Invest in music the new hype!

I just read about a new company again that has what they think the brilliant idea that you
can invest in music in the new blockchain technology. This is actually the
fourth this week I read about. I just see a big hype right now that will rip off artists and make the music industry look like a shitty amateur camp.

The fact that is nothing new even though they claim they are so innovative and new. Sorry to disrupt that dream. This concept actually was undergoing in 2002 almost twenty years ago. It was like a stock market for songs and built by a friend of mine. It was never launched because the finance inspection said no,

it was too large of risk from insider operation. Back then they didn’t have blockchain

technology that now is going forward, some cryptocurrencies are run on. I think the inside problem is a big issue still in the new companies. The
blockchain has an easier way to control ownership. Still don’t really solve the problem
with inside jobs. Even the stock market has a problem with inside things like the
GameStop controversy just a month ago. Here it can be even worse. There is no
way to stop anyone to build bubble around an artist that never will happen. You just have the example of Threatin in 2018 as a fresh reminder.

There is even a bigger problem I see right now. The people behind the new
systems. When blockchain came around there were a bunch of good music tech investors
and really smart people adapting to it this was around ten years ago. If
there was something into this these people would have showed up right now. Most
of them have left the projects claiming that it won’t really work in the favor
they want. The new systems I have just seen this week are very alarming. One
system was done by a quite shady DIY distributor. One was done by a person that
couldn’t see the difference between a manager and a record label and quite clearly
is not part of the music industry. The third is run by people that before has
lost a lot of money to artist building similar tech companies like a Ponzi scheme getting investors
then run with the money.

Then you have
another problem. They all claim to be new and innovative. To be honest I got
contacted two years ago with a company doing exactly this trying to get in some
of my artists. I didn’t fall for it because there are some things in the whole
strategy that is not working if you know the real music industry. Last week I was talking to a person that works there but he was afraid
of losing his job right now because the company is not doing well. And he said
it hasn’t gone well the whole time. So why would it be better now when a
bunch of these companies jumps on the market?

Why won’t
this work? This is what record labels have
been doing from day one. They evaluate the artist the songs and make an
investment. These new systems just claim that okay now you can go without the record
label and just get your investment money from investors.

First the
investors. The company I was talking about that don’t go that well. One of the reasons
I was suspicious was that there were no investors on the platform. It was
your job as an artist to pull in people that should invest in your music. That
is just another word for Pledge Music if someone remembers that crash. Yes, it was
a go fund me page where you can get people to invest in a project. Mainly the
return is that you are investing in a machine or tool and you get it very cheap
later when it’s done. It’s not many artists that were lucky on these. There is a
couple of success stories but never any bigger one. In all these cases the
artist has to spend a lot of time driving people to the project even if it’s a pledge
or the new blockchain investment. Time, that is taken off from making music and
art. Of course, if you already have an enormous fanbase, a system like this
would work. Metallica with their fanbase would get a hell of lot of money if they
put out that you could be a shareowner or getting the album first etc. Just one
problem.

Now
Metallic doesn’t need the money, they already have it. But let’s pretend they got
a couple of million dollars. They need to use that money wisely to get the
music out there. Now it’s the guys in the band that has it. They need to overlook the process to get the new album to the right people. With the money, they can hire the right people. I doubt they actually know the right people. All this was done by theri record label.

Bingo! Here
is what the record labels have been doing for the past 50 years. They have a
staff of people hired to do these works and personal relationships. If they don’t have it, they know who
they should hire. In many cases, they also have partnerships in hand. Take a new artists that
haven’t been around at all, they don’t even know where to start. Instead, when they get
this money they will spend it all on a recording and some flashy videos, and a
new guitar amp. That won’t get their career going. A record label would stop
these accessories and put the money in the right place.

You put
the artist to work hard and then they might get money to spend, but they don’t
have any clue where to spend it. Every artist has to build up a new network to
make these things work. Not even blockchain can save that one. You are
competing with companies doing these strategies and collaboration for fifty
years and you really think that you can get a new artist to build up the same
network in one year?

I don’t say
the technology is wrong. It might work but then it has to contain several
things. First, inside the platform, it needs to have options with networks that
the artist can choose from and use. Second, the systems have to have built-in
investors. To explain, when Spotify started they needed the big labels to gain
attraction to a big audience. Today we all know that Spotify is one of the
biggest platforms, you can be certain there is an audience there. Here is the same
for an unknown artist if there were people inside the platform that invested in
music it would be attractive. Is that an angel investor that would do that?

That is
also a problem. This has been the case before. I have been part of many wealthy
people that have set aside big portions of money to invest in artists. Until
today I haven’t seen any of them succeed. If it has succeeded it’s usually spent on their sons or daughters, like Taylor Swift. Most of the time the projects fall apart since the artist is really not up for the job. Isn’t talented enough. A think that now would be decided by the artist taht sells their songs in the system.

Another problem is that the blockchain only covers the master side, maybe the
publishing side (a bit unclear on different systems). The master side is just 25%
of what an artist earns. The big chunk is live where it’s 50% of the income or more. We
are now going to have more live than ever since the audience is hungry for it.
To invest in music, you need to have income on all areas. That is what the companies
tried to do in the crisis with 360 deals. Kind of greedy. Didn’t work out since even the biggest companies couldn’t provide full service in all areas. When you come to investors they are
in for the money. If they see they can only get money back on 25% of the whole.
There is much better business to be done. We all know also that artist mainly makes money out of one area. Like Ramones made most on T-shirts and touring, not recordings or syncs. My guess many investors that wouldn’t get any money back seeing the artist making a lot on a different field would make the business sour.

My advice on
this is to stay away from it. If it’s going to work, it needs a sanitation
process. There are too many players out there. Not a market for each one of
them. Maybe one survives and it all become like a record label with the inside
tools. My guess is that the record labels that still hold a lot of the gates
won’t let it happen too easily.