Musicoin aim is to disrupt the music industry and in this article I will explain WHY ?

Musicoin aim is to disrupt the music industry and in this article I will explain WHY ?

By Miha Kunaver | miha | 4 May 2021


Current state of the Music industry

While the Covid-19 pandemic has wreaked havoc on several industries worldwide, music industry revenues reached an all-time high, with an overwhelming 83 percent of that revenue coming from streaming services like Spotify, Apple Music, Tidal, and more. 

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So who's cashing out record labels or the artists?

For most artists getting a record deal has been a clear sign that they made it. So you might be surprised to hear that at the time when TLC won two Grammy Awards in 1996 and was the world's biggest selling female music group was broke.

Why is that?

Artist's deals with record labels are incredibly complex. A lot of times those deals will not be in the artist's favor because of the way that they're structured. Put simply, many record deals are simply bank loans at the highest rate imaginable. Later these deals evolved to what is now called a 360 record deal.

A 360 deal allows a label to recoup that advance from the artist not only from music sales and streaming revenue but also from all other streams of income for the artist, including touring revenue, merch, sync licensing, publishing, and endorsements.

So if a record label gives you a $1m deal, what does that actually mean? It's really an advance on future royalties. Meaning it must be paid back to the label from revenue you earn after you make the music.

So let's say you've negotiated an 80-20 split on the royalties. That means your music would need to generate $5m in revenue in order to fully recoup the $1m advance owed back to the record label. Then you can start collecting your 20 percent share of the revenue.

Is the massive increase in popularity of streaming services a beacon of hope for Unsigned Artists to live off their music?

With the current business model of streaming services, the answer is no. Let's explore why.

Artists earn revenue based on the number of streams. The following chart displays how many streams an artist needs to generate in a month to earn a minimum wage.

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While streaming services enable easy access to international markets, the problem lies in the payment metric pay per stream. If an artist wants to earn an annual minimum wage from streams on Spotify he will need to generate 4,5 million streams in a year.

Because of this artists are motivated to produce more tracks with shorter lengths instead of producing fewer tracks with increased quality. That is why streaming services are starting to resemble mass manufacturing factories, where the only motivation is to produce more products/songs. 

Because of this massive increase of generic songs, masterpieces get lost within the noise. 

That’s why Musicoin was created. 

To enable signed and unsigned artists to live of their creations.
To help with the development of the artists
To promote the creation of quality instead of quantity
To find masterpieces that would otherwise be lost within the noise.

Next time I will explain HOW we will do this.

 

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