Artist Development and Incentive Structures for Content-Driven Cryptocurrency Platforms
By: Ryan Tanaka
Tags: Music Business, Music, Ethereum, Cryptocurrency, Blockchain

Wealth = (Tokens) = Labor

Before talking about incentives there’s a need to clarify what type of utility a cryptocurrency token actually provides to us in general. What makes crypto “useful”? Why bother with the blockchain to begin with?

One important aspect of cryptocurrency tokens is that they should be conceptualized as either a representation of labor, or as a representation of wealth. There’s a lot of debate in the crypto community right now about what a token really *is*, but at the end of the day a token is either a representation of someone’s wealth, or someone’s labor. Fiat currency systems were explicitly designed to act as a bridge between wealth/labor and this conceptualization does not change, even with the new technologies that we have today. That’s the whole point of it, really!

With this in mind, as with fiat exchanges, there’s primarily two ways to gain crypto tokens — either by paying for them directly with fiat (buy your tokens through an exchange system) or by “earning” them through “work”. “Work” means something very different when talking about purely online environments (it’s a different thing than say, working at a coffee shop as a barista) but there are a few “jobs” out there that lend itself very well to these types of models — data entry, validation, QA — to name a few.

For music and content based projects, the concept of “work” will probably take on a different meaning since the “product” itself focuses on entertainment rather than utility, in most cases. We can find a few examples of how these issues were dealt with in gaming platforms, however.

The massively popular video game League of Legends has an interesting model where in order to get a few in-game “perks” you can either choose to pay for it (wealth), or “work” for it by playing the game or promoting the brand of the game itself (labor). Sure, if you’re rich you can get all the good stuff right away, but if you’re willing to put in the time you can compensate for it by working hard for it. (Money won’t make you happy but it will save you time, btw.)

Part of the reason why League of Legends is so massively popular is because they have incentive structures that allow both the rich and the poor to participate in the process on more or less equal grounds. (Money will get you a slight advantage in-game, but not so much that it overcomes good performance.) Money helps, sure, but it doesn’t mean that just because you don’t have any, your situation is hopeless. If we want to get away from digital systems that reward money and money only, we need to acknowledge the value that labor can provide to the space as well. I do believe that crypto models built with this type of universality in mind will perform much better in relation to those that don’t, because it brings back a sense of balance in the business world that has been missing for quite some time.

The main hypothesis of the crypto-music-content space is that if you incentivise your users correctly, you can delegate a lot of the work that artists don’t want to deal with (admin, legal, marketing), allowing them more time to work on their craft. Using tokens as rewards, we should be able to create support systems that work to the advantage of both the artists and their fans. The jury is still out in regards to if it will actually pan out this way, but that is the hope that keeps us crypto-people going day to day — while the old guard reflects on how they’ve been going about their labor practices up until this point (#metoo, the absolution of corporate responsibility), cryptocurrency projects will probably be the ones leading the way towards what comes next.