Ontology Network and Muzika announced earlier this week that they were working together to develop a decentralized music streaming platform. A music streaming service delivered via a blockchain-enabled dApp is in some ways an obvious idea, with many inherent advantages over existing streaming services, for both artists and end users. However, there are big challenges in attaining any kind of success with this type of service. But Ontology Network and Muzika should have enough behind them to have at least a fighting chance.
Taking on the Giants of Streaming
Any new music streaming service will have to contend with the network effect already achieved by services such as Spotify, Apple Music, and Google Play. The network effect is incredibly powerful when introducing any new mass-market digital service. Even a company as powerful as Amazon had to throw huge sums into marketing and developing content for its Prime streaming service to have a fighting chance at taking some of Netflix’s market share.
Amazon recently hit a trillion dollars’ valuation and takes 49 cents of every American dollar spent on ecommerce. Ontology Network and Muzika obviously have nowhere near that kind of economic might to throw behind their proposed new music streaming platform. But there are other reasons to think they could be a disruptive force in this market.
The first is that, despite achieving household-name levels of consumer awareness, Spotify and other streaming services have a business model that’s far from perfect. From the artists’ perspective, these services pay peanuts. A million plays on Spotify translates to about $7,000 in royalties for the artist. Some other streaming services are even worse than this, with a million streams through Pandora only generating $1,650. But despite paltry payouts to artists and quarterly revenue in excess of $1.36 billion, Spotify has still yet to reach profitability.
But simply offering a better deal for artists is no guarantee of success. Tidal has been a well-documented example of an artist-first streaming platform that has seriously struggled to make a significant impact.
The second - and most important - reason that Ontology and Muzika have a fighting chance is that they don’t necessarily have to take Spotify and the like on directly to be successful.
Providing New Artists with a Money-Making Platform
Muzika was created earlier this year by the Mapiacompany, spearheaded by three South Korean entrepreneurs with an average age of just 22. The youthful trio have already found success with online piano portal Mapianist, attracting 2 million users to the platform. The concept behind Muzika is to create a combined social network and streaming service. Users will receive the MZK utility token for engaging in activity on the network, which they can then use to sponsor their favorite artists.
This focus on direct engagement between listeners and artists seems like it would be of most immediate relevance to independent acts who would struggle to generate any meaningful income through plays on Spotify and similar services. Their biggest competitor in this regard would be SoundCloud, which recently launched a Premier service aimed at providing better remuneration for artists. SoundCloud differentiates itself from the likes of Spotify and Apple and Google’s streaming services by being an open music platform, establishing itself as the most accessible platform through which new artists can find an audience. However, the Premier program is currently invite-only and is thus far restricted to artists who’ve already cultivated a sizeable audience. By basing its streaming platform on blockchain-based principles of decentralization, Muzika has an opportunity to establish itself as the most accessible platform through which emerging artists can simultaneously grow an audience and make money from their music.
Mapiacompany’s previous projects have received the support of Korean internet heavyweights Kakao and Naver, a company whose omnipresence within South Korea is almost impossible to overstate. The KakaoTalk messaging app is used by 91.5% of Korean phone users, and the company has leveraged this enormous market penetration into services including market-leading taxi-hailing and maps services, as well as Korea’s leading music streaming service, Melon. Naver’s Line messaging app enjoys a similar level of market dominance in Japan, and also operates its own Line Music streaming service.
Past collaboration is of course no guarantee that either Kakao or Naver will be offering support for Muzika. But it is evidence of the multitudinous paths available to Muzika for achieving adoption without necessarily needing to eat into the market share of more established streaming services.
The Ontology Network & Muzika Connection
Ontology Network’s USP is that it is an enterprise-focused blockchain-as-a-service platform that allows ventures to utilize the potential of dApps and distributed ledger technology without having to publish all data to a publically-viewable blockchain. The Ontology ecosystem is therefore a logical choice for Muzika’s dApp to be deployed through.
Muzika’s Chances of Success
The takeaway from all this is that Muzika is providing a unique solution to issues that streaming services like Spotify and Soundcloud are actively trying to overcome. The music industry was the first to be disrupted by all manner of new technologies over the past two decades, from Napster to BitTorrent to the now-dominant major streaming services. Muzika has enormous potential upside, but carving out its place in a highly competitive marketplace won’t be easy.
There are few - if any - industries as trend-driven and ever-shifting as the music businesses. Muzika therefore provides a very interesting test case for the transformative potential of dApps.