Imagine if your favorite struggling musician on Spotify or Amazon Music could receive 95% of the revenue she generates for those online platforms. Imagine if her fans could access her music without using an app that charges a monthly subscription or serves up annoying ads.
The irony of the creative sector is that artists and creatives contribute almost all the value to their products, services, and entertainment, but rarely do they reap a proportional reward compared to others in the distribution chain, like agents, music labels, art auction houses, film studios and more.
Web3, especially blockchain and cryptocurrency, may finally tip the scales in favor of the artist. Let’s briefly overview how Web3 tools and new crypto projects could transform revenue models for artists, musicians, and filmmakers.
Cryptocurrency in the Visual Arts
Beepleโs 2021 sale of an NFT for $69 M caused an uproar in the art NFT scene. It also marked the mainstreamโs first exposure to NFTs. Even after the bubble burst, art NFTs are here to stay. Here are some ways cryptocurrency can transform the visual arts scene.
- Unique Signature for Digital Art: Digital artwork is easy to copy and distribute. With NFTs, artists can create a unique digital record associated with an artwork file to prove they created the artwork. When they record the NFT on the blockchain, it serves notice to the world.
- Provenance and Royalties for Tangible Art: Even if the artwork is tangible, artists can create an NFT to establish authorship and provenance.
- Smart Contracts: With smart contracts, artists can stipulate that they still own the copyright. They can also include royalty clauses for future sales that finally allow them to participate in the increase in the value of their work.
- Graphic Designer Control: In commercial work, graphic designers can benefit, too, by asking for a micro-share of future revenue from the use of their work. Imagine if the designer of the NIKE swoop had received even a thousandth of a cent for every impression of the NIKE brand.
- Automated payouts and P2P: With smart contracts and blockchain, payouts are automatic. Peer-to-peer transactions are more straightforward, making it possible to eliminate much of the distribution overhead.
The web3 tools like NFTs and smart contracts also benefit other artists. Let’s look at how musicians are experimenting with these models.
Cryptocurrency in the Music Business
Musicians have long had a contentious relationship with distributors and promoters. The music industry is big business and the graphic below overviews how digital currencies are beginning to impact the industry.
Cryptocurrency can help musicians create direct ties with their fans while earning a larger share of the profit from their music. Letโs look at a few scenarios.
Musicians and Cryptocurrency
The current streaming royalty payment system for musicians features meager royalties payouts for artists. With traditional payment systems, several middlemen take a cut of their earnings.
It’s no wonder musicians are experimenting with accepting payment on chains in popular cryptocurrencies. From concert tickets and merchandise to digital downloads and streaming subscriptions, crypto facilitates direct peer-to-peer transactions, eliminates intermediaries, and reduces transaction fees.
Just as with visual artists, when fans pay musicians directly as the artist keeps more of their earnings and achieves greater financial autonomy. Musicians and bands can also create unique tokens or NFTs, offering exclusive content and access to fans. An NFT assigned to a music track can designate that track as the original. Like studio mix tapes from the Rolling Stones or Sam Cooke, an NFT can establish provenance that lays the foundation for the digital music file to increase in value over time.
For funding music projects, blockchain technology supports decentralized crowdfunding platforms, where fans can directly support their favorite artists. Cryptocurrency also creates a new channel giving artists direct access to their global fan base. One example is monetizing audiences in developing markets with limited access to traditional banking infrastructure.
On the distribution side, large web2 streaming platforms are taking notice. MediaChain (now a part of Spotify) is a peer-to-peer blockchain database that organizes open-source information by issuing unique identifiers for each piece of information. To guarantee fair payment, MediaChain issues smart contracts with musicians that state their royalty stipulations without the third parties or contingencies.
Cryptocurrency in Film
Filmmaking differs from visual arts and music in a few ways. Firstly, making movies is complex and expensive because it requires organizing input from across the creative spectrum – writers, artists, actors, music, directors, and cinematographers. Here are some ways cryptocurrency is influencing filmmaking.
- Film Fundraising: The current model for film funding ranges from parents, repurposed student loans, and second mortgages to sophisticated investor groups. No one knows how many brilliant film ideas die from lack of funding.
Cryptocurrency can reduce costs and add transparency to crowdfunding campaigns, helping filmmakers appeal directly to their fans to raise funds for film projects. Moviecoin is an early entrant, including a new film with A-list lead Russel Crowe.
- Simplify film production: Producing even a low-budget indie movie has thousands of small details and is very complex. Smart contracts can simplify crypto payments for paying crews in different countries and automate milestone-based production budget drawdowns.
- Distribution: Blockchain technology can enhance film distribution by increasing security and transparency, fighting piracy, and ensuring fair compensation for creators.
- Fight film piracy: The film industry lost an estimated US$6.7B in 2022 to illegal streaming downloads. Blockchain can help fight film piracy with content surveillance and digital watermarking.
Moving Ahead
Cryptocurrency in the creative sector is attractive to investors because it intersects with established industries with proven demand. It also enables fans of the arts to participate and benefit from supporting their favorite artists and projects.
Do you invest in arts-based NFTS, support creative projects, or trade other crypto assets? If so, ZenLedger can help you stay organized for tax time. The platform aggregates transactions across exchanges, computes your capital gain or loss, and generates the necessary paperwork. In addition, you can identify opportunities to reduce your tax burden using strategies like tax-loss harvesting.
This information is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
