The music industry is no stranger to change, and more is on the way as it contends with declining revenue, piracy, and other issues.
Might the blockchain play a role in a better future for the music industry? Elio Di Iorio certainly thinks so. Mr. Di Iorio is the chief organizer of Musiconomi, a company with a vision of a rich ecosystem where artists can incentivize social sharing to suit their needs and those sharing and promoting great music are rewarded for doing so.
“It’s pretty obvious all the evidence points to the fact things aren’t working,” Mr. Di Iorio began. “Spotify and others are losing money hand over fist.”
Artists and companies aren’t making money like they used to, Mr. Di Iorio said. The internet disrupted the old analog model, but it is better at moving information than value.
That’s where the blockchain comes it, he explained. While in its infancy, the blockchain’s legacy will be how it allows value to be transferred on the internet.
Mr. Di Iorio said Musiconomi’s leadership team first worked together on blockchain-based currency Musicoin, which was designed to support the creation, publication and consumption of music as a cycle. Its cofounder and primary developer Dan Phifer led a group that started on prototypes in October 2016. They were joined by I Mother Earth frontman Brian Byrne weeks later, with Mr. Di Iorio and several others coming on in early 2017. They got $MUSIC added to exchanges, developed the web application and promoted Musicoin to the music industry and its fans.
That was the first step, but in order to give music fans the optimal listening experience, the team needed capital to build out the application layer. They are preparing a crowdsale on Cofound.it, a self-sustained business consultancy with the goal of becoming a platform which harnesses the blockchain and translates the logic of interactions into successful distributed business models.
The Musiconomi token, MCI, facilitates the new system by allowing for a unique revenue sharing model where features like playlists, streaming video, and virtual merchandise and ticket storefronts are available to token holders looking to generate revenue. It recognizes the important role “shareism” plays in the music industry.
“Think of the best elements of YouTube and iTunes,” Mr. Di Iorio said. “The best quality goes to the top and contributors are being rewarded.”
Artists face declining revenue models as the worst parts of the sharing model keep them from being paid. No one wants to see that, but they also don’t like a model where most of the money doesn’t go to the artist anyway, Mr. Di Iorio said.
The smart contract eliminates the intermediaries so the artists receive a greater percentage of the revenue while those creating added value for the artist are also rewarded. Artists can also determine the benefits on a track by track basis. Newer acts can drive sharing by giving greater rewards to the community while more established names can keep a greater portion for themselves.
Labels also see the value, Mr. Di Iorio said. On July 18 Musiconomi announced a partnership with Sweden’s Substream Music Group. Founded in 2004, they represent 450 artists including several iTunes and Billboard chart toppers. Substream manages eight subsidiary labels for dance music and downtempo electronica, while also serving as a publisher.
“The music industry is in desperate need for a faster and more efficient solution for royalty payments,” Substream cofounder Håkan Ludvigson said. “We believe that blockchain technology with smart contracts has the potential to make both distribution and royalty accounting direct and efficient, and we are excited to be the first label and strategic partner with Musiconomi to make our catalog available on the platform.”
Mr. Di Iorio said that while most acknowledge the flaws in the music distribution system, many still have to be educated about why the blockchain provides a better option.
“It reminds me of the late 1990s when I was involved in website design and selling people on the benefits of having their own web page. People said ‘I have the Yellow Pages, why would I need this?’,” Mr. Di Iorio recalled. “It’s a paradigm shift and it will happen gradually.”