Will Blockchain Technology Be a Music Industry Savior?
In the last few years, blockchain technology has wrapped its tentacles around almost every industry imaginable, offering itself as the bandage that can patch up almost any wound. One of those industries, known for its deep and sometimes controversial wounds, is the music industry. While technology has made it much easier for music listeners who get hold of music, the industry itself is still very behind the rest of the world.
This lack of development in the music industry could possibly be linked to its decline over the last two decades. However, over the last three years, the industry has shown some growth. In 2015, live music ticket sales made approximately $7.2 billion and are predicted to rise to $9.1 billion by 2021. Moreover, the industry attained a huge 8.1% growth in revenue globally in 2017.
With more money coming in, the music industry needs to adapt to new technology to secure itself and ensure that such a decline doesn’t repeat itself. On top of that, it is becoming more important to make sure the people involved in the industry are paid correctly.
And blockchain technology is the best way to do this.
Music piracy is considered one of the biggest factors in the downfall of the music industry over the past two decades. Piracy in the music business is estimated to cost the U.S. economy:
- $12.5 billion in total output
- 71,060 jobs
- $2.7 billion in earnings (in the sound recording and retail industries)
Indeed, it is incredibly easy to find pirated music free to download online. Ever since Napster started offering content for free in the 1990s, pirated music has become the normal way most people get hold of their tunes. Individuals don’t need to look much further than YouTube to find blatantly illegal music to listen to, and if they want, they can even convert the video into an MP3 file and download it.
If the industry can take back control over pirated music, it will be a lot stronger economically and, in turn, the people who work for the industry will be paid more fairly for the work do. Blockchain technology can halt piracy in several ways.
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Blockchain technology can be used to establish who owns the intellectual property rights of creative items by using a distributed ledger. A distributed ledger is an open-source ledger that holds all records of all transactions within a blockchain. However, not all blockchains allow all people to view this information.
In theory, blockchain technology can be used as clear evidence of ownership and used in court if necessary. This is particularly useful for the music industry to help prevent legal battles between studios and artists, for example. The music industry is known for its complicated laws on ownership – from ownership of the audio itself to specific lyrics within a song, and that’s just the tip of the iceberg.
It also can make the process easier if using blockchain technology becomes the standardized way to establish ownership because different companies and institutions may state ownership in different ways, with different wording, requirements and even formatting, some of which may be manipulated as loopholes.By clearly displaying ownership, blockchain technology will allow even individuals who lack any legal knowledge to be able to see who owns the intellectual property. Click To Tweet
Blockchain technology can also:
- smooth over any issues involved in purchasing the rights of music (if, for example, one music company wants to buy the music rights from another music company)
- help other companies such as film studios pay for rights to use music
- be used to trace the history of those rights, as users will have a transparent record of its history
Smart contracts can be particularly useful in this area as well. Smart contracts are basically pieces of code that hold the complex agreements that are made on a blockchain and fulfilled when certain conditions are met. It is incredibly hard to manipulate them, and they are growing in popularity.
It was reported by Medium in June 2018 that so far there are 1,712,287 smart contracts currently in operation on the Ethereum network. By utilizing smart contracts, artists and studios can ensure that intellectual property agreements are met by other parties.
Perhaps the most complicated issue, though, is international rights. When music crosses the border from one country to another, things can get more complicated as more distribution companies are involved that follow different laws, regulations and business practices. Blockchain technology can overcome this barrier by acting as supra-national record keeper, ensuring that things go smoothly and that all funds are accounted for.
It is worth noting that for blockchain technology to be recognized as a form of intellectual property rights, governments need to recognize the technology as a legal way to show ownership. This may still complicate things between borders as not all countries involved in a legal dispute over ownership may accept a record within a blockchain as legal evidence.
Paying Artists Fairly
An artist’s music is usually published and sold on numerous platforms and because of this, there is usually no complete consensus over how much money was made. This often leads to artists complaining that they have not been fairly paid for their work. However, it’s not just artists who are taking this stance anymore.
Now some highly influential figures in the industry are also backing this argument, including Spotify’s global head of creator services, Troy Carter. In August 2018 it was reported that musicians only received 12% of the revenue made in the music industry in 2017. Blockchain technology can overcome this by keeping a record of all sales across company platforms, which will give a complete picture of how much a song or an album made.
By being visible on a blockchain, the information will be public for all those involved, potentially including the artists themselves, so they can be aware of how much money they are owed, as well as the percentage taken from them by third-parties who distribute their music. Therefore, if there is a disparity, those affected have the evidence to back up their claim.
This is also important to others who work alongside the artists, such as songwriters, sound engineers, producers, and other collaborators. As mentioned above, specific parts of a song could be owned by other individuals aside from the artist. The lyrics may belong to a writer or even to another artist completely. Although the audio from the song might not used, the lyrics might be, and writers should be paid for this as well.
Paying Artists in a Timely Manner
Artists are not always paid in a reasonable time, sometimes even waiting years to receive their earning for their work. If blockchain technology was utilized by the music industry, smart contracts could be implemented that instantly pay artists once certain requirements are met.
This could be very useful for musicians who are struggling to make it in the industry and prevent them from needing to find alternative means of making money or eventually dropping out of the industry.
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Paying Artists Fairly Will Reshape the Industry
If artists were paid fairly for their work with a pay-per-listen structure, it may be possible to reverse the current system of touring that is now prevalent. Before the advent of the Internet, most artists made their money from selling albums or singles, but now there is almost no money to be made in this field.
To make their money, artists are now almost constantly touring and performing at festivals. Musician James Blake recently spoke out about his depression and suicidal thoughts which he believes he developed due to constant touring as “being on the road can exacerbate mental health struggles.”
Blockchain may see an end to non-stop touring. Though there are many music lovers who prefer live music to studio recordings, this is more convenient for the artists and means that they can focus more on making new music instead of repeatedly performing the same songs.
Cutting Out Third-Parties: Distributors
Blockchain technology could also weaken the hold that music companies have over distributing the music or even eliminate the need for distribution companies altogether. One of the primary selling points of blockchain technology is cutting out third parties. In regards to cryptocurrency, for instance, this has usually meant cutting out bankers.
In the music industry, blockchain technology can bring artists and fans closer together, allowing listeners to pay micropayments to artists for listening to their songs directly. This is something that has already been suggested for other types of media, such as content marketing, where readers pay a micropayment to read the article.
Music Companies that Already Use Blockchain
Some companies are already ahead of the crowd and launching similar services for artists. These companies include:
- Mycelia – Founded by British musician Imogen Heap, Mycelia calls itself a research and development center for musicians. It aims to make the music industry fairer by ensuring that all those involved are paid and acknowledged, and seeing that ethical and technical standards are put in place. They plan to use blockchain technology to make this a reality.
- Musicoin – Created by forking the Ethereum network, Musicoin is designed to be used as a pay-for-play platform where users can make payments for listening to songs. It utilizes the smart contract feature of Ethereum and those involved in the network can build their own distribution network for revenue.
- MediaCoin – A cryptocurrency that aims to be a secure place to publish music and videos, and provide a streaming service for these mediums that is paid for by a token. Its primary focus is on security, so if anyone tries to download music or anything else from them, they will simply get a file they cannot open.
- Ujo – This is another platform that is attempting to create a transparent database of ownership rights for musicians and pay them fairly in royalties. They previously worked with Imogen Heap and their platform is built on the Ethereum network.
Many of the companies that are likely to move into this space in the next few years may create their own coin for transaction purposes or launch an ICO (Initial Coin Offerings). Until a company is established as the leader in this area, those that are interested in it can practice crypto leverage trading, profiting from the price differences between them.
The best way to stay on top of new music-related cryptocurrencies to trade is by signing up to trading platforms like BitMEX and take advantage of BitMEX signals which can inform you when to buy or sell a certain cryptocurrency.
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Adoption by Established Companies
It is also worth noting that some established companies, like YouTube or Spotify, could make a big difference to the industry if they decided to utilize blockchain technology to pay artists.
One of the biggest established companies that could make this a reality is Spotify – which is now so big that at one point it was worth more than the entire U.S. music industry, with a valuation of $8.4 billion in 2017. While it has helped hinder music piracy and has created a platform where listeners do pay, some have complained that it is still not clear where that money goes. However, it looks like this issue may be in the process of being solved.
In 2017, TechCrunch reported that Spotify purchased blockchain startup Mediachain. The purpose supposedly is to connect artists and other rights holders with the music that is hosted by Spotify. It’s possible that other large companies in the music industry may do something similar and purchase a blockchain company to fill this need.
Blockchain may not be able to solve all the music industry’s ills, but it can bring the tired-out industry into the 21st century for artists and those who make a living from it.
Theoretically, by paying artists for their work fairly, they should be more motivated to make more music. Musicians who are struggling to make it in the industry can make their music more profitable with blockchain solutions.
Blockchain implementation in the music industry will be useful as a tool for dismantling piracy. But keep in mind that unless it is globally recognized as a proof of ownership rights by world governments, it will not be effective.