New Sound on the Block
How Blockchain and Cryptocurrencies Could Make the Music Industry March to a Different Choon
The music industry has seen new technologies change the way music is consumed, without changing who holds onto the money. But can a new blockchain-enabled streaming service give more power to the people who matter: the artists? Daniel Davies speaks to Choon’s cofounder, DJ Gareth Emery, to find out
The music industry is used to new technologies attempting to disrupt it.
In the past few decades it has seen platforms like Napster, LimeWire and music streaming services such as Spotify, Tidal and Apple Music come along, and although it has had to adapt to keep up, we still live in a world where 360 record deals exist and where record companies and music publishers hold most, if not all, of the power.
Whatever new technologies and platforms have been introduced, the music industry has always found a way to assimilate them, leaving power structures untouched and artists getting screwed over like they always have.
But although record companies, publishers and copyright societies – in other words the status quo –have won these previous battles, the war is still raging, and a new blockchain-enabled streaming service aims to put artists back in a position of power, by actually paying them for their work. How novel.
Choon is a music streaming service and digital payment ecosystem powered by the Ethereum blockchain that has been designed to remove the music industries’ middlemen, and pay artists a fair price for their music.
This isn’t the first time a streaming service has been set up with the promise of being for artists, by artists. Jay Z’s Tidal was originally touted as a platform that would provide "fair rewards", but what Choon is proposing is more fundamental change. By divorcing itself from the status quo and only accepting musicians who own their own music, Choon says it will provide a platform where artists can upload their music, share it with others, and immediately be paid 80% of the proceeds from the streaming of their material.
“The biggest difference between Choon and Tidal is that Tidal is essentially Spotify but a little bit more generous. I think Tidal pays... double what Spotify pays, but double of basically fucking nothing, is still basically fucking nothing,” says Choon’s cofounder, and electronic DJ, Gareth Emery.
Image courtesy of Rukes.com
The music industry doesn’t need record labels anymore
Emery says the music industry in its current form is “fundamentally broken”, with too many middlemen each demanding their share of the profits. Streaming services like Spotify, Apple Music and Tidal have all been annexed onto this broken industry, so, for example, even though Spotify’s revenues increase year-on-year, its operating costs also jump year-on-year because it still pays out billions to music rights owners, which typically isn’t artists themselves but the status quo.
“It's a system that was basically devised in the days of sheet music and jukeboxes and we're still using it to this day,” says Emery. “I mean it just blows my mind that when my music is streamed, be it on Spotify, Tidal or anywhere else it can take me up to two years to get paid for those streams, there's no accountability, there's no kind of chain of where that money's gone, I just get hundreds of pages of statements from my record label and a very small number at the bottom, and they're like there you go that's what your 10 million streams has got you.”
What we really want are kind of the big artists of tomorrow that have not really signed into those old legacy systems
What Choon aims to do is disconnect itself from the traditional music industry and cut out the middlemen. It doesn't work with record labels, it doesn't work with publishers and it doesn’t work with copyright societies, so everybody that is putting music on Choon has to own the rights to their own music. Rather than trying to bolt a solution onto a system that is fundamentally broken, Choon is building a new system, with a new breed of artists.
“What we really want are kind of the big artists of tomorrow that are going to be your Ed Sheerans and Calvin Harrises of 10 years from now that have not really signed into those old legacy systems,” says Emery.
“When I started in music 20 years ago, you needed labels for physical distribution because you had to get CDs into thousands of stores across the world, which requires some pretty complex distribution channels, so you needed record labels for that. Now it's digital, we don't need that anymore. You needed them to pay for studio time. Well, now a £500 laptop will do as much as some of the greatest studios in the world, so we don't need them for that anymore, and you needed them for PR and press and stuff, whereas now, with social media, write a message on your phone and bang it goes out direct to your fans in your exact words.
“The reasons we need record labels don't really apply anymore, yet for most music they're still there in the middle of the process, taking most of the money, just because they have this iron grip on the flow of cash. You can't put your music on Spotify without going through an aggregator, a distributor or a record label. So for us it's direct uploads, there's nobody in the middle and it's essentially having a pretty direct path between the people paying for it and the people listening to it.”
Choon cofounder and electronic DJ Gareth Emery. Image courtesy of Gareth Emery
How quickly can Choon’s artists start seeing real money?
On the face of it though, Choon is just a regular streaming service, where artists who own the rights to their music can get it to listeners and be paid in real time. Underneath the hood, however, Choon is utilising the Ethereum blockchain and its own cryptocurrency, Notes, to disrupt the music industry and its middlemen on a much larger scale.
The Ethereum-based blockchain will be used by Choon to log what tracks users are streaming and ensure artists are then paid appropriately, but another reason why Emery and Choon chose to use the Ethereum blockchain was because it allows artists to engage in smart record contracts.
You could upload a track on Monday, you could get ten thousand streams on Tuesday and then on Wednesday you could withdraw the proceeds of those streams
With the contracts, if The Beatles were to join Choon (which couldn’t happen because The Beatles’ music is owned by Sony and, until relatively recently, Michael Jackson) then the band could set up a legal arrangement where each member receives a predetermined percentage of royalties, which would then automatically be paid to them with Notes.
However, if I’m an artist, smart record contracts, the Ethereum blockchain and Notes are all secondary concerns; if I were an artist then what I would really care about is when exactly I was going to see real, tangible cash hit my account.
“The artists will be earning Notes from day one; as long as they're getting at least one stream they'll be earning something,” says Emery. “Now for you to be able to cash that out requires Notes to be traded on a cryptocurrency exchange, and that won't happen until a couple of months after we start because basically one month after the doors open we're having our token generation event where essentially we sell Notes to the general public in advance, which is kind of a way of funding our company.
“The moment that finishes, essentially crytocurrency exchange will allow the trading of Notes, so about two months after doors open, assuming you're there on day one, you'll be able to send your Notes to an exchange and then cash them out for Bitcoin or real money and send it to your bank account.
“Now if you're joining two months in, it's immediate,” adds Emery. “You could upload a track on Monday, you could get ten thousand streams on Tuesday and then on Wednesday you could withdraw the proceeds of those streams, which you know are fair because it's been accounted in a transparent way, and you can go and exchange them for Bitcoin or dollars or Euros or whatever, so yeah it's really quick.”
Image courtesy of Electric for Life
The cryptocurrency volatility problem
The problem with initially paying artists using Notes is that cryptocurrencies are extremely volatile. Ajay Banga, CEO of MasterCard, once commented “If I pay for a bottle of water in Bitcoin, one day it is two bottles for a Bitcoin, the other day it is 9,000 bottles. This does not work.”
For artists, getting paid in a cryptocurrency is a risk, and if Choon’s cryptocurrency, Notes, holds little-to-no value then there is a danger that they could receive the same pounds, shillings and pence that they currently get for popular streaming services.
Emery though isn’t worried about the intrinsic volatility of cryptocurrencies and argues that even if the value of Notes were to nosedive, it would still provide artists with a better income, and certainly a more transparent income, than they receive from other platforms.
If the value of Notes happens to go super high, you know, you're going to be fucking laughing, and if the value of Notes collapses you're going to go 'well shit'
“Cryptocurrencies by nature, at least at the moment, are very volatile because they're new, so whenever you transfer any of your actual money into cryptocurrencies it's going to be a different equation,” says Emery.
“It can go both ways, if the value of Notes happens to go super high, you know, you're going to be fucking laughing, and if the value of Notes collapses you're going to go 'well shit', and I think a lot of that is an individual decision.
“I'd kind of hope artists would educate themselves into how volatile cryptocurrency values are, and particularly, I hope they'll look at the price of Notes and they'll see it move up and down and they'll make decisions about how much to hold for potential future gains and how much to cash out because they need money, so it's very much an individual decision,” Emery adds.
“We've done some initial maths and we think that even if the value of Notes were to really decline, and I'm talking about say a 90% collapse in the price of Notes from where they start...even if the price collapsed by about 90%, we still think artists would be doing better than on the other platforms. You're just starting at a much better rate.”
Image courtesy of Rukes.com
Getting the public to pay for music
When Tidal was first announced, some of the world’s leading artists, including Jay Z, Madonna and Kanye West, came together to claim artists deserved more money for their work. Not an outlandish claim, but parading some of the world’s best paid entertainers on a stage in New York and asking for more money probably wasn’t the best way to garner support.
Choon is different, its mix of unsigned and unheralded artists, along with a splattering of superstar DJs, like Darude – the Finnish DJ and record producer, known for the track Sandstorm – mean that Choon is fighting for the little guy.
As well as people who call music their profession, Emery wants to make music a realistic career choice for people who have either left because they couldn’t see any way to make money from recorded music or for any musicians, new or old, who don’t want to spend all their time on the road, travelling from city to city and show to show to make ends meet.
“I would love to see some of these people that have left the music industry to go and do other stuff get brought back into it,” says Emery. “Unfortunately, we've kind of got this myth now where we've been sold this thing where you can't make money from recorded music, you have to be a live touring artist, and I'm fortunate that I have a great live career, so I can go and play to a couple of thousand people and get paid for it, so for me I don't need to rely on music for my income whereas not everyone wants to tour, not everyone wants to spend half of their life travelling around the globe to get paid, so those are the kind of people I'd love to make the music industry viable for again.”
While Choon’s goal is admirable, it might ultimately come unstuck because, in this day and age, people just aren’t willing to pay for recorded music.
We've kind of got this myth now where we've been sold this thing where you can't make money from recorded music, you have to be a live touring artist
Right now Choon is free for users, but it does have plans to charge users in a year or two, according to Emery. He also says that, because Choon has so few middlemen, it will be able to charge less than the current streaming services and could eventually cost around £5 per month.
While £5 per month is around half what you would pay for a service like Spotify or Apple Music, it doesn’t solve the issue that the whole status quo has been grappling with for a while: that music has been free or at least perceived of as free for a long time, and it’s difficult to get people to pay.
But Emery isn’t as convinced that people aren’t willing to pay for music as the rest of us.
“One of the myths that we've been sold is 'people don't want to pay for music',” says Emery. “But when I see people doing Kickstarter campaigns, and these are getting really popular in the music industry because people have no other way to make money, how do you explain thousands of fans giving artists in some cases £50 or £100 to go and make an album and they're getting nothing back, like literally nothing?
“I don't get it, on one hand they say people don't pay for music, but then people are going and giving their favourite bands huge amounts of money with almost no return, so I think probably we need to give the end user a little bit more credit.
“Don't get me wrong, I don't think we're going back to the days where people are spending £15 on an album. Those days are gone. And the level that people will expect to pay for content is far, far lower than it was in the past,” Emery adds. “However, I think that's pretty applicable across the board. Ten years ago you'd buy one newspaper, it'd cost you 50p and that's probably the only one you read. Now you can read 20 of them on your phone for free.
“I think the cost of content has been massively changed by how much stuff is available for free on the internet, not just in music but in TV and film and print journalism and everything, but I think there's a lot more of a willingness to pay than we probably give people credit for. At least under our system we really get to see that, and with nobody in the middle we can get to see exactly what people are willing to pay.”
Image courtesy of Electric for Life
Will Choon change the music industry?
Choon success won’t necessarily be measured by how well it does in comparison to its competitors or by how many Ed Sheerans or Calvin Harrises of the future it finds, Choon will more likely be judged by how much influence it can have on the music industry and the status quo.
Emery confirmed that both big and small record companies have been in touch to find out what Choon is up to, some of whom have a genuine interest in what the streaming service is doing and aren’t just trying to see how they can assimilate Choon and its ideas into their own bloated empires. But what are the chances of the status quo actually taking Choon’s raison d'etre – to pay artists fairly and transparently – and applying it to the music industry ad infinitum? Well, don’t hold your breath for that.
Ultimately my mission in this is not about making Choon a success, it's a lifetime mission to fix the completely broken music industry
“Ultimately my mission in this is not about making Choon a success, it's a lifetime mission to fix the completely broken music industry,” says Emery.
“If, and I don't think this would happen but projecting, Spotify decided to follow the Choon model and the major record labels and the publishers and the copyright societies all went 'yeah, we don't need to hold on to artists music for years, let them have it immediately' and the industry shifted, I would very happily close Choon down and go 'mission accomplished’.
“Now I don't think that would happen and I'll tell you why: because for that to happen, many of those major record labels and publishers would not exist because the only reason they do exist is because they're intermediaries and middlemen in the process. They'd essentially be signing their own death warrant, which is why it's been so hard to get transparent accounts for artists, but if in some way that happened, there is no need for us.
“I'd be like OK, there you go, job done,” add Emery. “We helped to get that fixed, now it is fixed and we can all go back to making music and getting paid fairly for it.”