Blockchain and Music: Where are we now?

There are multiple market experiments related to applying decentralised digital technologies in music. The main areas of application so far relate to:

• Decentralised Music Distribution: Blockchain can be used to create music distribution platforms that allow artists to sell their music directly to fans without intermediaries. This reduces costs for artists and increases their earnings.

• Digital Rights Management: Blockchain can track the ownership of digital rights, such as copyrights and royalties. This can help prevent piracy and ensure that artists are paid fairly for their work.

• Fan Engagement: Blockchain can create more engaging experiences for fans. For example, artists can create NFTs and fungible tokens that give fans access to exclusive content, such as concerts, merchandise, and more.

There have been no truly disruptive use cases up to now, but it's worth noting that music applications are still in the early stages of development and that recent technological advances allow for greater scalability, making many more applications possible.

One particular sector, Digital Rights Management, is the most promising. It follows a market trend that views blockchain as a horizontal technology for digitising Real World Assets (RWA), such as music IP. Important players in the financial markets, including some of the world's leading stock exchanges, are developing or planning systems that can link traditional financial markets with digital asset markets. This opportunity paves the way for potential large-scale developments, making it one of the main areas where music tech startups and VCs can look to build and identify effective operational methods and new business models.

However, the music industry exhibits unique characteristics in this aspect. Typically, tokenisation is used in financial applications that can benefit a particular industry. In the case of music, there's another significant area that would gain from tokenisation.

The music industry thrives on a complex network of legal relationships through which rights owners license the exploitation rights of their intellectual property to third parties responsible for promotion and distribution. This effectively creates the "music products" (from vinyl records to streaming services) that ultimately reach end-users.

The digitisation, or tokenisation, of this network of relationships, could facilitate the emergence of an open financial market underpinned by musical intellectual property. On the other hand, it would streamline the licensing processes, greatly enhancing scalability to meet the demands of a digital world that is rapidly evolving the way music is consumed.