The Revolution Will Be Gamified: How Vault Music Is Using Play to Create a New Status Quo in Independent Artists’ Favor
Introduction
The modern music industry does not benefit emerging artists. The status quo is centralized power, privileged access, opaque agreements, and celebrity perks. Without the power, resources, or connections to influence this culture, independent musicians are held underwater. The transition to music streaming has only made the situation more grave for emerging artists. Billion-dollar streaming companies like Spotify and Apple have risen to the upper echelon of the music industry and dramatically altered the modern listener’s relationship to music. Most fans no longer purchase their music library. Instead, they rent access to the massive libraries stockpiled by streaming companies.
Within this environment, convenience outweighs connection and organic discovery. Streaming companies play middlemen between artists and listeners, mediating music discovery through biased algorithms and other forms of editorialization in favor of their preferred partners. At the same time, they divert their substantial revenues away from artists and to their shareholders. The streaming royalties that do make it downstream to emerging artists are a mere drop in the bucket.
The odds are stacked against emerging artists who are pressured to become more entrepreneurial despite being squeezed in every direction. Artists cannot afford to wait for streaming reform or a changing of the guard. They need a new status quo now.
While others continue tearing down the old system brick by brick, Vault is focused on creating a new system with infrastructure built to support up-and-coming artists. Our solution? A playful, win-win music ecosystem that reconnects artists and fans through gaming.
The Vault music ecosystem is set up to resource emerging artists, reward their early supporters, and reconnect them more intimately with one another through a spirit of play. Its economy is scaffolded by three pillars: 1) a primary market where fans buy limited-edition releases of exclusive and unreleased music, 2) a secondary market where editions can be sold, collected, and traded, and 3) the newly introduced Fantasy Record Label game that brings it all together.
“If you don’t like what you hear, change the conversation. That’s what we’re doing at Vault… Already we’ve seen artists earn more with a single release on Vault Music than they’ve earned from streaming in a year. That’s because in our game, just as with real record labels, up-and-coming artists have the most potential upside.” ¹
Fantasy Record Label takes its inspiration from fantasy sports. The game stimulates Vault’s primary and secondary markets, rewards fans for investing in artists, and supports an engaged community of music lovers — oh, and it is just fun to play. At the heart of the game is the mutually beneficial relationship between emerging artists and their early supporters. This dynamic supports artist sovereignty far more than the typical patronage models and creates robust music communities.
Let others lobby for streaming reform and fight the gatekeepers’ outdated systems. Vault is busy building a new system that turns the status quo on its head and places independent musicians and their fans at its center.
The Music Industry Status Quo
Music streaming has revolutionized the music industry. Long gone are the days of flipping through gargantuan CD books or scrolling through personal collections of mp3s. Purchasing physical music and digital downloads is now mostly a niche pastime for Hi-Fi enthusiasts and conscientious music lovers. The majority of listeners now opt to rent their music libraries using subscription services. Music streaming represented 62% of global music revenues in 2020 and that number keeps growing.² With so many listeners’ relationship to music now mediated by billion-dollar tech companies, where does this leave musicians?
The streaming economy offers very little benefit to the vast majority of artists. Streaming companies earn around $1 million an hour from music streaming alone. Emerging artists’ see very little of that profit. The current average payout per stream is a mere third of a cent ($0.00307).³ This compensation comes from Monthly Service Revenues, the money collected for subscription fees. Spotify, for instance, pays out 70% of its Monthly Service Revenues to artists. However, these revenues represent only a small portion of the company’s valuation (Fig. 1). The majority of their wealth comes from data collection and sales, playlist branding fees, stock sales, and investments. Artists never see a penny of this revenue despite making it all possible.⁴
The numbers simply do not add up, especially if you expect artists to receive fair compensation for their creative labor and intellectual property. Yet, anyone familiar with the inner-workings of the music industry likely recognizes the state of affairs as business as usual (Fig. 2). Streamers cater to their preferred partners — powerful industry players like major labels, commercial independent labels, aggregators, and distributors — who are constantly angling for a larger piece of the pie.⁵ This centralization of power makes the streaming economy vulnerable to market manipulation. Spotify, for instance, has royalty payment agreements with Sony Music, Universal Music, and Warner Music⁶ who together account for 74.1% of global music revenue and 85% of the United States music catalog.⁷
An “NDA curtain” prevents us from analyzing the terms of these deals that allow record labels to leverage their market position and shareholder status to increase their market share.⁸ The anticompetitive behavior thrives within the “black box” of the streaming economy with its “culture of secrecy and unchecked power.”⁹ It is this culture that makes it near impossible to untangle the various nefarious threads behind streamers’ business practices.¹⁰
“Consumers are pouring more than $12 billion dollars a year into music streaming services. From there it enters a dark, labyrinthine economy shaped by centuries-old laws and unchecked market power. When that money emerges out the other side and reaches artists, it has been reduced to fractions of pennies.”¹¹
Other forms of market manipulation are more subtle, veiled by seemingly neutral technologies and unbiased connoisseurs. For instance, streamers’ playlists and recommendation algorithms are created with input from staff music experts who are undoubtedly beholden to the companies and their shareholders (Fig. 3).¹² Spotify’s Discovery Mode is reportedly riddled with payola schemes where music licensors negotiate lower royalty payouts in exchange for privilege in recommendation.¹³ This fight for preferential placement is “a race to the bottom” for artists.¹⁴
Indeed, the bottom is where we find the vast majority of artists in the streaming economy. The lion’s share of royalties are taken home by artists with celebrity status. For instance, only 1% of artists on Spotify are responsible for 90% of its streams.¹⁵ Streamer algorithms bolster this statistic by directing attention to already popular artists who then collect the majority of streaming royalties thanks to pro-rata payout models. In pro-rata schemes, artists receive their proportion of a giant pool of a platform’s total streams. This arrangement stacks the odds against emerging artists who do not have the connections or commercial power to garner the streams needed to compete in this market (Fig. 4).
“…an individual user’s subscription fee is not divided up according to which artists they actually listen to, and there is a tendency for major-label superstars to receive the bulk of the revenue.”¹⁶
Matters are only getting worse. Streamers are beginning to introduce popularity thresholds that redirect streaming royalties from songs with less than 1,000 annual streams to those above the threshold. This change is expected to help redirect up to $1 billion dollars to payout pool for popular artists on Spotify.¹⁷ Deezer’s recent announcement with its partner, Universal Music Group, will allow popular artists (like those on UMG’s roster) to receive 4x their proportion of total royalty shares. They are calling this an “artist-centric” payout model.¹⁸
Not only do these changes tie artists’ revenues to easily exploited popularity metrics, but they reinforce a system where the winner takes it all.¹⁹ Emerging artists simply cannot compete.²⁰
Meanwhile, independent musicians are already buckling under the weight of modern neoliberal standards for creative professionalism. Artists are expected to constantly produce new content to meet the demands of the fast-moving attention economy in addition to developing and delivering on new revenue streams, all while teetering on burnout.²¹ They are being asked to pull themselves up by their bootstraps while streamers’ avoid accountability and collect their billions.²²
“The music industry today pushes the self-starting multimedia strategist as the model creative professional, responding to trends in the data and tailoring their work accordingly.”²³
Creating revenue opportunities for independent artists is more critical than ever. Advocates continue to suggest alternative payout, ownership, and governance models for streaming.²⁴ For example, Soundcloud’s user-centric payout model pays artists royalties for their share of streams per user.²⁵ Another option is federal regulation by entities like the Federal Trade Commission.²⁶ However, the overwhelming tendency to focus on reforming streaming obscures the options that lie outside of it. Few are asking, what lies beyond the streams?
Even when alternatives are developed outside of reform, they suffer their own problems. User tipping systems place the responsibility for resourcing artists on the backs of conscientious listeners²⁷ and tools like Patreon and Substack turn artists into content creators obsessing over monthly subscription numbers. Web3 has provided new options for technology-curious musicians, but remains niche.
“You may not have to sell your soul to the record label or publishing house. But there are still tradeoffs and sacrifices as you chase the people who will actually pay.”²⁸
Streaming reform also will not reconnect artists to their fans (Fig. 5). The streaming model encourages a form of passive listening that flattens the relationships across the broader music community.²⁹ Users have reported feeling less attached to music, disinterested in new releases, less engaged with artists’ broader discography, and disconnected from fellow listeners.³⁰ This corrosion of their relationship with music motivated these users to opt out of streaming altogether.
However, the vast majority of listeners are still paying rent to the music landlords. We need new, better options that engage listeners and resource artists. Streaming reform and alternative patronage are not going to cut it. If we want to move the needle in favor of emerging artists, we need new infrastructure; new systems; new economies. Vault has some ideas.
A New Status Quo: The Vault Music Ecosystem
Vault is building a new music ecosystem tailored to emerging artists and their fans that reinvigorates music discovery with a sense of play and levity. Our economy will resource up-and-coming artists, build mutually beneficial relationships between artists and their listeners, and support a connected and engaged community of music lovers.
The infrastructure for this new economy consists of three pillars: 1) a blockchain powered music format (Vaults) that fans purchase to get exclusive access to new and unreleased music, 2) a secondary market where vaults can be traded, and 3) our newest innovation, Fantasy Record Label — a fantasy game that puts money into artists’ pockets and rewarding fans for being early, loyal supporters.
Fantasy Record Label gives emerging artists and their listeners a viable alternative to the dysfunctional streaming economy. The concept is relatively simple and will feel familiar to fantasy sports fans.
Each week, players “sign” five unique, eligible artists to their label, finalizing their choices by Friday at midnight UTC. Each week, cash prizes and points are awarded to the fantasy label(s) with the highest 7-day monthly listener gains.
To sign an artist, players must have that artist’s Vault in their collection. New, emerging artists are constantly onboarded to Vault and players must act fast to secure one of the limited-edition Vaults (or wait anxiously for them to become available on the Vault secondary market). This ownership requirement incentivizes fans to participate in the primary and secondary Vault markets and actively support emerging artists who make money each time their Vaults are bought, sold, and traded.
Our players are incentivized to discover, collect releases, and sign the next music stars to their fantasy label before their big break. It’s a music economy where everybody wins.³¹
So, why fantasy? For Vault’s co-founder Nigel Eccles, the proof of concept lies in his previous successful fantasy sports venture, FanDuel. He noticed that the fantasy format not only inspired a deeper affinity with the athletes, but it also connected fans more deeply to the sport in general, transcending specific team loyalties.
“I think one of the things that fantasy does really well is it creates this connection between the fan and the object [or in our case, artist] they are buying into — to a fantasy football player, Tom Brady is no longer just the quarterback of the Patriots, he’s the quarterback on their fantasy team, referred to as “my guy” even if they are a Giants fan.”
Vault saw the opportunity to apply this lesson to the music industry to uplift emerging and independent artists — and it is already paying off for artists and their fans.
“We give our players the opportunity to listen to an emerging artist. They’ll say, ‘Yeah, this artist’s pretty good, I like this.’ And then they make an investment into that artist by purchasing their Vault and putting them on their roster. Now they’re not just somebody who casually listens to the artists, they’re actually invested in them and are hyping them up and rooting for them to succeed because they’re on their record label.”
Fans participating in the beta version of Fantasy Record Label are naturally hyping up their artists. “We’ve seen people creating playlists and publishing them on social media. We’ve seen them promoting the artists as their artists.”³² By building hype, players are actually influencing artists’ performance metrics. This dynamic, which is missing in fantasy sports, is particularly exciting for Nigel and the Vault team.
“No matter how enthusiastic I am about Tom Brady, I can’t actually have any influence on his success. Whereas if I buy Bella Rose’s Vault, create a playlist and tell all my friends, ‘This is an artist that you should love because she’s fantastic!’ (and she is fantastic), I actually could have an influence on her success.”
Vault chose to focus on monthly listeners with input from their artists.
“Every artist we talk to, the core metric for them is listeners. It’s a number they see every day when they go in, even more so than streams. They’re like, how do I get more listeners? How do I get more fans? And so that was why we felt it was absolutely the right metric. It was the one that was singularly most important to them.” Admittedly, monthly listeners is still a quantitative performance metric. However, they believe detaching artistry from per song streams is a step in the right direction. Plus, the monthly listener metric is less vulnerable to exploitation. “You can’t just put a song on 24-hour repeat and drive up the number.”
The goal is to build relationships with artists. They want to get fans on artists’ teams, invested in their success. This affinity incentivizes fans to meaningfully delve into the artists’ worlds of artists, not as a captive, passive audience receiving piecemeal content in exchange for attention, but as a financially invested team member. Through this process, fans are given insight into the mechanisms behind streaming and how they impact their favorite artists.The game offers them a look behind the curtain of the music industry and empowers them to be part of something new.
Nigel believes that the Fantasy Record Label game could put the 1,000 (or even just 50–100) true fans model within reach of emerging artists, especially those who do not quite fit the hyper-entrepreneurial content creator model.
“We love artists for their art, not their salesmanship. And if we expect every artist to be a salesperson, then I think we’ve lost something as a society that the best artists are the ones that are best at sales… Some artists are great at it, maybe like 2%, but most of them are not. And I don’t think we want them to be. I think we want them in the studio creating great music. And the good news was when we asked users what they wanted and valued, it was more unique and unreleased music.”
A Win-Win for Artists and Fans
The Vault music ecosystem creates a new economy that resources the independent musicians outside of the industry’s favored few. Carly Moffa, an independent singer-songwriter and Vault artist, is a perfect example (Fig. 11). Carly’s Vault of exclusive, intimate performances earned her more money than she made in five years off streaming royalties. Fantasy Record Label will provide even more incentive to support Carly as players sign her to their labels and barter for her Vaults in the secondary market in hope of winning rewards.
The mutually beneficial relationships Fantasy Record Label creates between fans and artists makes it an integral piece of the Vault music ecosystem. The game promotes active, intentional participation in equitable music ecosystems. Fans are staying engaged with the game, hyping up their roster of artists, and developing connections with a community of music fans, all the while receiving cash and redeemable points. This win-win scenario flips the script in favor of emerging artists and their early supporters (Fig. 12) and gives artists permission to disengage from streaming economies that require superstardom for artists to earn beyond a subsistence living.
Gamifying music communities also reinvigorates music with a sense of play and infuses fun back into music discovery. Players have the opportunity to discover new artists, invest in their music, and become part of their team by “signing” them to their label. More generally, it creates opportunities for joy — something we could all arguably use more of — and empowers conscientious music lovers to be part of the solution (not just point out the problem) for rampant inequality of the streaming economy and the music industry at large.
Final Thoughts
Reforming the entire music industry is going to take time. Rome was not built in a day, and neither were the current structures that scaffold the music industry. Some call for tearing them down, while others call for reform. However, working artists cannot wait for the circumstances to change. They need solutions now.
Streaming reform and subscription content models alone cannot level the playing in favor of emerging artists. They need new music economies that (re)engage fans, (re)connect artists and music lovers, and (re)establish support for artists outside of the favored few. Vault is answering the call with Fantasy Record Label, a game built into their innovative music ecosystem, that creates a positive feedback loop in favor of independent musicians. The game is empowering listeners to actively engage with music discovery and put money directly into artists’ pockets, leading Vault to believe that the revolution will be gamified.
Visit vault.fan to play Fantasy Record Label and learn more about and what Vault Music is building for independent artists and their loyal fans.
Sources
¹ Kara Burney. Chief Marketing Officer at Vault.
²Castel, C.L., and C. Feijóo. (2021). “Study on the artists in the digital music marketplace: economic and legal considerations.” World Intellectual Property Organization.
³ Ibid.
⁴ Ibid.
⁵ Ibid
⁶ Bazinet et al. (2018). “Putting the Band Back Together: Remastering the World of Music.”
⁷ Rose, M. (2023). “Streaming in the Dark: Where Music Listeners’ Money Goes — and Doesn’t.” Public Knowledge.
⁸ Ibid.
⁹ Ibid.
¹⁰ Ibid.
¹¹ Ibid.
¹² Castel, C.L., and C. Feijóo. (2021). “Study on the artists in the digital music marketplace: economic and legal considerations.” World Intellectual Property Organization.
¹³ Ibid.
¹⁴ Ibid.
¹⁵ Rose, M. (2023). “Streaming in the Dark: Where Music Listeners’ Money Goes — and Doesn’t.” Public Knowledge.
¹⁶ Castel, C.L., and C. Feijóo. (2021). “Study on the artists in the digital music marketplace: economic and legal considerations.” World Intellectual Property Organization.
¹⁷ Ibid.
¹⁸ Music Business Worldwide (2023b). “Universal and Deezer’s ‘artist-centric’ model isn’t shocking…”
¹⁹ Pelly, L. (2021). “Socialized streaming: A case for universal music access.” Op-Ed. Real Life Mag.
²⁰ Rose, M. (2023). “Streaming in the Dark: Where Music Listeners’ Money Goes — and Doesn’t.” Public Knowledge.
²¹ O’Neal, B. (2022). “Web3 Music: Can the Web3 Movement Help Independent Artists Confront the Roots of Burnout?” Vault Medium.
²² Rose, M. (2023). “Streaming in the Dark: Where Music Listeners’ Money Goes — and Doesn’t.” Public Knowledge.
²³ Pelly, L. (2021). “Socialized streaming: A case for universal music access.” Op-Ed. Real Life Mag.
²⁴ Ampled. (2021). “Streaming Economy: Defaults & Alternatives.”
²⁵ Shapiro, A. (2023). “Spotify is reportedly making major changes to its royalty model.” The Verge.
²⁶ Rose, M. (2023). “Streaming in the Dark: Where Music Listeners’ Money Goes — and Doesn’t.” Public Knowledge.
²⁷ Castel, C.L., and C. Feijóo. (2021). “Study on the artists in the digital music marketplace: economic and legal considerations.” World Intellectual Property Organization.
²⁸ Ibid.
²⁹ Pelly, L. (2021). “Socialized streaming: A case for universal music access.” Op-Ed. Real Life Mag.
³⁰ Pelly, L. (2022). “‘There’s endless choice, but you’re not listening’: fans quitting Spotify to save their love of music.”
³¹ Kara Burney. Chief Marketing Officer. Vault.
³² Nigel Eccles. Interview. November 9, 2023.
