Mixing Music and Finance
Our concept was born out of the combination of two very separate industries - finance and music (if you’re not sure what TempoTrader is, click here). They differ pretty strongly from a cultural standpoint, and a lot of artists we have talked to feel that finance is all the way on the opposite end of the spectrum from what they do. Some artists have already asked us what we think the implications of what we are doing are. This is a very good question.
It is hard to know how creating a tradable market for music will affect the music industry. Some people have expressed concern that it will fully commercialize and commodify art. We think that although this seems like a legitimate possibility, it may have the opposite effect if we consider where we are at right now.
Realities of the music industry
Art is already commodified in the current industry. Labels sign artists who they think can produce a sound that will be profitable given the trends of the time. Often signed artists are limited to expressing themselves a certain way because their label dictates what is ok on the terms that it will sell. Because of the existence of multiple middle-men in the industry, artists are left with meager payouts at the end of the day (click the graphic above for more on this). Our model will put a price on artists’ Tempos, but that price will just be a reflection of how much people want and are willing to pay for the experience that artists offer. It is a freer, cleaner market where fans and artists can negotiate what they think access to digital content is worth.
The ideal result is that the extra income that TempoTrader provides to artists will allow more of them to stay independent and be the sole proprietors of their music. We feel that putting a price on art but giving artists the opportunity to fully reap the benefit of their product is better than allowing a third party (label) to put a price on art and take 50+% of the proceeds. We envision an industry where listeners will decide what gets popular based off of what they like or think is important, rather than labels deciding what gets popular based off of what they think will sell the best in the pop culture environment.
The Finance Side
There are some potentially interesting implications on the finance side. Finance feels inaccessible to most of us. The stock market is a distant world where someone somewhere is making money, but a lot of us don’t understand what it is or how it works. One main reason for this is simply the fact that you can’t really play unless you have money. With the commission that most brokerage firms charge and the price of most high quality stocks, you need a decent amount of capital to start out (and have well-managed risk).
To put money into investment vehicles you need to have some disposable income set aside for investment - something that a lot of Americans don’t have. Almost everyone, however, spends some amount of money on entertainment each year and music is a large segment of the entertainment industry (check out the graphic to the right on average consumer spending). People already pay to get music, so why not pay to get access to music but also have the ability to sell that access - maybe to break even, maybe for profit, or maybe for a small loss. We think that with small sums of money being traded in a gamified way, a lot of young, music-minded people will be more likely to trade on TempoTrader than they might be on the stock market. We would love for this to act as a foot in the door for people to understand finance better. Many of the technical principles of trading are the same across markets, and someone who trades successfully on TempoTrader might become interested in learning how to invest elsewhere. Public education does not teach us how to invest, handle, or even budget our money. This creates a cycle where the people that have access to wealth are also the ones with access to knowledge of wealth, which adds to disparity. Gamifying markets and applying them to areas other than finance where average Americans might take more interest could do something to democratize some of the basic concepts of investment.
Give us your input
Please leave thoughts in the comments! We would love to know how you think our model will interact with both music and finance, and become a part of the community so that we can grow the experience together.