The Power of Smart Contracts for Content Producers (and Fans)
Actors, writers, creators, and musicians, along with film, TV, video, and music producers have long faced an uphill battle for equitable and transparent financial outcomes due to a system stacked with intermediaries and opaque accounting practices. “Hollywood Accounting” and “black-box" streaming revenue shares are obvious culprits, but there are many other parties in the mix as well. All of these points in the chain once created value and were necessary to be successful, but with all of the modern technology we have today, managing self distribution and marketing are easier than ever.
Blockchain and smart contracts, as part of modern content distribution and the explosion of social media marketing, offer such an enormous benefit to creators, empowering them to combine these tools to easily publish, sell, track, payout, receive royalties, and audit in real time.
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Traditional Distribution Channels: Middlemen and Hollywood Accounting
Much of the below will be obvious to some of you, and some of you might even be disrupted by this, but we need to underscore why this technology is important and just how many parts of the business it touches.
Studios, Labels, and Distributors: Each entity involved in distribution takes a cut, so creators relying on 3rd parties to help distribution give up money and likely rights.
Lawyers, Accountants, Business Managers, Agents: The complexity of the current system requires a team of people to navigate, and that team costs money. They also could be potentially taking more than they should in the chain.
Streaming Platforms: Platforms like Spotify, YouTube, Netflix, and others often operate with largely “black box” models, where revenue from royalties is pooled together and then distributed according to proprietary formulas.
Hollywood Accounting: This practice involves intentionally complex accounting methods, often resulting in artists and creators being told that their projects are "unprofitable" even when they generate substantial revenue. By allocating expenses in dubious ways, studios can claim that projects have made little to no profit, reducing payouts to creators.
These systems of opaque accounting and high cuts for middlemen mean that, even if a movie or album is successful, the creators may only receive a small portion of the profits, and audits are difficult and expensive, so nobody even tries.
Benefits: Smart Contracts Change the Game for Producers
With smart contracts, creators establish direct relationships with their audiences. Instead of a payment being routed through multiple intermediaries, fans pay directly for a film, album, or piece of content. This payment goes straight to the creator's digital wallet, or multiple wallets for all contributors, reducing or even eliminating the cuts taken by middlemen. Smart contracts are self executing with the terms of the agreement directly written into code, and they ensure the transparent, automated payment distribution and verifiable ownership for the purchaser.
Production Side:
A producer creates a film (or music video or whatever) and releases it when it's ready for distribution.
People who worked on the film need to get paid revenue shares based on the sales of the film. e.g. Writer, Director, Producer, Actors, etc.
When the film is uploaded, a price is specified, payouts and split percentages are added, and the smart contract along with the content are published onchain.
Viewer Side:
A consumer buys the content by paying for it with their wallet.
The blockchain records each transaction and adds a proof of purchase / NFT to the buyers wallet.
Money paid into the smart contract is instantly and automatically sent to everyone included in the payout splits.
Viewing entitlements are unlocked for the consumer since they’ve purchased the content.
A fully transparent audit trail exists onchain for everyone with proof of purchase, revenue splits, dates, times, and amounts.
Not only does this significantly increase transparency and provide instant payouts, but it also eliminates tracking overhead expenses, platform and distributor accounting timelines, legal and accounting processing, auditing, and payouts to the team. No more disputes over revenue shares, back-end points, or royalty calculations, and no waiting for months (or years) to get paid. Each transaction is instant, documented, immutable, and available for audit.
Creator Earnings Breakdown
We’ve all seen these charts recently. The earnings that creators receive per stream on major platforms vary significantly due to factors such as platform policies, the presence of intermediaries, and individual contractual agreements. The examination of music-centric examples below clearly shows the disparity between gross and net payouts across major platforms; an analysis of video streaming is more difficult due to a lack of payout data.
Spotify:
Average Gross Payout: Spotify pays approximately $0.003 to $0.005 per stream. Ditto Music
After Intermediaries: For artists signed to record labels, the label often takes a substantial portion of the revenue, sometimes leaving artists with only 10% to 20% of the gross payout. This means the artist's net earnings per stream could be as low as $0.0003 to $0.001.
YouTube:
Average Gross Payout: YouTube's ad revenue model results in creators earning between $0.00067 to $0.00139 per view. Unchained Music
After Intermediaries: Creators affiliated with Multi-Channel Networks (MCNs) or having management agreements may see additional deductions ranging from 10% to 30%, further reducing net earnings per view to between $0.00047 and $0.00125.
Factors Influencing Net Earnings:
Labels or Studios: Artists (or Actors) often receive a small percentage of the revenue after the label or studio’s share (if at all).
Distributors: Using distribution services incurs fees or revenue splits.
Management and Agents: Typically has fees ranging from 10% to 20%.
Legal and Accounting: Legal and accounting at all levels takes money and time.
The Algorithm or Your Following: If you don’t have enough followers, or the algorithm changes, you might be left out of monetization entirely!
Now a simple example using Smart Contracts.
Average Gross Payout: Rad TV pays 70% of the payouts directly to creators. $10 for a documentary yields $7 for the creator. $1 for a song yields $0.70 directly to the artist.
After Intermediaries: The platform for contract generation (legal and accounting), storage, globally optimized adaptive bitrate streaming, marketing and discovery takes 30% for its costs (this is adjustable). All payments are transparent and instant, onchain The creator still receives 70% of the price, and the best part, they keep their IP and rights.
You can have 10 subscribers on your channel and still monetize day 1.
Real World Example:
Snoop Dogg recently put out a video where he said for 1 Billion (yes Billion with a B) streams on Spotify, he received $45k. That’s an effective payout to him of $0.000045 per stream. It probably took him a year to see that money from release to payment.
Now let’s say he sold his album via smart contract.
If he sold 65,000 singles for $1 and made 70% directly, he’d make $45,000, and he’d be paid instantly on every sale with an immediate audit trail.
Doggystyle has sold over 11M copies. With this math, and at $10 per album (instead of $1 per single), Snoop would have made $77M on that album alone.
Granted, this is the utopian version of this example and represents the endgame that’s possible, but the math holds up. Distribution of content is different now than when Doggystyle was released, and labels and studios are becoming less relevant. Their strengths previously were in manufacturing, distribution, and marketing of physical goods, and legal and accounting work required for creators, producers, and artists to get paid through the black-box system. Smart contracts fundamentally change this. And with unlimited potential for self-marketing and promotion through social platforms, self distribution and sales of content with legal and accounting built in comes next.
*These figures are estimates and can vary based on individual contracts, the artist's popularity, and specific agreements with intermediaries. Independent artists who distribute their music without intermediaries may retain a larger share of the gross payout, while those with multiple partners may see more substantial deductions.
The Benefits for Fans and Consumers
Proven Ownership: Fans receive verifiable proof of ownership, which can increase in value if they choose to resell it, creating a secondary market for digital content. The smart contracts also contain royalties for the original creator, so everyone wins.
Direct Support for Artists: Purchasing directly through blockchain means fans are assured that the majority of their money goes to the creator rather than to intermediaries.
Engagement and Perks: As owners of NFTs or blockchain-verified content, fans gain access to exclusive experiences and a deeper connection to the creators they love.
Security: Fans can buy and own a piece of content with a blockchain-based wallet, which does not require them to share their credit card information with yet another platform that can be hacked and their info stolen.
Where to Next?
While blockchain technology is still evolving, it is fundamentally reshaping the media industry. By improving transparency, increasing payouts, and giving fans genuine content ownership, blockchain offers a fairer, more sustainable model for creators and fans alike.
Get in touch to discuss how we can work together!
Creators can create accounts, upload, and monetize onchain today by going to https://radtv.com.
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