The music industry has always evolved alongside new technologies. From analog records to digital downloads, and now to an era dominated by streaming services, the relationship between artists and fans has become increasingly complicated due to intermediaries. Imbalances in revenue structures, lack of transparency in copyright distribution, and various barriers to global expansion have long been persistent issues in the music industry.
However, the recent emergence of blockchain and cryptocurrency has attracted attention not just as a means to address these issues, but as a tool capable of creating entirely new opportunities. By leveraging this technology, new economic models and innovative relationships can be formed across various areas of the music industry—a point already emphasized by many experts. This trend is gradually gaining momentum across the industry, and in the long term, it is expected that traditional music business models could be completely reshaped.
1. Economic Structures that Connect Artists and Fans Directly
In the modern music industry, various intermediaries are involved in dividing revenue. Whenever a song is streamed, the platform, label, and distributor take their share first, leaving the artist with only a portion at the end. In this structure, no matter how successful a piece of music is, the compensation received by the creator often falls short of expectations. Cryptocurrency-based payment systems, on the other hand, open the door for direct transactions between fans and artists. Fans can send payments directly to an artist’s cryptocurrency wallet without going through a platform, ensuring that artists receive a larger share. In the long term, this structure can promote music creation and provide an environment where independent artists can be more active. This is especially advantageous for indie musicians who are not bound by contracts with labels.
In fact, an article by Robert Jang outlines the best new cryptocurrencies to invest in for 2025, demonstrating the potential of a cryptocurrency-based economic structure where fans can send payments directly to artists without going through a platform. These coins come with a wide variety of use cases and could create high profit levels for investors (source: https://cryptonews.com/kr/cryptocurrency/new-cryptocurrency/).
This system ensures that artists receive a larger share and can create an environment in which independent musicians can be more active.
2. Transparent Royalty Distribution Through Smart Contracts
The distribution of royalties has long been a major challenge in the music industry. Many songs are the result of collaboration among multiple composers, producers, and session musicians, making actual revenue distribution complex and opaque. Blockchain-based smart contracts automatically allocate revenue according to programmed conditions whenever a specific song is played. This reduces errors, delays, and a lack of transparency in the revenue calculation process. For example, if a smart contract is set so that the revenue from a song is divided equally—20% each—among five copyright holders, the corresponding amount is automatically sent to each of their wallets whenever the song is streamed or sold. This approach enhances trust across the music industry and establishes a structure in which creators can receive fair compensation.
3. Ownership and Fan Experiences Expanded Through NFTs
NFTs represent a genuine innovation in the music industry, going beyond a passing trend. By issuing music in the form of NFTs, fans move from being mere consumers streaming content to becoming owners and investors. Fans who hold limited-edition album NFTs can enjoy a variety of benefits beyond just listening to music, such as access to online events exclusive to NFT holders, priority for VIP concert tickets, and special merchandise. This enables artists to create new revenue streams while allowing fans to experience a sense of belonging and pride in the music they love.
In this process, the trading and ownership verification of NFTs take place on the blockchain, with purchases and transactions typically conducted using cryptocurrencies such as Ethereum. To buy an NFT, fans need a cryptocurrency wallet, which they use to load funds and make payments on NFT marketplaces. In this way, NFTs go beyond being simple digital assets; combined with cryptocurrency, they create a new economic ecosystem in the music industry. They also transform music consumption from a mere act of listening into social and economic participation, strengthening fan engagement and loyalty.
4. Borderless Payments and Global Market Access
Music is inherently a borderless art form, yet payment systems are still constrained by national regulations. Emerging-market artists face complex barriers such as currency differences, exchange rates, and banking regulations when trying to reach a global audience. Cryptocurrencies, however, break down these barriers. Anyone in the world can send payments in the same way, which is especially advantageous for independent musicians. For instance, a rising artist in South America can receive album payments directly from fans in Asia using cryptocurrency. Transactions that once took weeks can now be completed in minutes, often with lower fees. These changes also have a positive impact on the growth of music ecosystems in emerging markets.
5. Fan-Centered Crowdfunding and Investment Models
In the past, artists had to seek labels or patrons to launch new projects. Cryptocurrency-based crowdfunding, however, allows fans to directly support an artist’s growth. Fans can purchase tokens issued by the artist, with the funds used for album production or concert preparation. As the artist succeeds, the value of the tokens held by fans increases, allowing fans to share in the success of the projects they supported. This represents a new form of engagement that combines investment and participation. Fans are no longer passive consumers—they become active stakeholders in the music industry.
6. Preventing Piracy and Copyright Infringement with Blockchain
Illegal downloads have been one of the greatest threats to the music industry in the digital era. Blockchain, however, stores all transaction records in an immutable way. By assigning unique blockchain authentication to music files, it becomes possible to verify authenticity and track pirated copies. This allows artists to protect their creations while enabling fans to safely consume legitimate music.
In fact, Custos Media Technologies, founded at Stellenbosch University in South Africa, is tracking piracy in the film industry using blockchain-based digital watermarking technology. This technology embeds a Bitcoin address within a movie file and allows the source of illegal copies to be traced by identifying the person who first activates that address.
The same principle and technology can be applied to the music industry. By assigning blockchain authentication to music files, artists can protect their creations, and fans can safely consume legitimate music. Furthermore, this technology can be utilized by streaming services and music distributors to prevent illegal downloads and promote legal music consumption. In the long term, it could significantly shrink the illicit market and enhance the overall health of the music industry.
7. New Business Models and Innovation in the Music Ecosystem
The greatest potential of cryptocurrency and blockchain lies in creating new business models. For example, decentralized music platforms have structures that are entirely different from traditional streaming services. On these platforms, fans can directly curate music and receive rewards in cryptocurrency for their participation. This innovation transforms fans from passive consumers into active participants in the music industry.
Additionally, virtual concerts in the metaverse, blockchain-based ticketing, and sales of digital merchandise generate new revenue streams. Artists are no longer dependent on platforms or distributors; they can interact directly with fans and bring their creations to the market. This approach has the potential to transform the music industry into a more democratic and creative ecosystem.
