TikTok companions with blockchain startup — and it is excellent news for creators
On August 17th, TikTok announced that it would partner with Audius, a streaming music platform, to manage its extensive internal audio library.
Audius wasn’t the obvious choice to partner with the short video giant. As a digital music streaming startup founded in 2018, it is not one of the big streaming services like Apple Music or Spotify.
And, even more unusual, Audius is one of the first and only streaming platforms to run on blockchain.
Remind me what is blockchain?
Blockchain is a technology that stores records and transfers values without central ownership.
Transaction data on these systems is stored as individual “blocks” that are sequentially linked when linked by time stamps and unique identifiers to form “chains”.
For music, this means that unique codes are assigned to individual songs and clear records are made every time a song is played. It can also mean leaner and more transparent payments.
Platforms like Spotify and Apple Music use a “pro rata” model to pay artists. As part of this system, artists receive a share of the platform’s total monthly revenue generated from ads and subscription fees, calculated based on the number of times their music was played.
The pro rata model has been criticized by independent artists and analysts for maintaining a “superstar economy” in which the most popular artists claim a majority share of monthly revenues.
Backed by its blockchain system, Audius employs a “user-centric” model where artists earn revenue generated by the individual users who stream their music directly.
That said, payments for artists are generated more directly from people streaming their songs.
While the biggest streaming players have refused to discontinue partial payments, Deezer – a French music streaming service with around 16 million monthly active users – has taken the first steps towards user-centric payments.
Now it seems like TikTok might follow suit.
And how does TikTok work?
With over 800 million monthly active users, TikTok is the world’s largest short video platform and has become a major force in the global music industry.
Once on TikTok, songs can be used as backgrounds for short videos – and go viral.
Currently, making independent music available on TikTok requires the help of a publisher or companies like CD Baby or TuneCore who charge a fee or reduce revenue.
Audius will enable independent artists to upload music directly to TikTok. This would be a boon for music artists as the music plays a central role on TikTok and the platform tends not to adequately honor artists for their work.
Recent research on blockchain systems in the book release suggests the technology may lead to improved intellectual property tracking and higher royalty payments to independent authors. The same may be true of independent musicians on TikTok, but a history of exaggerated claims and unfulfilled promises warrants moderate expectations.
Is that a fairer payment system?
So far, TikTok has given no indication that the company will use Audius’ blockchain technology to implement a user-centric revenue model, but the inclusion of royalty payments per video playback is a reasonable expectation.
When artists get paid from a platform like Spotify, they’re paid in cash. But Audius does blockchain transactions using its in-house cryptocurrency called $ AUDIO.
Cryptocurrencies are virtual currencies that are stored in public ledgers rather than banks and are used to conduct transactions that are facilitated by blockchain systems.
The Audius co-founder claims that most users are unfamiliar with or are not interested in the cryptocurrency underlying the platform – but the price of $ AUDIO skyrocketed in the coin markets immediately after the announcement.
With cryptocurrencies operating in a volatile market, it might be impossible to predict whether their income would be adequate compensation if artists were to collect payments in $ AUDIO.
Artists’ income depends not only on how often their music is heard, but also on market speculation.
What does that mean for artists?
Some independent artists may be cautious about processing payments through a decentralized digital currency, which is less regulated and unpredictable in value fluctuations – not to mention the environmental costs associated with mining and maintaining cryptocurrencies.
And a user-centered model is not without its flaws. Full collaboration between record labels, music publishers and digital platforms is required for the model to really be tested.
Anything else would create fundamentally unequal conditions for artists who use different services.
Even TikTok doesn’t put all its eggs in the blockchain basket. In June 2020, TikTok partnered with major labels and indie consortia for music distribution, and in July 2021, TikTok announced a new partnership with Spotify to offer premium services exclusively to European artists.
But after years of sensational claims and unfulfilled promises that blockchain will change the future of the music industry, TikTok has taken a concrete step to figure out what that future might actually be for everyday artists.
This article by D. Bondy Valdovinos Kaye, Assistant Researcher, Queensland University of Technology, has been republished by The Conversation under a Creative Commons license. Read the original article.