It has been apparent for several years that the business of music distribution is completely broken.
To use block-chain technology (see bitcoin.org) to keep an unbroken ledger for each piece of music released. Autonomous contracts are embedded within each song to automatically distribute digital payments for different uses of the music. Each artist could have their own personalized currency that consumers would purchase, then use that currency to purchase music. As the music digitally spreads, the embedded contracts would continue to flow payments back to the artist. The technology for this already exists and is quite mature and there could be several different contracts covering a single tune.
- Incentives could be included that would encourage peer-to-peer sharing of your music. Consumers could enjoy a (small) percentage of the creator’s income for each time they share/copy with a friend. Block-chain technology can track whether you give someone a song (transfer the file to them), or create a separate copy for that person – the first instance being cost-free, and the second invoking a set payment based on terms embedded within the music.
- Contracts could also be embedded to cover streaming services like Pandora/iTunes/Spotify, making the payments automatic and the terms set by the artist, not the streaming service.
- Even special cases like advertising, film use, or sampling of your music could have contracts established ahead of time, so that these uses of your music would be remunerated automatically.
- People could also invest in the future marketability of an artist – purchasing that artist’s personal currency – much like investing in an IPO or contributing to Kickstarter. As the artist’s reputation increased, so would the trade value of their currency, creating an outside market where people could speculate on the relative success of different artists as represented by the relative value of each artist’s currency.
- With personalized currency, consumers would be more than simply purchasing product – the different artist currency they hold and trade could become a specific expression of their values.
- The low (approaching zero) cost of fund transfers and the high amount of trust afforded by block-chain currencies would enable extremely small micro-payments to be realistic. This would allow the artist to receive virtually all of the funds spent on their music, with no middle players (lawyers, banks, managers) siphoning funds. The price of each song could drop dramatically, since it would be very economical to reach a world-wide audience.
- The contracts are embedded, meaning that the details of transactions would be almost invisible to the end-user. A consumer would simply go to iTunes or to an artist’s website and use a credit/debit card to purchase a set amount of an artist’s currency and then use that currency to purchase that artist’s music, (very close to the way they are accustomed to). Or they could perhaps hold a portion in reserve, betting that they could profit from the future rising value of that artist in open currency markets.
- DRM (digital rights management) nightmares go away, as consumers are actually encouraged to share and trade music as often as they like.
- This brings back the idea of owning a piece of digital music, much like we own physical books, or how we own a vinyl album. The block-chain method allows consumers to relate to the music they buy in a way that feels natural, yet prevents the destruction of the artist economy due to wide-scale pirating.
Ethereum (ethereum.org) and Bitshares are currently the two best platforms for this.