How Much Is Blockchain Technology Disrupting the Music Industry?


The digital music industry, as it is today, experiences a host of challenges that blockchain technology may has the ability to solve. A number of blockchain startups are already targeting the music industry for disruption, using blockchain technology in various way to alleviate specific problems in the industry.

How effective have these efforts proven to be to date? And do music industry success stories for blockchain projects, such as Spotify's acquisition of Mediachain, signal more disruption to come, or, are these ramifications limited?

At this critical intersection of a changing industry and a transformative technology, valuable insight can be gained through an evaluation of the extent to which blockchain startups are successfully disrupting traditional models for distributing music, managing attribution rights and more.

Disruption Opportunities in the Music Industry

It's easy to identify problems in the music industry, the most problematic of which include:

  • Middlemen . Artists rarely are able to distribute their music directly to consumers. Instead, they must rely on intermediary organizations that host distribution hubs on which music can be downloaded. These middlemen typically receive a large cut from every artist's revenue. The middleman may also impose restrictions on the manner in which artists can license their music.
  • Payments . The music industry relies heavily on a system of centralized payments. Sharing payments among large groups of users is challenging because micropayments are expensive . It's also difficult for artists to receive direct payment from consumers because of the large number of intermediaries in the industry, as noted.
  • Attribution management . Copying and redistributing audio files is an easy process, but the digital rights management systems designed to prevent unauthorized sharing of music are brimming with flaws . For these reasons, artists experience great difficulties in receiving not only credit, but payment, for their creative works.

Blockchain technology appears to be well-suited to solve these challenges and others, and a number of experts have predicted that blockchain technology is poised to revolutionize the music industry.

Blockchain Music Startups

A fair number of blockchain companies and organizations are already hard at work on revolutionizing the music industry.

  • Rethink Music, an influential organization that provides thought leadership for the music industry, believes blockchain technology may be a way to solve industry challenges such as data management and ticketing.
  • is already offering a blockchain and digital tokens to power new payment models for artists in the music industry.
  • is building a decentralized digital assets management platform that could be used to manage attribution rights and payments for audio files, among other types of digital content.
  • PeerTracks seeks to enable peer-to-peer distribution of audio content to remove middlemen and place more revenue in the hands of the people who produce music.
  • Mediachain , whose acquisition by Spotify in April 2017 was one of the first major success stories for a blockchain startup, created a digital attribution system using a distributed ledger. Spotify bought the company primarily because it needed an attribution-management solution.

These are just a few examples of blockchain startups that are working to revolutionize the music media industry. It's already a crowded market.

Measuring Blockchain Technology's Success to-Date

How successful has the blockchain revolution been within the music industry? That depends on how you think about what disruption means and how far blockchain startups need to go to make their mark in this space.

Some observers have expressed doubt about blockchain technology's ability to effect real change in the music industry. Among other criticisms, they contend that music contracts are too complicated to be reduced to smart contracts hosted on a blockchain and that blockchain technology lacks the security sufficient to protect audio files,.

In some respects, these criticisms appear valid. Security remains a challenge across the blockchain ecosystem, not just within the music industry. Until users can rest assured that blockchain data will not be manipulated by malicious nodes or compromised through software flaws, the applicability of blockchains in the music industry, and any other industry, will be limited. The relative newness of blockchains such as Ethereum, which is currently the most obvious candidate for building smart contracts for music management, also casts a certain amount of uncertainty over the long-term viability of blockchain-based solutions in the music industry.

Others have demonstrated that the process of actually buying music through decentralized, blockchain-based distribution systems has more than a few kinks that remain to be worked out.

On the other hand, blockchain technology's ability to solve certain problems in the music market is undeniable. Attribution and digital rights management can be successfully implemented using a blockchain, as the Spotify acquisition of Mediachain makes evident . Mediachain's rights management system did not revolutionize the entire Spotify platform, but it solved a clear problem within it.

It is also easy to imagine how the number of intermediaries that separate artists from consumers could be reduced through blockchain-based platforms, as long as those platforms can attract a critical mass of users. Attracting users is no mean feat, since displacing the entrenched centralized music services (such as iTunes and Amazon), to which most consumers currently turn when seeking to purchase music, will be difficult from a consumer-awareness standpoint. And the usability issues noted need to be addressed before the average consumer will see a blockchain-based service as a viable means of purchasing music.

It seems fair, then, to conclude that the reality has not yet caught up to the hype about blockchain technology's ability to revolutionize the music industry. At the same time, however, real progress is being made.

Perhaps the greatest hurdle that needs to be overcome at this point - before blockchain startups in the music industry see increased adoption - centers on marketing, rather than on technology. Consumer awareness of blockchain-based alternatives to traditional music services remains low, and it will stay low if companies like Spotify continue to acquire blockchain startups rather than facing real competition from them.

Fortunately, for blockchain startups, marketing is an easy-enough challenge to meet. Both the technology and the need to improve the music industry through blockchains are there. The challenge is in convincing more people to use the blockchain platforms that have emerged so far within the music industry.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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