A big part of blockchain technology’s appeal is the potential for up-and-coming artists and creators to make steady income from their content. The historical path to securing royalties for releases hasn’t always placed the original creator at the figurehead of earnings — on the contrary, some corners of the music industry have been notorious for diverting income away from artists. Before we delve into the potential and security provided by blockchain technology, let’s take a brief look at some of the typical challenges musicians and artist’s have faced when trying to secure royalties.

Even At The Top
One might believe it’s safe to assume the most accomplished and well-known artists would have both control and access to the distribution and earning potential of their music, but even at the top, the game has been easily rigged. Chuck D (of Public Enemy fame) has been outspoken against major labels and their tendency to hoard royalties. In 2011, the rapper sued Universal Records for $100 million, claiming Public Enemy had been paid only 25% of their owed revenue from online sales. This is made doubly shocking considering Universal were only cutting Public Enemy 18% of digital download sales in the first place. By 2015, the case had been consolidated with a few others seeking fair compensation, including names like Rob Zombie and the estate of Rick James being thrown in against Universal’s proclivity for underpayment. The class-action suit concluded in 2016 with Universal having to distribute $11.5 million to around 7,500 artists on their label.

It’s understandably demotivating for rising talent to face an industry with the historical tendency to take most of your earnings. The promise of earning potential from streaming platforms is hardly reassuring, on its own terms. Artists on a major label will average around 18% from streaming platform revenue, and those starting out alone are looking at a dismal 6–7%. The revered composer and guitarist Niles Rodgers has adamantly expressed his take on the flaws with royalty distribution and major label prominence, naming a lack of consistency, transparency and equal representation as underlying issues perpetuated by labels. Though much blame for low streaming returns has been placed on major labels, one has to assume that the sediment sinks to the bottom, and that unrepresented artists who are just starting out are likely to get the worst deal. Because the industry is still fuelled by networking and reputation, the distribution of royalties is often influenced by hype and standing — both of which are near impossible to accrue in an artist’s early days. In the UK alone, 20,000 applications for hardship funding were processed for amateur performers in the early half of 2021.

A Fair Cut
Thankfully, the introduction of NFTs to the music scene comes with the promising inclusion of smart contracts. A smart contract is essentially a digital contract between two or more parties that has been embedded into a blockchain-based product. The difference between this contract and others is it’s ability to self-execute — in essence to enforce the contract’s terms without the need for third-party maintenance or intervention. Because smart contracts are software-based, they can be pre-programmed with conditions that, when met, result in an immediate transaction or distribution of royalties to the appropriate party. Blockchain technology, with its emphasis on transparency and safety, means a breach of contract is far less likely than traditional, label-controlled contracts.

What else do smart contracts hold, in practical terms? That depends somewhat on the marketplace the corresponding NFT is being distributed on, but generally speaking, they hold all the necessary information relating to the said NFT. On platforms like OpenSea, for example, NFTs display a ‘contract address’, which when clicked will take users to Etherscan — a hub for metadata, transactions, wallet addresses and the smart contract itself, all pertaining to the individual token’s identity. That this much freedom and control is being offered to users who wish to release their content is a stark contrast with the exclusive, vague and inaccessible world of major labels that so predominated the industry in decades past. Gone are the days of portioning a large percentage of profits to third-parties who traditionally regulate royalty systems.

Are you an up-and-coming artist looking to build a name for yourself? On the hunt for a contract that nets you the royalties you deserve?
The Publicator is dedicated to creating a platform for artists, fans and NFT enthusiasts that wholly embraces the decentralized future of the music industry. We stand by the underlying values of creativity, originality and artist ownership. You can apply to be a beta tester at https://the-publicator.com/.

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