Could bitcoin and tokens be way for artists to better control the sales of their work? In this piece, Adam Levine, Founder & CEO at Tokenly, explains that embracing new technology can help artists forge deeper connections with fans and make money based on what they think their work is worth.
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By Adam Levine, Founder & CEO of Tokenly
Throughout the history of recorded music, the cost purchasing songs has remained remarkably inflexible. The cost of vinyl records, cassettes, and CDs generally stayed within the space of a few dollars on the high and low end; mp3’s almost always sold for $0.99 or $1.29; streaming services charge the same flat fee no matter how much music you listen to. But any artist or fans knows that not all songs are equal, both from a financial and emotional standpoint. A song written in a basement in twenty minutes and recorded on a four-track or laptop has one (low) cost; another song with two co-writers, samples, and guest verses costs much more — yet there is almost no price difference between the two.
“In most other industries, the cost of production is factored into the cost of the product.”
In most other industries, the cost of production is factored into the cost of the product. A shirt made by an experienced tailor costs more than something made in sweatshop; a meal made with locally-sourced, high quality ingredients costs more than mass produced fast food. But music has been stuck in a place where artists have almost no say in how much they want to charge fans — and fans who are willing to pay more are spending money elsewhere. The prices have largely been set by other entities whose business is selling “music” and who may themselves see every song the same — but there are changes coming.
There has been plenty of discussion about how bitcoin and the blockchain can revolutionize music, much of it centered around how artists can use the blockchain for data storage and management and smart contracts. But bitcoin and tokens can also help sell directly to their fans, and have total control over how they want their music to be distributed.
For example, let’s say an artist records two songs – one a quick bedroom jam, the other a shiny, expensive, hyper-produced track. She’s not so sure about the bedroom jam, so she releases 500 virtual tokens, each one the equivalent of a unique download code, to her biggest fans and let’s them listen to the track for a few cents to cover her costs. She wants to make the second track a hit, though, so she initially releases a hundred thousand tokens, and because the track cost so much and she thinks fans will pay, charges three dollars. If no one seems to be biting, she can drop the price; if it sells out immediately, she can issue more tokens and set a higher price point. Artists can also sell bundles of tokens to retailers at a wholesale price, allowing the retailer to help the artist expand their reach.
Direct To Fans: Music, Merch, Tickets & More
Tokens don’t just have to be limited to recorded music, either. One great way to cut down on scalping would be to issue concert tickets as tokens; the tokens could still be sold or exchanged in case the original owner couldn’t go to the show, but this would eliminate fraud and fake tickets. Tokens redeemable for experiences or merch could also be sold, with the artist able to build different packages or bundles to strengthen relationships and build a long term connection with top fans.
At some point during the first Napster years, it was predicted that artists would simply break away and start selling direct to fan. Several structural challenges prevented that, but tokens now provide a way for fans and artists to create a mutual support network with smart, responsive pricing built in.