Last year, Russell Sheffield had a conversation about the economics of today’s music industry with his longtime friend Dave Stewart of The Eurythmics. They wondered why it was that the top 5 percent of artists made virtually all the money from streaming. And it was obvious to them that the disconnect between fans and artists had grown in just the last few years. Streaming platforms have removed the traditional artist-fan relationship, according to Sheffield, who is the son of the late Norman Sheffield, owner of the former Trident Studios in London, where Queen, David Bowie, Elton John, and many others recorded.
“We’ve been looking at how we can democratize this whole process and put the power of the music and the ownership of that music back directly between the artist and the fans,” Sheffield said, adding that his new company, Songbits, does just that.
Announced in March at SXSW in Austin, Texas, Songbits is an NFT (non-fungible token) platform in which fans can buy parts of a song (bits) from their favorite artists using blockchain technology. Anyone will be able to purchase a songbit for as little a dollar with a few clicks.
Sheffield said although Songbits is powered by the blockchain, users won’t need an understanding of cryptocurrency. The concept is more about building a community that enables fans to sponsor an artist and for artists to have another revenue stream.
“They buy a songbit, and the artist gets that money in their bank straight away from that purchase of that songbit by the fan,” the Songbits CEO explained. “And the fan gets a longtail revenue of that song, but they also get amazing bragging rights, like ‘I own a bit of that song.’”
The artist picks the song they want to make available to their fans on Songbits. It’s a 50/50 split, so half the streaming royalties and rights are held by the artist, and the other half is made available for sale to the fans.
“You really are partners in this,” Sheffield said. “[The artist] earns 50 percent, you earn 50 percent, and [the artist] retains all the rights and the ownership of what he wants to do with this music. It’s his control, but you have the opportunity to participate in where that song goes and what it might turn into being.”
So how does Songbits make money?
“We take a small slice of the songbits as part of the deal as well,” Sheffield said. “We’re investing in the future of that piece of music as well by saying, ‘OK, we’ll take some songbits because we believe in your work.’”
Sheffield thinks Songbits and NFTs in general will be a massive part of how artists make a living in the future.
“When an artist puts a song up on Songbits and he makes it available for sale, immediately he’s getting a massive cash injection when he sells a piece of that work,” he said. “Instead of having to rely on a label to give them an advance to go tour or to go record, he can use Songbits.”
Each song will have a finite number of songbits available for sale, and the artist will set their own price. Sheffield pointed out that more established artists like The Eurythmics’ Dave Stewart, a backer of Songbits, may charge more than $1 per songbit, while up-and-coming artists may opt for the buck minimum.
To keep it simple, Sheffield decided to make each millisecond of the song equal to one songbit. So, for example, a three-and-a-half-minute song would have 210,000 songbits. If the artist sold all the songbits of their 3.5-minute song for a dollar each, they could rake in $210,000 from just that one song.
“That’s real power,” Sheffield said. “Now, I’ve got that advance and can go finish that album. I haven’t got to go around with a hat trying to collect some cash. It’s these people who’ve invested in me. My fans have enabled me to do this. I think there’s a dynamic shift in terms of the direct fan-to-artist engagement.”
Songbits is expected to go live any day now. For more information, visit the official site.