DAO and smart contracts instead of labels and managers

Every few decades new revolutions shape the music industry. The invention of records, cassettes and CDs, the transfer from physical to digital music and ultimately music streaming. However, the most recent revolutions are increasingly playing into the hands of the big players in the music industry. Can blockchain technologies like smart contracts and DAOs help make artists more independent and financially stronger?

A lot of money does not stay with the artist

In 2021, 165 billion music views were registered via streaming platforms in Germany alone. Spotify, the largest provider of music streaming, pays 0.2 cents per stream – that’s pretty little. In the music industry, most artists are dependent on an intermediary. You must transfer the copyright of a piece of music to labels and music publishers. The publishers then take over the licensing for different types of use such as concerts or club appearances, film music, advertising or computer games. Not enough money ends up with the respective artist through streaming alone. In times of physical sound carriers it was completely different.

Despite the oligopolistic market, many labels also systematically exploit their artists. A solution to this problem could be Decentralized Autonomous Organizations (DAOs) and Smart Contracts.

DAOs and Smart Contracts

Thanks to the decentralized infrastructure of the blockchain, DAOs and smart contracts do not require any intermediaries. Low End Activistan artist from Berlin’s electronic music scene who we spoke to at the crypto art exhibition NFT Art Berlin, sees a lot of potential, especially for up-and-coming artists.

Imagine there are 100 artists who know each other, each with 100 fans. This results in 10,000 fans. There is a lot of money and potential for this community [DAO] in as those fans are potentially willing to buy art or music by those artists.

Low End Activist

Organizing on a global level is particularly difficult for him, but necessary. DAOs provide just that organization through code. This code cannot be changed. Once the rules are set, they apply equally to every DAO member.

For example, multiple artists from every corner of the world could work collaboratively on a project. The code in the smart contract could already store in advance what percentage of the revenue goes to which entity. This ensures a fair distribution of the money for the artists within the DAO. No label can cut off too much of this.

DAOs and blockchain music startups

Low End Activist is part of the Friends With Benefits (FWB) DAO. FWB is a group of cultural professionals using Web 3.0 tools to encourage creative work. Each DAO often has its own cryptocurrency. at Friends With Benefits is it the FWB token. It serves as a financial deposit, much like a public company, and is trading at around 37 euros. The token makes it possible for the company to be owned and controlled collectively. The value that is created collectively is also shared collectively and equally.

The community idea is always emphasized by DAO sympathizers. Low End Activist takes a similar view. He believes that decentralized organizations are excellent for building a network among artists. “A good network is essential in the field of music,” he said.

social music industry

Other companies are also trying to establish new monetization opportunities using blockchain technologies. The main goal is to shift the value chain and create a fairer market. Some of these start-ups already provide the following services in the music industry:

1. streaming
2. trading platforms
3. Author Databases

bandcampone of the fairest marketplaces among all providers, was last rated by blockchain sympathizer EpicGames bought up. The lesser known company Ujo Music for example is comparable to iTunes and has set itself the goal of making the music industry more social. Before uploading their music to the platforms, artists can name everyone involved in the work and determine the distribution as a percentage before the release. A smart contract based on Ethereum then carries out everything fully automatically. There is a similar process on the NFT marketplace Foundation.

Grammy winner Imogen Heap and DJ Rac have already tested the platform, attracted a great deal of media attention and already generated profits. This proves that, in principle, a business model can be established with this new technology.