The music industry is changing. Revenue from recorded music sales has been evolving for over a decade through streaming, and the trend shows no sign of reversing. Although as a macro trend the accessibility of streaming is positive, it offers a revenue pool that is less accessible to undiscovered, underground, and niche artists without a full-scale team behind them.
This problem is not unique to the music industry; it is symptomatic of a more significant trend towards disintermediation, in which consumers are increasingly getting their content and services directly from technology layer providers, and seldomly from sources closer to the creators.
The advent of peer-to-peer file sharing allowed individuals to pirate copyrighted material so easily that content owners were forced to adapt, leading to almost an “arms race” to control digital music and digital rights. However, they have done so in a way that has empowered the intermediaries at the expense of creators, and new intermediary models are making it increasingly difficult for artists to get their work out into the world. This has meant that the founders and CEOs of the world’s music companies make more money than any of the top musicians.
For the music industry to thrive in the future, it needs to find a way to distribute revenue that properly incentivizes all participants in the ecosystem, from artists and fans to technologists and investors.
DAOs can benefit everyone
One potential solution to this problem is the establishment of decentralized autonomous organizations (DAOs), which could act as collective decision-making bodies for the music industry. DAOs would allow artists, consumers, and other stakeholders to interact directly with one another without the need for third-party intermediaries.
DAOs could help to rectify music industry imbalances by giving artists a direct say in how their work is distributed and consumed, giving audiences a direct connection to the musicians they support, and giving infrastructure layers such as management and record companies a chance to collaborate with their core demographics and get closer to the music itself than ever before.
DAOs could be used to distribute profits more fairly within the music industry. For example, ticket resale sites take a large cut of earnings from any concert tickets they sell on their site, regardless of whether these tickets are sold for $5 or $5000. A DAO that represented musicians and concert-goers would not need to charge these exorbitant fees and could instead redistribute the profits more equitably.
One of the key advantages of a DAO is its ability to operate at scale. A DAO could process and act on an unlimited number of decisions, collaborations, and interactions without the need for human intervention. This would be a significant improvement over the current system, in which decision-making is often bottlenecked by a small number of gatekeepers.
DAOs could also help reduce costs and increase efficiency in the music industry. For example, a DAO could manage rights and royalties in a more streamlined and automated way than is currently possible. This would free up artists’ time and resources to focus on creating new music.
This would be particularly beneficial in the music industry, where payments and royalty settlements are often slow and inefficient. A DAO could also help reduce the amount of fraud and piracy in the music industry by providing a secure and transparent platform for artists to distribute their music.
DAOs provide a more democratic and equitable way for consumers to access music.
In the current system, the major record labels and centralized tech platforms wield considerable power over what music is available to consumers and what prices they can charge. This system benefits the labels, but it doesn’t necessarily help consumers, who are forced to accept whatever music the labels decide to release.
No battle needed
None of this says that the music industry needs to be dismantled or burned down. The record label and music management layers are not an opposing force, and we believe that an authentic music DAO will welcome everyone to the table. There’s no need to pit musicians against music industry professionals.
Instead, blockchain technology could create a more transparent and equitable framework for collaboration between artists, fans, producers, marketers, and other individuals involved in the music industry. If implemented correctly, this would allow all parties to benefit from an enhanced information flow and decision-making system.
By assembling these types of collaborative communities, DAOs could help to reshape the dynamic of music creation and consumption. Blockchain-based technologies may allow for a more equitable distribution of power in the global music industry with the right mix of transparency, fairness, and automation.
The music industry needs major changes, and DAOs may be the solution. By empowering artists and consumers to interact directly with each other, DAOs could help create a more equitable and sustainable industry without the need to rely on the intervention or permission of gatekeepers.