Music Industry's Status Quo
The architecture of the businesses which collect and distribute royalties is slow, inefficient and fails to capture many of the income streams that Creators are entitled to.
Royalty collection is expensive and limited to larger identifiable streams. Each link in the collection chain takes its cut. With many links in the collection chain, it is incredibly easy for royalties to be miscalculated. It is estimated that over 75% of all royalty payments are incorrect.
Deals with music creatives are heavily weighted in the music company's favour. Percentage splits of 85% to the company, 15% to the artist are standard, with all external costs often covered by the artist.
The bureaucracy and inefficiency of collecting societies complicate the royalty payment system for Creators, whose financial freedom and ability to continue creating can be delayed for months, or even years.
Although respect for creative work dates back to ancient Greece, where sheet music was protected by copyright for the first time, it was not until moveable type presses were created that the law recognised the “right of reproduction” should belong to the creator. The “copy… right.”
The commercial value of copyright, therefore, derives from the assurance that the creator can control and recover fees for each reproduction.
Arguably, for music, this reached its zenith with vinyl – which required industrial machinery and could not be cheaply copied.
It was domestic recording by analogue tape, and then digital distribution that diluted the ability to maintain royalties for each reproduction.
By embedding music in a digital collectible that trend is being reversed.
Each digital file can now be tied to a digital wallet (a piece of software or a machine). It can not be copied but it can be transferred. The smart contract enables that transfer to be recorded on the blockchain and the respective contributors are rewarded in tokens or proportions of tokens for each.