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A Field Guide to Music’s Potential Crypto Boom. Part 3. Banishing ticket scalpers from the concert business. When in-person concerts and tours eventually return, NFTs could also play a role in live events. “Bookings can be done by using smart contracts that would execute payments automatically and instantly as soon as contractual obligations are met,” says Veber. “This means that you could book your wedding DJ, digitally sign the contract and put crypto funds into escrow on the blockchain. Once the DJ does her thing and you are satisfied, the funds are released to her without using the bank or any kind of financial intermediary.” Additionally, NFTs can hold tickets, which becomes more interesting when you apply this concept to the secondary market of resellers. Adam Alpert, who manages The Chainsmokers and serves as CEO of Disruptor Records, partnered with The Chainsmokers and executive Josh Katz to create a blockchain-powered ticketing company called Yellowheart in 2018. Alpert says Yellowheart’s mission is to eradicate scalping and bad players in the secondary ticketing market and put the power back into the hands of fans and artists, but there’s also room for venue promoters and the resellers themselves to benefit. “What Yellowheart does is it writes the rules for a concert’s tickets in a smart contract,” says Alpert. “So, it can say, ‘This is how many seats there are. These are the rows and seat numbers. This is how much the seats cost. This is what they can be resold for. This is how many times they can be resold. This is how old you need to be to buy these tickets.’ Any kind of information that can be governed by a smartphone or computer. And most importantly, you can dictate where the money goes.” Yellowheart can rule that a certain concert has a face-value worth of $50 a ticket on the primary market — and that the venue promoter and artist are okay with it being resold for a maximum of $100. The organizer can then decide how that extra $50 is split up. “Maybe that $50 goes to the artist, maybe it’s split up between the promoter and the artist, or maybe the artist wants any money above face value to go to charity,” Alpert explains. The average reseller with a last-minute change of plans may see this as a win as well: While they may not be able to benefit from insane markups, they get to make money back in a legitimate way. The Yellowheart team spent most of 2019 developing its tech. They planned on launching in 2020 before Covid-19 got in the way. Now, they’re just waiting for live events to return, but the Ticketmaster-owning Live Nation has already invested millions. “The secondary market is a ten billion dollar market — if not more,” says Alpert. “That money is the biggest elephant in the room of the music business… Venues, promoters, and ticket-sellers all want to solve this together. There are [random] people — not promoters, not venues, not artists — that are getting this money.” Yellowheart is also looking into NFTs that hold digital collectibles. An artist can create a piece of digital art that is specific to a tour or show date. “One of the most simple ways of thinking about it is like a digital ticket stub,” says Alpert. “You bought your ticket on Yellowheart and you have this ticket stub to, let’s say, The Chainsmokers at Madison Square Garden in October of 2021 for seat five in row six. You’re the only one that has that and you own the rights to it.” The same idea could apply to a one-night-only poster or t-shirt with a certain city and date on it. Demystifying streaming and incentivizing fans. There’s no streaming platform more blunt about its ambitions than the blockchain-based Audius, which wants to turn passive streaming into an intimate relationship between artists and fans. While Audius has not launched monetization yet, there are a lot of developments in the works. Currently, it’s free to use, but that’s because it’s in a strictly promotional phase — with around two million monthly users, 250,000 tracks, and 50,000 artists, making it the biggest consumer platform built on a blockchain so far. “Not only will there be the ability to pay for the music that you’re consuming, there will also be the ability to essentially crowdfund projects by your favorite artists, there will be the ability to participate longterm in the growth of an artist on the platform, and there will be the ability to pay an artist a customized streaming rate based on how they feel their art should be valued,” says Head of Partnerships Clayton Blaha. There will always be some ad-supported free version of Audius, but Blaha says the paid version will be highly customizable. “Many artists will say, ‘All of my old music is free, but now that I have 10,000 followers on Audius, it’s now 20 cents to stream my new EP forever.” RAC, who’s already on Audius, has never been a fan of traditional streaming platforms’ fixed-rate model. In his mind, a musician should be treated like a painter or a photographer, both of whom get to set their own prices for their art. These applications of crypto are “giving artists power again,” says RAC. Blaha also points out that money generated by Audius streams goes directly to the artist. “90 percent goes immediately to the artist in real time. 10 percent goes to the people that support the network, which allows artists to have flexibility in growing their career in ways that have never existed because of so many inefficiencies in streaming’s payment systems.” Blaha encourages interested parties to liken the situation to old-school album sales. “When you would go to a record store to buy a Journey album, it was much more likely that Journey would see the upside of that. They sold a bunch of records, so they made a bunch of money. That’s how the music industry used to work. Now, if you stream a hundred artists on Spotify, none of whom are Drake, Drake still gets paid because of the pro rata system within all DSPs. For me, I started my morning listening to Grover Washington, listened to a bunch of Cumbia, and then was playing Gunna. I want to give my money to those people, because they’re the ones who made me feel good.” He adds that there will probably be something like an “Audius Premium” subscription. In that situation, artists would be able to assign content to their premium tier of superfans. Audius’ crowd-funding component, on the other hand, is rooted in the idea that there’s a certain amount of pride and “social capital” that comes from finding an artist early on in their career. “Maybe an artist opts into a mechanism where they say, ‘Commit five dollars now and you’ll get a percentage of the revenue that this song generates for the next two years on this platform,'” He says. If the fan is invested, they’re more likely to tell all their friends about this new music: “Fans have never been compensated for that behavior in the past.” Audius also launched its own token, $AUDIO, in October. It’s a “governance token” that gives users access to different features. For now, the platform is just giving tokens away to encourage activity. But eventually, users will be able to buy them to unlock different features. Holding those tokens could also allow the user to vote in the creation of new features for the community. “Because we’re totally decentralized, Audius is owned by the people that make it valuable, which are people that commit their music, people that commit their fandom, and people that want to build onto the platform… The token allows us to incentivize them to do so.” While this may be a lot to digest, Blaha insists the Audius team doesn’t want anyone to ever have to think about crypto when they’re using Audius. “We want it to be more like a consumer platform that you just interact with because it’s so fun and you love the music on there. Suddenly, you look at your your Audius wallet, and you’ve done all of this healthy network behavior that’s compensated you without you knowing it.” Blaha admits that Audius is more than a streaming player: “It’s a totally new music industry with a fan component that’s never been facilitated.” “It incentivizes community,” adds Mike Power, who manages Kenny Beats, a songwriter, producer, and musician who joined Audius in January with three exclusive tracks. In the last year, Kenny Beats has invested a lot of time and effort into incentivizing community. Without touring to focus on, they turned to other alternative platforms like Twitch and Discord. “Kenny started his beat battle on Twitch. Every Monday, he asks an artist friend to come in to provide a sample. That sample’s then distributed to anywhere between 5,000 and 20,000 kids. They have a couple hours to make a beat. That same artist will come back in and judge the beat battle with Kenny. And he’s had everyone from Timbaland, to Mike Dean, to Charlie Puth, to Baauer… It’s really empowered artists to create and push through in this difficult time. And a platform like Audius just pushes them to be more involved. On top of that, it streams at a higher rate than [the likes of] SoundCloud and Spotify.”