PHLOTE Daily Notes 12.15.20
“Though music was the first to go digital, the business is still re-applying the structures of yesteryear onto the needs and complications of today. If the music industry wants to solve its troubles, things need to change.”
The archaic infrastructure that includes major record labels has been the music industry’s bottleneck for decades and is now severely outdated. The current system is massively undersized. In fact, the problem is only getting worse.
The proliferation of creative tools and platforms, including social media, has enabled a new generation of creatives to share their work, grow followers, and importantly, improve at a staggering pace. Everyday, we see new “stars” being minted by the viral content machine that is social media. The seismic shift towards a creator-led economy is happening all around us.
Meanwhile, the music industry is stuck in the past, relying on architecture that has long been inadequate in its inability to efficiently identify and invest in the next wave of recording artists. It’s hard to see how the incumbent players will keep up in this new reality while the number of talented vocalists, musicians, writers, and producers balloons globally. More directly, it’s hard to see why the incumbents are still needed.
Technology is forcing a much needed industry redesign.
Similar to the transition from physical CD’s to digital formats, the industry is at the beginning stages the next great technological revolution. Like before, music will expand its influence around the globe, bringing more listeners to the party. This time, however, the expansion will be powered by a new class of owners made up of talented artists, DJ’s, songwriters, producers, musicians, professional curators, and fans.
A combination of traditional and new financial technology will fuel the next phase of industry expansion. Some of this capital will look like traditional forms of venture capital and private equity. What’s more exciting are the new sources of capital that are aided by blockchain technology and forming to open the music investment opportunity broadly to everyone, not just the fortunate few with access to private deals.
We believe NFT’s and Social Tokens hold the most promise. The excitement around this technology is two-fold. First, NFT’s allow artist to earn money, a much needed innovation in music. Second, through the sale of NFT’s, artists are able build with their fans, giving their earliest…