From Streaming to Tokenisation: The Evolution of Music Monetisation

The music industry has undergone a radical transformation over the past three decades. From physical sales to digital streaming, and now toward Web3-powered financial models, each shift has fundamentally changed how artists earn, who controls their revenue streams, and how fans engage with their music.

As the industry moves beyond streaming into the era of digital alternative assets, artists, labels, and IP owners have an unprecedented opportunity to unlock greater ownership, liquidity, and direct fan participation.

The Evolution of Music Monetisation: From CDs to Streaming

1. The CD Era (1990s – Early 2000s): The Peak of Physical Sales

For decades, the record label-driven model dominated music monetisation. Artists relied on album sales, radio play, and touring as their primary revenue streams.

• CDs generated high margins, but artists only earned after recouping label advances.

• Labels controlled distribution, marketing, and financial structures, making them gatekeepers of success.

• Revenue was front-loaded, meaning an artist’s earnings were concentrated around album release cycles.

While this system allowed for blockbuster album sales, it also left artists with limited financial flexibility and a heavy reliance on label funding.

2. The iTunes & Digital Download Era (2003 – 2010): The First Shift to Digital

The launch of iTunes in 2003 marked the transition from physical formats to digital distribution.

• Digital downloads allowed direct sales without manufacturing costs.

• Revenue became more predictable, but piracy (Napster, Limewire) cut into profits.

• Labels adapted by selling music track-by-track, moving away from the traditional album model.

Although this era expanded access to music, it did not change who controlled revenue—labels still dictated royalties, advances, and distribution deals.

3. The Streaming Era (2010 – Present): The Subscription Model Takes Over

The rise of Spotify, Apple Music, and YouTube Music in the 2010s transformed the music industry’s revenue model, replacing one-time purchases with continuous microtransactions.

• Streaming made music more accessible than ever, shifting revenue from ownership-based (CDs, downloads) to access-based (subscriptions, ads).

• Artists now earn fractions of a cent per stream, making revenue recurring but diluted.

• Tech platforms gained control over music distribution and revenue flows, shifting power away from labels.

While streaming has expanded audience reach, it has also lowered per-unit payouts for artists. However, it has created new financing opportunities by using streaming revenue as historical data to project future earnings for each catalogue.

Now, Web3 and tokenisation are set to take this further by enabling direct fan-backed funding, allowing artists to secure capital while retaining ownership and giving fans a financial stake in their success.

The Next Financial Evolution in Music: Turning Royalties into Investable Assets

The next evolution in music finance is turning music into a liquid asset through tokenisation. Instead of relying solely on streaming platforms and centralised intermediaries, Web3 enables direct funding and royalty models for artists, labels, and IP owners.

The Impact of Tokenization on Music Finance

1. Music Royalties as Tradable Financial Assets

• Artists, Labels and IP Owners can securitise royalty streams into regulated, tradable financial products.

• Institutional and retail investors can buy into an artist’s future earnings, creating a new financial market for music.

• This model allows artists to replace traditional advances with investor-backed capital—without giving up ownership.

2. YREC: The First Stablecoin Backed by Music Royalties

• IPY is a stable, revenue-backed digital asset that enables both institutions and fans to earn passive income from real music royalties.

• Unlike volatile crypto, YREC is tied to verified, high-yield music IP.

• Fans become financial participants in an artist’s success, shifting the dynamic from passive listening to active economic support.

3. A More Open and Flexible Music Economy

• The expansion of the market through tokenisation frees rights owners from reliance on a limited set of capital providers, offering greater financial flexibility.

• Artists gain more autonomy, aligning with the ongoing trend of independence, while still accessing new funding avenues without sacrificing control.

• Labels and IP owners benefit from diversified investment opportunities, allowing them to scale, adapt, and grow more effectively in a rapidly evolving industry.

Why This Matters: A More Sustainable and Scalable Music Economy

Tokenisation represents a paradigm shift in how music is financed, creating a more sustainable and equitable system for artists, labels, and IP owners. By transforming music rights into liquid assets, this model unlocks financial flexibility, reduces dependency on traditional intermediaries, and expands investment opportunities across the industry.

For artists, this means greater autonomy and financial independence without sacrificing ownership. For labels and rights holders, it provides a scalable way to optimise cash flow, reinvest in talent, and diversify revenue streams.

Key benefits of this new model:

• Unlock liquidity without selling ownership

• Generate stable, recurring revenue from institutional and retail investors

• Build long-term financial independence through asset-backed funding

Music Protocol is at the forefront of this transformation, bridging the gap between an illiquid market and a transparent, open financial system—providing institutional capital today and fan-powered capital tomorrow.

The question is no longer if music will be tokenised, but who will be the first to seize the opportunity and define the future of music monetisation.