Blockchain and cryptocurrencies are now two of the hottest topics of 2018. Considered by many the true game changer for the music industry, many have made this technology the ground for starting their own businesses or taking part in similar ventures. Blockchain in the music industry has become particularly interesting. Examples of this are Imogen Heap (artist) with Mycelia, Pascal Guyon (producer) as ambassador for MusicCoin and Jesse Grushack with UjoMusic. Similarly, artists like Björk began selling their albums and merchandise in Bitcoin and other digital currencies.
But why is this happening? What is blockchain and why are cryptocurrencies so trendy right now? Most important of all, why is it relevant for artists and the music industry?
What Is Blockchain?
Blockchain is a technology better known for its association with Bitcoin. Cutting through its complexity and the lingo of the field, blockchain is essentially a decentralized database that keeps continuously updated digital records of who owns what (read Collin Thompson’s brilliant article on it). Furthermore, it can be accessed by anyone and cannot be altered in secret (it’s encrypted too), which makes it safer for peer to peer transactions.
Due to its decentralized but secure nature, the need for intermediaries like banks and other financial institutions is removed from the equation, making the process more transparent for both parties involved in a transaction. This is why blockchain is so valuable right now.
Music Industry Issues
First of all, intellectual property is essentially a file. Or rather several files stored in databases. At the moment, labels and artist rights entities have these old databases filled with old incomplete files. This makes it hard for streaming services to trace a song back to its owners. Therefore, distributing revenue becomes a problem. Knowing who to pay and how much to pay is an issue that desperately needs a solution. If you don’t know who you owe money to, you’ll never really pay them. Will you? It’s a pain in the…
Kill The Middleman
Blockchain has the potential to remove the middleman from the equation. As said before, it allows for trusted transactions between different parties. You don’t need a bank to help you make a payment or transfer money online. So why should you use one?
Since the rise of digital, more and more artists have opted for the indie path, ditching labels or starting their own. Essentially killing the middleman and gaining control over every aspect of their careers. However, they still depend on different entities to get paid. For example, whenever a song gets streamed, the payment for that stream gets run through an aggregator / publisher / agent (depending on the deal) first, possibly with ridiculous administration fees or commissions getting deducted on the way, only then reaching the songwriter. The current process is very unclear and revenue from streaming has been questioned more and more.
Blockchain In The Music Industry
All hail the almighty blockchain! Wait… what? We’re not quite there yet.
Blockchain technology has filled industry hearts with hope. But the actual solution to the above problems may not necessarily be blockchain in itself. For instance for copyright revenue and attribution to work, the data needs to be complete and correct in the first place, otherwise the only thing the technology will do is distributing incomplete or wrong information in a secure way. On another hand, when it comes to cutting down the number of intermediaries between an artist and its source of income, blockchain can indeed help. However, some of those middlemen often have more leverage than an individual artist to negotiate better rates and deals overall.
The effects of using blockchain in the music industry will not happen overnight. It will likely be a gradual process that helps solve a few problems, but still it won’t solve the fundamental issues ingrained in the industry over years and years of existence. Despite that, there are a few companies making the effort to revolutionize the industry through this technology. Check below! They’re definitely worth following.
Founded by Imogen Heap to help artists get paid again. http://myceliaformusic.org/
Automating royalty payments using smart contracts and cryptocurrency. https://ujomusic.com/
Aiming to compensate artists fairly, instantly and automatically. https://musicoin.org/