If you think the joint lawsuits filed by Warner Music, Sony, UMG, Atlantic, and other major labels against Suno and Udio are about protecting artists' music, then I wish I had your optimism.

AI-generated music is amplifying an existing tension in the music industry. Music labels are not necessarily concerned with the integrity of the artist's work. Instead, they are often more focused on maintaining control and monetization of music distribution.

The battle over AI music is a symptom of a more significant structural problem within the industry: royalties. While the RIAA celebrates eight consecutive years of record profits under streaming, many independent artists struggle to make a streaming model work.

The issue isn't AI music but rather the current royalty model of music streaming, which isn't working for the majority of artists. In the current market, AI-generated music will only further deplete royalty pools while labels look to double dip.

At Camp, we believe that we can do more for musicians. By storing listener identities onchain, we are building a data-backed ecosystem for creators to offer personalized fan experiences and increase monetization beyond royalties.

The Current Model Doesn’t Work For Most Artists

Spotify paid a record $9 billion to the music industry last year, with half of that going to independent artists. Over 20 thousand artists earned +$50k from Spotify, up 175% from 2017. So, if more artists earn more than ever, what’s the problem?

Over 10 million artists uploaded at least one track to Spotify last year, meaning only 0.2% of active artists reached $50k. As publishing music became more accessible, so did the number of artists. Now that  AI music is being released, the ability to make a living on music streaming will only become increasingly inaccessible with existing royalty models.

Your listeners fund Taylor Swift’s private jet

The current royalty model for streaming platforms pays artists out of a fund based on their total streams relative to the total amount of streams that month. These funds can be variable—based on subscription and ad revenue like Spotify and YouTube—or come from a fixed-amount fund like TikTok.

Streaming platforms take a cut of variable funds as their own revenue—Spotify, for example, takes 30% of ad and subscription revenue, and YouTube similarly takes 35%.

To put this into perspective, let's say that Taylor Swift accounts for 20% of Spotify's total streams. You're not much of a Swifty yourself, but you're a big Panchiko fan and spend 100% of your time on Spotify listening to them. Despite being a loyal fan, 20% of your Spotify Premium subscription is still going to Taylor Swift. The remaining 80% likely isn't going to Panchiko.

While these Creator fund-type systems are designed to align Spotify and artist incentives, they fail to provide a meaningful way for artists to receive support from their fanbase.

Musical tragedy of the commons

As AI has become more accessible, it continues to lower the barrier to music creation and access to the royalty pool. While AI could be a powerful tool for creators, it also has a snowball effect of stress on the royalty fund. Music labels' response to AI music on streaming platforms closely resembles talks surrounding Functional podcasts (white noise).

Spotify users reportedly listen to white noise for an average of 3 million hours per day, resulting in $38 million in royalty payments last year. Though there are legitimate Functional podcasters, most of these sounds are designed as a low-effort way to receive royalties.

For independent and smaller artists, it probably doesn't feel great to know that your music makes less money than an oscillating fan. Getting paid less than an AI-generated LoFi certainly doesn't feel good, either.

Rather than forcing artists to learn how to game an algorithm, we must find ways to support creators in establishing their unique identity that can work across all platforms to cultivate their community, and engage with their audience.

How Camp Supports NextGen Artist Platforms

The current state of music streaming and the emergence of AI music have made streaming royalties virtually unobtainable for most artists. As Spotify finally looks to update its policies on Functional publishers, AI music is already draining royalty pools while labels push for more money.

To be an artist today, you need to do more than just publish music. However, current music platforms lack the tools necessary to succeed. At Camp, we’re creating a platform and onboarding ecosystem partners to create additional opportunities for musicians to earn from their music, engage with superfans and new listeners, and grow their following.

As an onchain user identity layer, Camp revolutionizes data ownership, opening up new and exciting ways for both artists and fans to connect. By bridging web2 identities into web3, fans can now be rewarded for their loyalty, while artists gain valuable insights and engagement tools to enhance their fan experience and receive direct support from their community.

It’s clear that the current model for music doesn’t work for most artists. At Camp, we believe the next generation of music and artist platforms will be onchain, rewarding artists for their work and fans for their support.

In our next article on onchain music, we’ll explain how Sonu, Momentify, Hume, World of Music, and others are leveraging the user identity layer to make this a reality.

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