Thriving as a Music DAO: Identifying Drivers of Success of Decentralized Autonomous Organizations in the Music Industry

Abstract

Decentralized Autonomous Organizations (DAOs) are blockchain-based organizations that have and will continue to profoundly impact society and disrupt creative industries. This thesis represents an exploratory study of DAOs in the music industry. Although organizations have existed since the dawn of mankind, their evolution is accelerating at a pace never before seen as a result of technological advancements in how people cooperate. Blockchain represents one of the most recent innovations that can be used by people to collaborate toward shared objectives. While the literature on blockchain technology is vast, academia has only paid marginal attention to the recent phenomenon of DAOs. Therefore, to address this, the aim of this paper is to provide DAO founders, industry leaders, blockchain enthusiasts, and researchers with an understanding of the dimensions that affect their success. The thesis fuels this stream of research with an industry-specific netnographic comparative case study, based on which an interpretive grounded theory is developed. The research question driving the study is: “What fundamental dimensions are drivers of success for Decentralized Autonomous Organizations in the music industry?”. To answer this, five sub-questions emerged. The paper provides the reader with an understanding of DAOs and their underlying principles. The collection and analysis of primary and secondary data from three DAOs in the music industry, namely: Audius, BitSong, and MODA DAO led to several findings. One of which is that the five fundamental dimensions that characterize DAOs within the music industry are their “purpose”, “community”, “technology”, “token”, and “governance”. Another is that more than one type of DAO exists, prompting the team to develop the terms: utility-driven and mission-driven to describe them. While utility-driven DAOs are more focused on profit maximization and monetization for DAO members, mission-driven DAOs are more concerned with the sociability of the organization and an abstract “higher mission”. This led to the realization that their success must be assessed differently and that there is no one size fits all approach to measuring the success of DAOs in the music industry. Based on the findings, it is concluded that the purpose, token, and technology are critical to the success of utility-driven DAOs, whereas the success of mission-driven DAOs is especially dependent on the organization’s purpose and community. Interestingly, the research uncovered that while governance mechanisms are fundamental to DAOs, they do not drive the success of the organizations as long as they have a system in place. The final theories derived from this research contribute to a stream of research that is in its infancy and is practically relevant for DAOs that aim to succeed in the music domain.