The recently released “Music on the Blockchain” report from a research group at Middlesex University, is the most in-depth look so far at how the music industry can benefit from Blockchain technology and via four different key approaches, the report looks succinctly dissects the threats and opportunities, challenges and approaches to potential success.
Nick Mason drummer of Pink Floyd leads off in the foreward to the report.
“If Blockchain technology can help the commercial and contractual relationships in music keep pace with technology and the communication between artists and fans then it could be truly revolutionary,” writes Mason.
“Distributed Ledger Technology (DLT), or ‘Blockchain’, has started to receive increasing media attention and investment from several sectors including governments, financial services and the creative industries. The potential application in relation to music is of particular interest, as it appears to offer solutions to problems artists have highlighted for decades – around transparency, the sharing of value and the relationships with intermediaries that sit between the artist and fan, the central and most important relationship in music.”
1. A Networked Database For Music Copyright Information
Any piece of recorded music contains at least two copyrights: one for the sound recording itself, relating to the performer and the record label, and one for underlying words and music, relating to the songwriter or composer and the music publisher. These could be stored on the Blockchain, via a cryptographic hash. Improvements in authorship and attribution alone, however, would not overcome the fact that there is no single database that documents ownership of all song and recording copyrights. Instead, there are numerous databases, none entirely comprehensive; information can vary between one database and another, with no central authority to settle conflicts. Each individual database must be contacted in order to correct any errors.
2. Fast, Frictionless Micropayments
Royalty payments, for both the sound recording and the underlying words and music, are often slow, taking months or even years to reach the bank accounts of rights holders. Given that fans can listen to tracks at the click of a mouse, this seems archaic. ‘Friction’ is an issue too since, by the time the money reaches rights holders, more than one performance rights organisation, or PRO, may have deducted administrative fees (Rethink Music 2015, p20). Blockchain technology has the potential to change this situation in various ways. Firstly, the low transaction costs of cryptocurrencies, which have a large range of denomination, typically to eight decimal places, make micropayments feasible. This is particularly important given the small size of typical payments in the streaming era. It would also allow content creators to receive ‘tips’, even in very small sums. Tapscott and Tapscott (2016) suggest that the blockchain could also allow for the ‘micrometering’ of streamed content such as videos: thousandths of a penny for milliseconds of video. It remains uncertain, however, whether consumers will pay for streams, which are currently more typically monetised through subscription or advertising models.
3. Transparency Through The Value Chain
There is a lack of transparency in the value chain for recorded music. ‘Significant funds are often paid to the wrong party’, while ‘large pools of royalty revenue end up outside the artist’s reach in a so-called “black box” – where rightful owners of royalty revenue cannot be accurately identified because of a lack of an industry-wide system for tying usage to ownership’ (Rethink Music 2015, pp 3-4). And since the specific details of many streaming deals are hidden behind non-disclosure agreements, it is difficult for artists and songwriters (or their managers) to assess whether labels, publishers or collective management organisations are processing payments efficiently (Cooke 2015). Perhaps the most ingenious aspect of Bitcoin was that it produced a practical working solution3 to the so-called Byzantine Generals Problem (Lampert et al 1982), essentially the problem of exchanging information over an unreliable and potentially compromised network. Nakamoto’s solution used a ‘proof of work’ algorithm (Back 2002) to achieve consensus without, crucially, requiring a central trusted authority or intermediary to verify the transaction. This could radically transform a culture of ‘black boxes’ and non-disclosure agreements, bringing transparency throughout the value chain.
4. Access To Alternative Sources Of Capital
Seed funding – often a crucial step between start-up and venture capital investment – is a major challenge in the record industry. Blockchain technology could help in three ways. Firstly, despite some growth in alternative funding models such as Seed Enterprise Investment Schemes (SEIS) and crowdfunding platforms, access to capital for artists attempting to operate without a record label remains limited. This is in part because of the difficulty of understanding a clear pathway to profitability for some artists and of effectively assessing, and therefore pricing, capital. The transparency inherent in delivery of music via the blockchain could improve investor ability to monitor activity and investment outcomes, facilitating the modelling of likely returns and potentially affecting the pricing of capital.
Particularly in terms of storing music copyright data, fast and frictionless royalty payments, transparency through the value chain and access to new sources of capital, blockchain technology does seem potentially transformative. Whether a shift to a networked record industry actually comes to pass, of course, is another question entirely. Certainly there is a need for further research into the possible benefits of blockchain technology for the record industry, in particular to explore the extent to which blockchain technology can co-exist with current contractual and copyright systems. Equally, possible barriers to, and disadvantages of, adoption must be explored in greater detail. More broadly, research needs to be extended to potential applications of the technology in those music industries not directly related to recorded music – and, indeed, in other creative industries entirely. This will provide the agenda for our own future research.
- Blockchain Wallet Jaxx Announces Massive Expansion - May 22, 2017
- ShapeShift Launches First Trustless Asset Portfolio Platform - May 22, 2017
- Status.im and Bancor Protocol Cut Deal to Issue Tokens From Smartphones - May 22, 2017
- Future\Perfect Lab Launches Blockchain, IoT, Artificial Intelligence and Security Convergence Project - May 21, 2017
- Storj Labs Claims Number Two ICO Spot With $20 Million Raised in Less than Six Hours - May 19, 2017
- Starta ICO Announces Crowdsale for Eastern European VC Vehicle on Waves Platform - May 19, 2017
- SingularDTV Announces New 11 Application Ecosystem - May 19, 2017
- Storj Labs Launches Token Sale - May 19, 2017
- CORION Announces Full-Service Blockchain Platform to Build and Manage Any Business - May 19, 2017
- Luxembourg Blockchain Group Incorporates Infrachain a.s.b.l. - May 18, 2017
- Fintech Investment Group Launches With AI Forex Trading Platform And Compcoin Digital Tokens Ahead Of Initial Coin Offering - May 18, 2017
- IBM and Chile’s Santiago Exchange to Deliver World’s First Securities Lending Blockchain Solution - May 18, 2017
- Supercomputer Organized by Network Mining (SONM) announces ICO - May 18, 2017
- Digital Assess Wants to Use Blockchain Technology to Replace Paper Qualifications - May 18, 2017
- Aragon Smashes ICO Record Pulling in $25 million in 15 Minutes - May 18, 2017
- Bloq Launches BloqLabs to Bring Open Source Blockchain Technologies to Enterprise - May 17, 2017
- Wagerr (WGR) — Sports Betting on the Blockchain - May 17, 2017
- Avalon Life Puts Land Ownership on Blockchain, Launches GREEN EARTH ZERO Service with NEM Technology - May 17, 2017
- Swiss EY Team Joins Polybius Cryptobank as Advisors, ICO to Follow - May 17, 2017
- IOTA Announces $2 Million IOTA Ecosystem Fund - May 17, 2017
- Crypviser Blockchain-Based Encrypted Communication Platform Announces the ICO of CVCoin Tokens - May 17, 2017
- Blockchain App Puts An End To Medical Records Being Held To Ransom - May 17, 2017
- Report on Blockchain Start-up Marketing Maturity Shows Challenges and Opportunities Ahead - May 17, 2017
- BlockEx Partners With Winston & Strawn to Leverage Blockchain for Bond Issuance - May 17, 2017
- US Brokerage Petitions SEC to Get Moving on ICOs - May 17, 2017
- Silicon Valley’s Boost VC to Invest in ICOs - May 16, 2017
- Aragon Partners with Leading Digital Asset Exchange ShapeShift Ahead of Highly Anticipated Token Sale - May 16, 2017
- LuxTrust and Cambridge Blockchain Announce Privacy-Protecting Identity Platform - May 15, 2017
- Sphre Partners with Airbitz to Power Secure Blockchain-Based Identity Management - May 15, 2017
- Furtherfield Gallery – Blockchain Art Exhibition London - May 12, 2017
- P2pfisy: An Innovative, Cross-sectoral Perspective On The Ongoing Disintermediation Of Financial Systems. - May 12, 2017
- How Exscudo Helps You To Store Cryptocurrencies - May 12, 2017
- Blockchain-Fueled Waves Platform Integrated in Microsoft Azure - May 12, 2017
- Nick Gogerty Joins the Lykke Team as Chief Strategist - May 12, 2017
- Countr POS Partners with Coinify to bring Blockchain Payments to its Merchants - May 12, 2017
- Wall Street Fintech PR Agency, Wachsman PR, Chooses Dublin as European HQ - May 12, 2017
- London Crypofinancing Conference – The Future of Startup Finance – Initial Coin Offerings, Token Sales, Cryptocurrencies and Blockchain - May 12, 2017
- AST to Deliver Blockchain-based Proxy Voting Solution - May 10, 2017
- Cofound.it Launches Token Sale for Startup Platform - May 10, 2017
- Global Graphchain Project FERMAT Expands, Partners with Cicada - May 9, 2017
- Gideon Greenspan – Where Flexible Thinking is Preferable to Dogmatism – The Blockchain Immutability Myth - May 9, 2017
- Mathematician and Israeli Bitcoin Association Chairman Meni Rosenfeld Joins Bancor Advisory Board - May 7, 2017
- South Korea’s BOScoin announces ICO May 10th, 2017 - May 6, 2017
- ICO Token Raises Blow Past VC for Blockchain Investment in last 12 Months - May 6, 2017
- Wipro Joins Enterprise Ethereum Alliance to Develop Enterprise-Grade Blockchain Solutions - May 6, 2017
- European Central Bank Eyes Blockchain Regulation - May 6, 2017
- Silicon Valley Billionnaire VC Tim Draper backs First ICO - May 6, 2017
- The Oracle Machine: Aeternity’s solution to industry’s most vital challenges - May 5, 2017
- Monolith’s TokenCard Massive ICO Over in Minutes – Raises $16.7 Million - May 4, 2017
- Patientory Wins Top Prize At SEMDA2017 to Transform Healthcare Using Blockchain – Announce ICO - May 3, 2017