Making a Scene: What Is a Smart Contract and How Can It Help Musicians?

If you’re a musician, you want to focus on creating and not worrying about getting paid or protecting your rights. That’s where smart contracts come in! They can help make sure you get paid instantly and fairly while keeping full control over your music. In this second installment of our series to help explain how the decentralized music industry will work, we ask the question, “What exactly is a smart contract?”

What Is a Smart Contract?

A smart contract is like your own digital robot lawyer that follows rules automatically. Imagine if you had a representative who made sure you got paid the second someone streamed or bought your music! It would do this without needing any middlemen that would take a percentage of your money. That’s what smart contracts do!

Smart contracts are embedded on something called a blockchain (see our article “Introduction to the Blockchain in the Music Industry“) The Blockchain records transactions in a way that can’t be changed or cheated. Once a smart contract is set up, it will run automatically, and it will execute your payments and accounting, so you don’t have to trust anyone else to handle those procedures.

How Does a Smart Contract Work?

In it’s simplest form, we can think of a smart contract much like how a vending machine works. You put money into the machine. The machine checks that you inserted the right amount. If everything is correct, it automatically gives you what you chose to purchase and, if needed, gives you a change from your purchase.

No person is needed to approve the purchase—the machine just follows the rules. A smart contract works the same way but for digital purchases, like music.

The major difference from this analogy is that the funds from the purchase are automatically split between the copyright holders, mechanical royalty holders (sidemen), investors (more on that in a future article), etc. and deposits the funds into the respective accounts. And all this happens the moment the purchase is complete.

How Can Smart Contracts Be Used in the Music Industry?

Smart contracts can completely change the way musicians get paid and protect their rights. Here’s how:

🎶 Automatic Payments for Streaming

Right now, streaming platforms like Spotify take months to pay musicians, and the money has to go through multiple middlemen first. With smart contracts, you could set up a system where every time someone plays your song, you get paid instantly—no delays!

🎵 Fair Royalty Splitting

If you work with producers, songwriters, or band members, a smart contract can automatically split the money and send each person their share. No one has to worry about whether they’re getting paid correctly—it’s all built into the contract!

💿 Selling Your Music Directly to Fans

You can sell your music as a digital collectible (NFT) or a regular download, and a smart contract will make sure you get paid right away when someone buys it. No record label or platform needs to take a cut!

🎤 Licensing Your Music for TV, Movies, or Ads

Let’s say a company wants to use your song in a commercial. Instead of hiring a lawyer and signing complicated contracts, you could use a smart contract to automatically allow them to use your song in exchange for a set payment.

📊 Tracking Music Plays and Ownership

Because smart contracts are on blockchain, they keep a public record of everything. This means you can prove when you uploaded a song and see exactly how many times it has been played—helping you fight music piracy and missing royalties.

Why Should Musicians Care About Smart Contracts?

Right now, the traditional music industry has a lot of middlemen—record labels, managers, distributors, and streaming platforms—all taking a piece of your earnings before you even see a dime. Smart contracts cut out the middlemen, giving you:

✅ Instant payments (no more waiting for months!)
✅ Fair earnings (no one can cheat you out of your money)
✅ Full control over your music rights
✅ Transparency (you can see exactly where your money is coming from)

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Where Can You Use Smart Contracts as a Musician?

If you’re interested in trying smart contracts for your music, here are some platforms already using this technology:

• 🎶 Audius: a music streaming service that pays artists directly.
• 💰 Catolog.works: A platform where fans can invest in your music, and you share royalties with them.
• 🔗 Ujo MMusic: A site that helps artists manage their music rights and get paid automatically.
• 🎤 Opulous: a platform for music rights management and instant payments.
• 📊 Stem Disintermedia: Helps musicians track earnings and split payments fairly.

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Final Thoughts

Smart contracts are changing the game for musicians. No more waiting months for payments, no more wondering if you’re getting your fair share, no more losing up to 90% of your money to an outdated middleman structure of the music industry. You will receive an instant, fair, and automatic payment for your work. If you’re an independent musician, now is the perfect time to start learning about smart contracts. They could be the key to keeping your music safe and your wallet full! 

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