It’s hard to recall now how long we’ve been hearing that the music industry is changing: in flux, in transition, in crisis, most recently in the development of reliable music streaming; like any other industry, the music business is always on the lookout for the next big thing, the opportunity to get in at the ground floor of a new and significant step forward.
That’s why it was interesting to read about the acquisition by eMusic investors of a controlling interest in the British firm 7digital, which deals with B2B services as well as direct-to-consumer downloads. This story has several layers: the roll-out of a new technology strategy, the potential salvation of more than 100 UK jobs, and, most importantly for the passing punter, a potentially much better deal in terms of value, fairness and efficiency for the music consumer.
Based on blockchain technology, which has in the past been dismissed as the domain of the cryptocurrency cowboy, this will be the first major commercial use of blockchain, operated through a system of tokens (which, crucially, are limited in number). Customers buy the tokens, currently on sale for 39 cents each, and use them to purchase music. eMusic and their new partners 7digital use the amassed tokens to pay the artists direct, whether recording in their bedrooms at home or represented by a major label.
The prospectus is that this will make everything fair and transparent. The customer gets the convenience and security of the eMU token system, which, because supply is ultimately limited, is also an intrinsic asset; the artist gets fair and transparent reward for his or her music, independent of the heavy hand of record labels; and for both parties there is a more intangible but very marketable sense of connection and emotional investment. Consumers can feel that they’re contributing to the careers of their music heroes in a tangible way, and artists can forge a direct relationship with their listeners. This sort of creative utopia is the “value add” of the system, the authenticity that everyone looks for in today’s marketplace.
There’s also the economic side to the story, in the form of a tale of financial necessity. Behind the hard sell and careful planning of eMusic’s blockchain strategy is the plight of 7digital, which is having problems. Relatively speaking, they’re a venerable company, founded 15 years ago, and they employ more than 100 people and reach 85 countries. They’re a British success story. But at the beginning of the month, they announced plans for a share subscription to raise funds which would involve a partnership with Shmuel Koch Holdings and Magic Investments, in a debt for equity swap. led by the head of eMusic, Tamir Koch.
Despite an investment of £1.3m, 7digital says they still need £4.5m by the end of July, or this ambitious scheme will be over before it even began. For the sake of the jobs involved, the contribution to the music industry in Britain and the US, and the development of the consumer experience, I hope they manage it.