Tokenization of the Music Industry

by | Oct 27, 2020 | Industry | 0 comments

With all the excitement brought by asset tokenization- there is a selective perception and market that receives less coverage- assisting independent music artists in discovering new financing opportunities, without having to sacrifice their ownership and contract rights, such as control of future royalties to agents and producers.

Tokenization acknowledges and rewards music fans for attending shows and utilizing services. An artist can sell tokens to fans directly to raise funds for upcoming activities. With the help of smart contracts, artists receive prompt payments and revenue generated from their songs and performances, instead of waiting for several months to years to be compensated.

In the Digital Era, What is Stage Flight About?

The primary objective of an artist is to produce great hits and be a great live performer. In the modern world, to succeed as an independent artist (Indie), you must overcome the noise and be celebrated by recording companies and sponsors. It is no longer about having a striking profile and streaming numbers- it is about being recognized and the brand strategy.

To reach scale and optimize time, musicians require money to create a robust network and surround themselves with knowledgeable music experts. One way of achieving this is by signing an agreement with a producer. In return for a portion of future royalties, publishing, touring, merchandise revenue, and potentially creative control (depending on the agreement terms), music producers offer the needed capital for artists and the advertising influence for better market opportunities.

Though some musicians may be comfortable with this method, it is a career killer for most indie artists. This is because they may not have the traction, recognition, legal expertise, and number that may offer them an advantage over the record labels. Therefore, indie musicians may innocently sign predatory agreements, or surrender full music control. For many promising artists, the logical part of the business extinguishes the flames of passion and creativity, and predatory contracts become so caustic.

Music Contracts on ‘Smart Contracts’

Music contracts are beneficial to artists in many ways, but some producers want to exploit upcoming artists who struggle with fame and industry knowledge. Tokenization may help capital-constrained artists fund their music careers by strengthening the bond between musicians and fans. Tokenization can enhance the relationship between musician and fans to unlock new financing opportunities for resource-constrained artists.

Tokenization is the act of converting intellectual property (for example, rights of a music hit) into blockchain tokens with an underlying value. Just like the way owning shares of stock grants your ownership rights in a company, tokens enable artists to share a whole or percentage of a song’s rights and get money in return. Payments received via tokens are processed by secure and transparent smart contracts running on a blockchain network.

Secure Peer-to-Peer Transactions (P2P)

Blockchain technology enables secure P2P transactions without third parties, like banks, publishing companies, and music producers facilitating the process. By incorporating a digital ledger that is self-governing, artists eliminate fraudulent transactions or predatory contracts from their careers.

Tokenization enables fans to be active participants in a musician’s career life and share their favorite stars’ success. With this new model of vested fan interest in the success of a song, indie artists can unlock new opportunities for fan relationships, brand evangelism, and marketing- with their followers mostly championing these efforts as street teams.

Musicians can raise funds for their projects by issuing and selling tokens to fans who love their creative work. The funds will enable them to record songs, mix/master, and pay for music videos, cover touring, and other costs associated with the production process. By holding tokens, fans share in the success of their favorite musicians. Remember, these tokens can be sold at secondary markets, like the Tokenizer DEX, unlocking liquidity in previously illiquid assets.




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