The music industry is no stranger to talk about crypto currencies. There has been plenty of editorial and media discussion around crypto in music. However, in the sea of attention, we as an industry may be missing what’s most important in how blockchain technology can impact our industry and its artists.
Back in 2014, when he was the artist in residence at Spotify, reputable investor D.A. Wallach wrote his thoughts on how blockchain technologies like bitcoin could change the music industry in this legendary article titled Bitcoin for Rockstars.
DA’s article was my first education to bitcoin, and after reading it, I instantly understood the enormous benefits that would eventually come from the widespread use of blockchain technology.
Over three years later, Billboard released an article on Friday, in which the writer wrote, “As cool as cryptocurrencies are, it’s still not clear what problem they solve.”
In an industry comprised of “streams” and “plays” as our products, the problems blockchain technology will solve for our industry are clear and immensely important.
This post will explain the impact blockchain technology can and will eventually have on the music industry. There are probably more points than these two, but these are the ones I see being most important and easy to understand.
1) Having an accurate database of information for all recorded music is imperative to accurate payments for copyright owners
Who knows what royalties have been missed out on over the years when the wrong information was submitted, or even worse, when the information wasn’t submitted at all? The plethora of ways records labels, publishers, and artists need to register a song to ensure they receive money is an outdated and overly cumbersome process.
The ideal universal catalog would have been beneficial in welcoming streaming technologies – If it existed, Spotify would not have any challenge locating the proper parties to pay royalties to.
However, as technology evolves, this database is a must. Any blockchain technology to be used in music will need this all encompassing catalog in place in order to operate.
Music and the blockchain will eventually come together to streamline and accelerate the payment distribution process. Bringing this opportunity to fruition may finally give the industry the push we need to simplify the cataloging and registration systems, and in the process, create a universally trusted source for all copyright information.
2) Accelerating the payment of royalties until they are real-time
When one of our artist’s songs plays on the radio in Germany, it can take up to 18 months from the time the spin takes place for the artist to receive his or her share. This is ludicrous and always has been, but until now, there has never been a better option.
Blockchain technology offers an effective solution to create real time payments.
By having a complete understanding of who wrote and owns each copyright, blockchain will effortlessly track and coordinate payments of even the smallest amounts in no time, whether it’s a spin on the radio or a digital stream.
Regardless of who owns the rights, the artist, label or publisher, there are many reasons why it is important these payments are made immediately. The revenues generated and received instantly can be put back into artist development (without having to dig further into a deficit) or in some cases real time distributions will enable artists to simply afford their rent.
In addition to speeding up the payment process, blockchain will furthermore eliminate unnecessary overhead and headaches around complex accounting and administrative calculations DA spells out vividly in his article.
ASCAP CEO Elizabeth Matthews said it well in the same Billboard article I quoted above, “The same realtime update and tracking capabilities that make blockchain attractive to the financial industry also make it an attractive option for the music industry, where accurate, real-time ownership data will grease the wheels for the money to flow to songwriters and copyright owners with less overhead.”
While in certain industries, it may be true “blockchain is still a solution looking for a problem” (according to the writer in Billboard), in music, the problem couldn’t be more obvious.
The article continues, “The idea that rights holders will get paid the instant consumers stream a song just isn’t realistic — blockchain technology simply can’t process that much data fast enough.” Not yet. The same way we couldn’t stream music over dial-up modems.
This technology is going to evolve along a similar trajectory to the internet revolution we saw take place over the last two decades, and will eventually be fast enough to process payments instantly.
In a separate Billboard article written last year advocating for the adoption of blockchain, rockstar lawyer Dina Lapolt wrote, “One thing I’ve learned in my many years in the music business is that the music industry is afraid of technology… This is the new music business — where transparency and efficiency are required… Our systems, which were built around the accounting of physical product, were never intended to be able to process this volume of data.” – streams of over 1.2B songs per day!
In order to create the transparency we as an industry are looking for, we need to simplify the complexities of registration, accounting, and administration. Blockchain technology is the perfect solution.
Already this year, the current rising valuation of Ripple made its founder potentially the richest man in the world. And there is a reason for it. Blockchain technology is going to disrupt the way payments are conducted – tracked and distributed – for a plethora of industries, including music.
It’s time we understand and capture the value of our music by using scalable database technologies to both standardize and accelerate payments.
Daouda Leonard, manager and publisher extraordinaire, wrote this article at the end of last year foreshadowing his start-up, which will provide tools and forecast revenues to create transparency that will empower our industry. Whether, it’s him or blockchain expert Benji Rogers, somebody will crack the code to create the official (or decentralized) blockchain of the music industry – In order to do so, they will have to get the major rights holders fully on board the way Spotify did with streaming.
Similar to the upcoming practical extinction of downloads, when it happens, we will never look back, and never believe our industry operated the way it did for as long as it did.