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Digital culture: blockchain

Published 7:31 am on Tuesday 18th May 2021 by Beat Magazine

The Portuguese musician André Allen Anjos wrote a small letter to everyone who bought his tape “Boy”.

I hope you are proud to be a part of helping artists gain their freedom.
These are big words. But this is not a commercially available album either, but the most expensive tape in the world. Two months after release the cassette was traded for up to $4500. Not the relaxed and rather unspectacular music, but the extraordinary pricing mechanism was responsible for such proud numbers: Anjos does not sell albums, but a digital voucher. The current owner can do two things with it: Either exchange it for one of the 100 copies worldwide. Or resell it. Like a stock, this right has changed portfolios several times and experienced highs and lows.
After the euphoria about the idea had passed and the price had dropped significantly again, the value of the tape settled at around $ 200 and most owners wanted the physical product after all. For RAC, the project is already a success: “If you let the market decide, you get closer to the true value of products. Maybe this tape is really worth $ 200. But if I had said from the start:

Hey guys, I'm selling a cassette for $ 200. I would have been declared crazy.
It's a tempting thought - so tempting, in fact, that some believe it is the future of the music industry.

Proven technology

For the technical implementation, "Boy" relies on a proven technology: the blockchain. Each voucher contains all information about all past buyers and sellers as well as all relevant transaction details. This information is public, so the current retail value of the tape remains transparent at all times. The blockchain is particularly resistant to manipulation: anyone who changes one coupon would have to change all the others at the same time - a task that is almost impossible, at least at the present time. Originally developed for the decentralized digital payment system Bitcoin, the blockchain has become a versatile tool. There is also a multitude of potential applications for musicians. From the proponents' point of view, these offer the chance to evoke the spirit of the revolutionary early days of the Internet again - and perhaps even to go beyond its wildest dreams.
The mere possibility of handling all payment modalities via a blockchain is tempting. Financial flows become transparent, lightning-fast, fraud-proof and 100% traceable. As soon as an income is generated somewhere, this is registered in the blockchain and a corresponding transfer is arranged. The transactions take place in seconds instead of days, weeks or months. In a detailed article on the subject, the American Rolling Stone magazine clearly illustrated how something like this could look for musicians in practice:

Imagine a carefully organized portal that automatically updates all of an artist's income streams - merchandising, tour income, royalty income, streaming royalties, and performance royalties. Exactly something like this does not yet exist, which is due to the complications that arise from the fact that so many different parties have rights to a piece of music. But something like this could really exist in five years' time - or less if we use blockchain.

Contract rights can also be stored and thus secured in the blockchain. Money is thus only one part of the new music economy, albeit a very important one.

It changes the way we do business and treat each other,
says RAC. A special feature is that the blockchain enables musicians to participate in a secondary exploitation. A typical scenario: an artist sells concert tickets for 50 euros. Within a few minutes, they are completely sold out and can now be found on eBay. But there they are now offered for up to 300 euros. That is a huge price increase, but one from which the artist does not profit. Blockchain technology makes it possible to limit the maximum value of a ticket to 100 euros, for example, to prevent ticket traders from artificially inflating the price. If a ticket is sold for more than 50 euros on the secondary market, the voucher can specify that the additional profit is shared among all parties. This means that musicians retain a share of the revenue until the day of the concert.
But what about the music itself? Here, too, fascinating new models are conceivable. On the alternative streaming platform Audius, all tracks are still free today. Soon, however, it plans to move to models in which fans actively support the creations of their favorite musicians by paying only for very specific streams. The amount of the streaming costs is to be determined by the musicians themselves. That sounds like a step backwards at first. After all, one of the achievements of the Spotify era for end consumers was being able to access a gigantic music library for 10 euros a month without restrictions. The joke is this: if you do the math, it quickly becomes clear that it's impossible to take full advantage of that 10 euros, even if you only listen to music 24 hours a day. It's like an “All You Can Eat” buffet where the restaurant always makes a profit. Instead, through platforms like Audius, you could pay only for the music you like, and still get away with it cheaper - and also be sure that the money is actively benefiting the careers and livelihoods of talented producers and songwriters. It is even conceivable to negotiate the exploitation rights to compositions. DJ and producer Guy J has done pioneering work here and sold the rights to some tracks. If the music becomes a big hit in the future, the buyers will receive the resulting revenue.

NFTs: The music of the future?

These ideas are still largely dreams of the future. What is interesting is that there is possibly an apparently far more futuristic market in which blockchain concepts could come into play much sooner: So-called NFTs offer exciting opportunities to develop sources of income outside of traditional patterns. The abbreviation stands for "Non Fungible Tokens". These are purely digital products that can nevertheless be limited. Currently, these NFTs often take the form of audio-visual works of art: specially programmed animations that are combined with audio loops to form a total work of art, at least a small one. Linkin Park songwriter Mike Shinoda, for example, offered a thirty-second loop on the Zora platform, which consisted of a groove and an animation. The track was called "One Hundreth Stream" and the highest bidder was willing to pay $ 30,000 for it. "Even if I had uploaded the full version of the song to digital streaming providers around the world, I couldn't make anywhere near $ 10,000 if you subtract the provider, label, and marketing fees," says Shinoda.
Shinoda has quite deliberately - and this is a special feature of the NFTs - not sold the exploitation rights to "One Hundreth Stream". He can still do what he wants with the music, for example build a full song. He can even upload the groove and animation to a streaming platform so everyone can see it there, and generate revenue. This may seem surprising - why should someone spend the value of a family car on something that the whole world can later use for free? But these banal issues of reproduction interest buyers of NFTs just as little as Van Gogh buyers are interested in the fact that a cheap reproduction of the same painting hangs on the wall in millions of living rooms and kitchens worldwide. Such absurd sums are paid to sustainably promote an artist, to make a potentially profitable investment, or to increase one's own prestige. The latter point is possibly even decisive here, because although NFTs can be reproduced, only those "copies" are original which have been personally approved by the author. The gaming industry has been proving for years that such a thing can actually work: With the sale of in-game products that have no existence outside of a game. In extreme cases, virtual items of clothing or a piece of virtual land can generate several hundred thousand dollars.
NFTs could regain the concept of scarcity for music. Between 1960 and 2000, the peak phase of record production, the business model was based precisely on the mass reproducibility of singles and albums. That music could be traded like a painting was simply unimaginable. When Jean-Michel Jarre only produced a single copy of his “Music for Supermarkets” in 1983, it seemed so strange that the master was auctioned for just 10,000 euros. Today, however, the concept seems far more contemporary. The Wu Tang clan repeated Jarre's feat with their LP "Once Upon a Time in Shaolin", reportedly making $ 2 million. This gradually brings music closer to the world of fine art, with its fabulous sales and astronomical retail prices. On paper it sounds like an achievement after so many years when the monetary value of music seemed to be on a downward spiral.
But is it really? Only very few benefit from the excesses of the art scene. Artists rarely do, and practically never the buying public, which has no chance of ever being able to call the works that are exhibited in the museums their own. There is no reason to believe that things in the music industry could move in a different, healthier direction. The mass usability of music has made it arguably the most democratic medium of all, an art form in which more people actively and passively participate today than at any point in our history. The greatest potential of the blockchain lies in maintaining this democracy - not in destroying.


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