Recording music in the Internet age is not a lucrative business anymore. The nature of today's popular streaming services like Spotify, Apple Music and TIDAL cause that most artists and songwriters beyond the world's top 10 artists make very little money directly from their music.
Vezt is the first blockchain-based mobile app where music fans can acquire rights in their favourite songs. It claims to be a new reasonable income stream for creatives. Let us take a closer look at the app's concept and find out what is it all about.
Vezt - A new Songwriters' Income Stream?
Vezt is a Los Angeles based startup founded in 2016 by Roberto Menendez and Steve Stewart. The two recognised a big gap in the music industry where artists could produce and distribute songs relatively easily at minimal cost but couldn’t monetise their work quickly to raise the budget to create new content. Andreas Carlsson, who has sold over 150 million records for artists such as Katy Perry, The Backstreet Boys, Britney Spears, and Celine Dion, is supporting the company in the position of the Chief Strategy Officer.
The app offers a marketplace where intellectual property (IP) holders can sell a part of the royalty rights to a song for a specific period to fans and investors. In theory that should lead to an improvement of the music industry by providing artists, songwriters and producers with funding sourced directly from their fans on a global basis. In exchange, fans get the right to receive royalties earned by their favourite songs. Vezt collects these royalties on behalf of fans from performing rights organizations, publishers and record labels. At the end of the reversion period, the royalty rights are then transferred back to the original rights holder. For their service, Vezt takes a 5% fee on the royalties paid out.
The Vezt app launched initially with just a few notable song titles; many of which sold out quickly. These sold out titles included songs recorded by Mac Miller (Wear My Hat, and Gees – feat. Schoolboy Q), Rick Ross – Cigar Music, and Rihanna – Man Down.
Is Vezt The Business Model Of The Future?
While the performing artist/singer gets most of the revenue, other collaborators who participated in the creation of the song such as songwriters, producers, and musicians also get a part of the royalty payments. However, this amount is typically a fraction of what the singer makes. The songwriter of a song that had 34 million YouTube views and 38 million Pandora streams made a little over $200 from each source.
The overall concept of Vezt is monetising fans by making them investors. The founders hope that the fans then turn into an advocate and promote their songs of which they obtained IP shares. Consequently, the fans will generate free marketing for featured songs and artists of the platform. The advocate fans will need to make use of several marketing tools, especially promoting through actual social media platforms. If a song whose rights the fan obtained increases in popularity, the royalty payouts will be higher in theory. But everyone a bit more familiar with royalty payments knows that you cannot expect surprisingly high amounts paid out.
What I have recognised while browsing Vezt's song collection that most songs offers so far are from artists' back catalogues. The most recent songs were from 2018 but could be identified as more unpopular "B-Side" tracks of known artists. On the contrary: songwriter Michelle Lewis, for example, told John Seabrook she got $17.72 when a song she was co-writing was streamed three million times on Spotify. As you can see, it will be difficult to end up with substantially more money than you invested at the end of the designated period. Your first objective would be to break even - even that will be hard enough to achieve. If the royalties were less than you have invested after the initially predefined period, you would hold onto the rights until you break even—even if it takes 200 years.
Summing up, it is hard to believe that this app's concept has a chance to gain massive popularity in the music industry and to become a regular income source for songwriters and producers. Of course, we like the motive to support songwriters and to generate more fluid cash flow for them in theory. But we doubt that the attraction of the concept is high enough to get a large number of fans investing in the song catalogue regularly - especially when those can be quite sure that they will not receive a nice pay check by doing so. As in most of the crowdfunding concept, it is more about the love for the particular thing - not a promising and profitable investment.