented creator. This potential monetisation might incentivize listeners to discover new creators. But blockchain tech can go further by disrupting the way music is created altogether. Electronic instruments (synthesizers) became trendy in the 70s, and in the 90s they became digitized. it evolved immensely since then and it keeps evolving, very quickly mind you, in a way that artists can’t keep up with the latest midi controllers, daws and VSTs. But in parallel to that, the philosophy and the way of making music hasn’t pretty much changed since the 90s. So here are a couple of possible scenarios of how blockchain tech, especially NFTs can change that.

- Generators: We use NFT generators now to mix multiple .JPG assets to create a composition. This tech can be applied on audio, by similarly mixing layers of musical pieces and making compositions, which can make the music making experience on a community basis. Yes, I’m talking about decentralising music making.

- VSTs on the chain: Analog and acoustic instrument enthusiasts like to collect. But that is pretty much non-existent in the digital side of instruments (DAWs and VSTs). The front-end of these digital tools can be NFTs that can unlock the instruments for the artist to use. In other words, collecting VSTs and DAWs in a wallet.

So here you go folks, we’ve talked about how web3 can decentralize an industry by providing solutions for distribution and marketing, and even introducing new ways to create an artistic work, by keeping both the artist and the audience happy.




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