Better Aligning Value Creation & Value Capture: How Crypto and Equal Equity Splits Can Revolutionize the Music Industry and Startups

Better Aligning Value Creation & Value Capture: How Crypto and Equal Equity Splits Can Revolutionize the Music Industry and Startups

In today's digital age, the way we create and capture value has drastically changed. The internet has disrupted traditional business models, and industries are struggling to adapt. This is particularly evident in the music industry, where artists and the industry as a whole are undermonetizing compared to other sectors like video games. However, there are two key concepts that can potentially revolutionize value creation and capture: crypto and equal equity splits among co-founders.

The concept of value creation and capture is crucial for any industry, including the music industry. From a fan's perspective, the ability to profit from early support of an artist is a strong incentive to become a supporter in the first place. This expands the total number of supporters and creates a larger fan base. The traditional business model of charging for content was effective pre-internet, but with the rise of the internet, giving away the base layer of content and leveraging viral marketing can supercharge value capture through complementary monetization.

The discrepancy between the music industry's $20 billion market and the video game industry's $140 billion market highlights the undermonetization issue. The key lies in who creates the value and who captures it. Currently, the value created by artists and other creators is not proportionately captured by them or the industry. This is where crypto comes into play.

Crypto enables new ways for musicians and other creators to directly capture the value they create. It provides opportunities for ownership and financial incentives that align with the interests of all stakeholders. By leveraging crypto networks, creators can sell their work directly to their audience, charging them in a granular way that generates more revenue per fan. This not only financially incentivizes fans but also increases the likelihood of attracting more fans. It empowers creators to have direct control over their value creation and capture, bridging the gap between their efforts and the rewards they receive.

Similarly, startups can benefit from equal equity splits among co-founders. While it may be controversial, equal or close to equal equity splits should become the standard. Founders often make the mistake of basing equity splits on early work, but it takes years to build a valuable company. Small variations in the early stages do not justify significantly different equity splits in the long run. Investors also view founder equity splits as a reflection of how the CEO values their co-founders. If a co-founder is given a disproportionately low percentage, it may raise doubts about their impact and potential in the business.

Equal equity splits send a powerful message about valuing co-founders and creating a strong foundation for collaboration. It promotes a sense of fairness, trust, and shared ownership, which can significantly impact the success of a startup. By choosing the right partners and providing equal shares, startups can foster a culture of collaboration and commitment that attracts investors and sets the stage for long-term growth.

Actionable Advice:

1. Embrace Crypto: Explore the potential of crypto networks to directly capture the value you create. Leverage the financial incentives and ownership opportunities it offers to monetize your work and build a loyal audience.

2. Prioritize Equal Equity Splits: When forming a startup, consider equal or close to equal equity splits among co-founders. Value your partners and create a foundation of trust and shared ownership that attracts investors and fosters long-term success.

3. Leverage the Ownership Economy: Embrace the concept of community ownership and network alignment. Create platforms that are built, operated, and owned by users to capitalize on the advantages of community-driven growth and ownership.

In conclusion, the alignment of value creation and value capture is essential for industries to thrive in the digital age. By embracing crypto and equal equity splits, the music industry can empower artists to directly capture the value they create, bridging the gap between effort and reward. Similarly, startups can foster collaboration and attract investors by prioritizing equal equity splits among co-founders. The ownership economy and community-driven platforms present opportunities for capitalism to become more inclusive and positive-sum. By embracing these concepts, industries can adapt and thrive in the evolving landscape of value creation and capture.