Blockchain technology can offer the opportunity for those writing the music and lyrics to be better rewarded for their talents. The rise in number of people streaming music has been immense but this has, in effect, also intermediated fans and performers. Blockchain technology enables a more direct relationship between fans and performers in a peer-to- peer manner, without any intermediaries. An example of this is OPUS. OPUS is a Blockchain-powered music-streaming platform allowing listeners to stream music as well as distributing royalties to performers, both by using its own cryptocurrency token. With the Blockchain technology OPUS tracks and records the history of what has been listened to and, hence, is able to make streaming payments to performers in real-time. The OPUS whitepaper states, “Like Spotify users, Opus users are able to listen to new music releases, with each play count generating a small amount of revenue for the artist. Opus aims to address the lack of transparency and lengthy time delays in the current royalty reporting process. Opus pays artists between 97 and 99% of the total revenue generated, with the remaining 1-3% going towards operational costs.”

In 2020, conclusions from a Digital Music study commissioned by OPUS included:

• musicians should be empowered by the transition of royalty payments into Blockchain for the music industry and;

• there is a potential for growth in Blockchain in the digital music streaming services market.

It is not only OPUS, but other firms also using Blockchain technology are active in the music industry including Ujo, Madiachain, eMusic, Music Life. Indeed, in an article from builtin.com, seventeen firms using Blockchain technology are identified as to be disrupting the music industry.

The ability for new independent performers to have a closer/more direct relationship with their fans is indeed another key advantage that Blockchain-powered platforms offer. A new company launching in June 2020 is ANote Music, a firm which is creating, in effect, a ‘stock exchange’ for music royalties thus offering writers access to an alternative source of funding. Investors have the ability to access an alternative high-income asset class in the form of royalties, previously uncorrelated with the traditional equity and bond markets. By creating a music exchange, it is hoped that this will improve the liquidity and, therefore, trading of royalties. Publishers, record labels and artists will be able to sell some or all of their music rights. In simplistic terms, ANote Music introduces a new scheme of financing to sellers and to investors, new investment and diversification opportunities.

However, parallel to this, it is not only the music industry being ‘shaken up’ by Blockchain technology. Listeners are also being impacted, with firms such as Viberate (which claims to have 450,000 artists) incentivising listeners by paying them ‘VIB tokens’ for contributing to its database of artists, venues and events.

Equally, an interesting company (which has its roots in the London punk rock scene from the 1970’s) is FileProtected. Now based in LA in California, the founder, Andy Rosen, has developed a Blockchain-powered platform designed to protect the rights of artists and writers. Having spent a career in the music industry Rosen knows only too well the ‘dark side’ of this industry hence establishing FileProtected, which is designed to allow the creators of digital content music, images etc to be logged cheaply and securely on the Bitcoin Blockchain. So, in the event of a dispute as to whom is the owner and original creator of content, there is now a proven database which can be accessed globally and be relied upon.

Source: FileProtected.com

WhatsApp was based on a set of very simple principles, “No ads! No games! No gimmicks!” . The founders, Brian Acton and Jan Koum, setting up WhatsApp Inc. in California in February, 2009 (having both left Yahoo and applying to work at Facebook, only to be rejected!) WhatsApp was launched on the App iPhone store in November 2009, and its unique selling point (USP) was that one could make calls and message, even internationally, for free. In February 2011, with 200 million users, WhatsApp was valued at $1.5 billion and then along came Google who tried to acquire WhatsApp for $10 billion only to be rejected as WhatsApp accepted Facebook’s $14billion offer! In 2018, WhatsApp, as an app, was ranked first in the social networking category in Apple’s App Store. The messaging app took the top spot with 11.58 million downloads during July of that year, while Facebook’s Messenger had only 9.62 million downloads in the same month.

All well and good, but what benefits and advantages does it deliver? In short, with a global reach across 180 countries,WhatsApp offers Facebook, in conjunction with Libra, the distribution many banks would ‘die for’. It possibly threatens to undermine governments in different countries as there is the potential of people migrating to use WhatsApp (as opposed to traditional currencies), particularly as WhatsApp and Facebook have been focusing more and more in businesses.

WhatsApp for Business API enables businesses to integrate the WhatsApp API with their own, providing a customer-friendly experience and allowing companies to message customers on WhatsApp automatically. Other features include, making it possible for banks to message confirmations of purchases and event promotors to confirm ticket booking applications securely through WhatsApp, in almost real time. This has proved extremely popular and there are now over 3 million business already registered on WhatsApp’s platform and growing. Subsequently, these firms could be offered incentives by Facebook to process transactions using a new Libra Digital Currency. Indeed some global corporations of sufficient size, could even have their own digital currency created and managed by Libra on a white label basis as discussed in previous editions of Digital Bytes.

The global remittance market and the revenue generated

Source: Save on Send analysis.com

Added to this, a further reason that WhatsApp payments will prove popular is the global remittance market is massive and is expected to continue growing. Therefore, whilst the cost of forwarding money is undoubtedly declining, a Digital Currency ought to be able to undercut the traditional money-transfer providers. Were it to be assumed that WhatsApp charged only 2% to transfer cash and succeeded in capturing 10% of the current $650 billion global remittances, this would generate over $1.2 billion p.a. of revenue for the mighty Facebook empire! On the basis that Facebook has a current price to earnings ratio (PE) of 31 were we to assume a net profit margin of 50% for WhatsApp, this could mean that the $600 million of additional profit would increase Facebook’s value by $600m x 31 i.e. $18.6 billion. Another way of looking at this is would be that it would only take 9 months (3/4 of a year) for Facebook to recoup the $14 billion it paid for WhatsApp!