Better Aligning Value Creation & Value Capture in the Digital Age: The Role of Crypto and the Ownership Economy in the Music Industry

Better Aligning Value Creation & Value Capture in the Digital Age: The Role of Crypto and the Ownership Economy in the Music Industry

Introduction:

In the digital age, the traditional business models that once thrived are being disrupted by the power of the internet and emerging technologies. This is especially true in the music industry, where artists and creators are struggling to capture the value they create. However, with the advent of cryptocurrency and the ownership economy, there is hope for a more equitable and profitable future for musicians and other creators.

Expanding the Total Amount of Supporters:

From a fan perspective, the prospect of being able to profit from early support of an artist is a strong incentive to become a supporter in the first place. This means that by aligning value creation and value capture, artists can expand the total amount of supporters they have. This is crucial in a digital landscape where viral marketing can supercharge the monetization of complementary products and services.

Undermonetizing in the Music Industry:

It's not just the artists who are getting the short end of the stick in the music industry. The entire industry is undermonetizing, with a market value of only $20 billion compared to the video game industry's $140 billion market value. This discrepancy highlights the need for a new approach that allows creators to directly capture the value they create.

Crypto as a Solution:

Crypto enables new ways for musicians and other creators to directly capture the value they create. By leveraging blockchain technology, artists can sell their music and merchandise directly to their audience, cutting out intermediaries and maximizing their profits. Additionally, crypto networks provide financial incentives that work for all stakeholders, ensuring a fair distribution of value.

The Power of Data:

What's valuable about platforms like Facebook and Twitter is the unique data they have, which users have provided. However, the value derived from this data is not shared with the users. Crypto networks have the potential to change this by allowing users to own a piece of the internet value they create, enabling them to capture that value directly through selling to their audience. This granular approach to monetization can lead to higher earnings per fan and incentivize fans to support their favorite creators financially.

The Double Diamond Model and Design Thinking:

Design thinking is a valuable methodology that can be applied to various industries, including the music industry. The Double Diamond model, popularized by the British Design Council, provides a framework for problem-solving and innovation. The model consists of four stages: Discovery, Definition, Development, and Delivery.

Discovery and Definition:

The Discovery stage of the Double Diamond model involves mind maps, brainstorming, desk research, and field research. This is where designers delve deep into understanding the problem at hand, conducting interviews, focus groups, observations, and consumer journey mapping. It is crucial to involve designers closely in the research process, as they can gain valuable insights from users. For example, Starbucks requires its designers to spend a month working as baristas before designing anything, ensuring they have a firsthand understanding of the user experience.

Definition and Development:

The Definition stage represents a filtering of ideas and data gathered in the Discovery stage. It sets the context for product development, assesses the feasibility of the project, and ensures alignment with the corporate brand. In this stage, involving different departments in the design process can lead to fewer prototypes and fewer problems discovered during testing. Microsoft, for instance, encourages designers to "eat their own dog food," using their own creations in their work to better understand the user's perspective. To facilitate efficient design changes, professional tools are essential.

Conclusion:

The digital age presents both challenges and opportunities for creators in the music industry. By embracing cryptocurrency and the ownership economy, artists can better align value creation and value capture, allowing them to directly monetize their work and engage with their audience on a deeper level. Additionally, incorporating design thinking methodologies like the Double Diamond model can enhance the creative process and lead to more impactful and successful outcomes.

Actionable Advice:

1. Embrace cryptocurrency: Explore the potential of blockchain technology and cryptocurrencies to directly capture the value you create as a musician or creator. Consider selling your work and merchandise through crypto networks to maximize profits and engage with your audience on a more personal level.

2. Involve designers in the research process: To gain valuable insights and better understand your audience, involve designers closely in the research process. Encourage them to spend time immersing themselves in the user experience, just like Starbucks does with its designers working as baristas. This firsthand understanding can inform the design process and lead to more user-centric products or services.

3. Utilize professional design tools: To facilitate efficient design changes and iterations, invest in professional design tools that allow for quick and seamless modifications. This will enable designers to "eat their own dog food" and experience their creations from the user's perspective, leading to more intuitive and user-friendly solutions.

In conclusion, the music industry has the potential to thrive in the digital age by embracing innovative approaches such as cryptocurrency and design thinking methodologies. By better aligning value creation and value capture, artists can tap into the ownership economy and create a more equitable and profitable landscape for themselves and their fans. The future of the music industry lies in the hands of those willing to embrace change and explore new possibilities.