Can Tokens Usher In A New Era of Price Flexibility for Artists?
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.
Tokens seem like an interesting idea.
It sounds like essentially doing limited editions or runs of a recording.
But how will this work unless piracy is brought under control?
Thanks for your comment,
“It sounds like essentially doing limited editions or runs of a recording.”
You can think of the token as a digital transferable bearer license granting access to specific albums. Whoever has it, owns it and is granted the rights associated with it. In the real world artists allow and certainly can’t stop someone from selling their CD or collectable or signed letter, and those things have value because when someone possesses it, the previous owner can not still also possess it. This transferrable-without-the-creator’s-permission dynamic allows the selling and reselling of an artists work in independent music stores, it’s use in libraries and more. None of these things exist in digitally equivalent format because all sales are final, music can not be resold and licenses are non-transferrable.
With tokens, these dynamics now apply to digital content and artists will mostly treat it the same because it is to their benefit.
There was a lot of understandable skepticisim before iTunes introduced a legal way to buy and consume music. People were already doing this stuff for free, why would we go back to paying? Whether it’s itunes or something else, mostly people listen to legal music even though literally everything is available for someone willing to go looking.
In practice, the majority of people want to play by the rules so long as a) they can afford it and b) it’s convenient.
When you make things expensive or make someone work hard, the inconveniences and potential risks of piracy become more attractive (relatively speaking).
There’s also a huge geographic component here, time is more valuable in the west than the east… I’m going to end the comment here before it’s longer than the article.
The Too Long; Didn’t Read answer to your question is “Giving people better legal options doesn’t require us to first fix universal piracy”