Blockchain Applications in Music

How Blockchain Technology Empowers Musicians

Blockchain technologies streamline ownership rights and help provide fair payment for musicians’ work while bringing industry-wide transparency.

Key problem areas in the music industry include transparency, clarity of ownership, and royalty distributions. Ever since online music sharing began, the industry has struggled with finding new ways to monetize digital music files that have now become non-scarce digital goods. The basic information that is needed to identify who wrote, performed, and owns the music that you listen to, is frequently overlooked. This data and its accuracy are vital to ensuring that creators and owners get paid for their work. Furthermore, the antiquated copyright databases and complex system of royalty collections make it orders of magnitude more difficult to get music from legitimate sources.

By utilizing blockchain technology and smart contracts to create a comprehensive and accurate decentralized database of music rights, the possibility for instantaneous and totally transparent transmission of artist royalties, including real-time distributions to co-writers, producers, technology partners, publishers, and even labels is now a possibility.

Integrating web 3.0 solutions would open up the potential to create an entirely new decentralized system that supports scenarios in which fans could pay for only the amount of the song that they have listened to, or make payments in real-time on a micro scale. Most importantly, blockchain smart contracts ensure each time a payment is generated for a given work, the money is automatically split according to preset terms. Each party’s account would instantly reflect the additional revenue without the need for a third-party fund distributor.

These are just some examples of how distributed ledger technology can be deployed to alleviate significant music industry pain-points for artists, record labels, and consumers.

A Short History of Peer-to-Peer Music Networks

Music sharing platforms are one of the earliest examples of decentralized peer-to-peer networks we can look to when explaining how a distributed network functions. Watershed file-sharing networks like Napster and Limewire were the first and still stand (arguably) as the most widely used decentralized technological innovation. There is a lot to learn about decentralization through examining the history of these early p2p file sharing protocols. The history of music distribution and p2p networks are inextricably intertwined.

By making user data accessible and transparent (yet separate from identity) on an open and decentralized network, we stand to gain a lot. Instead of controlling information centrally barriers to entry are lowered creating an ecosystem where diversity flourishes above all else. We see this with Kazaa and BitTorrent.

The biggest draw for adoption in the case of these p2p file sharing platforms was in part the content and diversity, but hype and attraction to the protocol hinged on the irrefutable fact that people love free stuff.

 At its height in 2004, online file sharing applications had 70 million participants worldwide. 60% of Americans when polled found the practice of file sharing to be acceptable. The result? The file downloading had an intensely negative impact on media sales trickling down to record companies and musicians.

The early 2000s era of ubiquitous music piracy led to many copyright lawsuits, some of which even reached the Supreme Court. P2P networks were deemed responsible parties in some cases if their software had been marketed as a vehicle for copyright infringement.

File sharing programs are still legal to use but downloading or sharing copyrighted items is illegal if you do not have consent from the original author. The record and movie industry has taken more aggressive approaches to put an end to illegal downloading and file sharing.

Now with decentralized applications built on a blockchain, we see a different protocol, one that uses tokens to monetize and incentivize participation. Decentralizing the music industry with DApps on the blockchain is a new, more sophisticated iteration on this old concept of p2p file sharing that could usher in a new age for music ownership that benefits all involved parties.

Blockchain Music News

Centralized Music Production and Distribution

While p2p file sharing offered a way to decentralize distribution to the public (essentially just providing a platform for illegally sharing copyrighted materials), no other aspect of the centralized music industry has used p2p networks to mediate production and distribution on an institutional level. The music industry is a top-down, centralized landscape filled with oligarchical corporations that provide capital for artists to produce and distribute on those centralized entities’ terms. Music consumers are also subject to listening and purchasing music on a centralized basis through these large intermediaries standing between artist and fan.

What problems does the music industry currently face that can be linked to centralization?

• Ownership Rights

In the current music industry landscape managing artist ownership rights is a muddled, costly, and obfuscated process. Centralized record labels control artists’ ownership rights, and artists are left with minimal legal resources to navigate this process. Record contracts are nothing short of documents used to sign young, naïve artist rights away for sometimes decades at a time. Maintaining rights to masters are crucial in the music industry Record labels often use the selling-point of a career as a recording artist to take away copyrights from artists giving them complete creative control, ownership, and in turn, profits.

Once an artist signs away the rights to their masters, the label will in return give the artist an advance deducted from their royalties. The artist is often unable to record or release music independently or with an alternative label once the all the contract ink dries.

• Centralized Streaming Platforms

Big name streaming services like Spotify have revolutionized music consumption through subscription style access to audio entertainment for listeners. The platforms monopolize music and take a sizeable amount out of record sales and for-purchase downloads. Artists feel they want to give their fan base access to their music on these platforms and fear if they do not have exposure on Spotify they will not have successful careers. Their main income streams no longer come from the actual records anymore, but instead brand deals, merchandise, and taxing international tours.

• Piracy

Piracy is an expensive uphill battle for everyone in the music industry and even for law enforcers. The p2p file sharing platforms discussed earlier brought in a new era of copyright infringement as the status quo for consuming media. The centralized music industry as it stands is helpless to piracy without taking costly legal action. Billions have been lost in sales, and this trickles down to the artist and original creators, it doesn’t only hurt big record labels and producers.

• Slow Distributions of Funds to Artists

Delayed fund distribution is a frequently overlooked issue that effects music artists. Compiling reports to then release funds to the artist is a time intensive process that lags payment until sometimes an entire other album has been produced and the arduous accounting begins all over again. Labels generally only can produce album sales and royalty data bi-annually or quarterly. This is due to pen-and-paper back-office bureaucracy coupled with a lack of motivation for record companies to pay artists promptly.

• Royalty Management Disputes

The litigation process for royalty disputes is costly for both parties. The complexity and obfuscation when it comes to music royalties result in multi-year legal arguments in court. This can stop an artist from producing new work until the case has been settled. Lengthy trials can be detrimental to artistic creativity. It can be incredibly discouraging, and newer artists are unable to recruit legal resources to rival a bigger production company’s team.

The Benefits of Decentralizing the Music Industry

·      Redistributes Power

Decentralizing the music industry takes authority and power from music industry executives and redistributes it to artists and fans—the communities creating, purchasing, and participating on the ground floor in the music industry. How? Using smart contracts to automate payment distribution and royalty directly to the artists, tokenized music platforms that run on a p2p networks on-chain, and blockchain-based copyright procedures. By offering artists and fans non-corporatized ecosystem to distribute and consume music the economic and creative power returns to the relationship between artist and fan.

• Improved Creativity and Motivation for Artists

Without centralized authority reigning over the music production process, artists are freer to make the music they want for their fans, not gear music towards the industry market and sales projections. Blockchain technology has the potential to close the gap between artist and true artist expression policed by record labels and executives. It is motivating for artists to know they will receive royalties for their music and the potential to distribute directly to fans and have creative control can be motivating.

• Facilitates Greater Transparency

Distributed Ledger Technology (DLT) facilitates greater transparency in every application as it provides involved parties with public access and real-time data. The ledger can be a resource for artists to view songs are distribution and stay on top of the royalties they are owed. Artists will no longer receive this information from infrequent record label released reports created behind closed doors; ideally they could access it on the blockchain from their mobile phone.

• It is Faster

Funds can be held in a smart contract on the blockchain and automatically released to the artist when triggered by a particular event. Record production and distribution will also happen on an accelerated timeline dictated only by artist creativity, never hampered by long legal battles. All related back-office operations for music industry companies can benefit from the streamlined processes blockchain tech has to offer.

• Secure and Improved Data Storage

People can more easily access information like who owns the masters to what song when automatic blockchain data storage becomes industry protocol. Song copyright information and royalty percentages stored on the public ledger from their conception creates a more transparent and accessible information system. Artists can easily purchase rights to remix or sample to bring musical integration above board. Related transactions can then take place on the blockchain in a secure fashion. All data on the blockchain is immutable, eliminating the need for third-party protection and regulation.

Use Cases for Blockchain Applications in The Music Industry

Revenue Sharing

Blockchain technology can provide a means for artists to revenue share via smart contract. The smart contract will outline the parameters of the agreement for a song or album and then release funds accordingly doling out revenue between manager, artist, and label transparently and in real-time. The database can be viewed at any time, so all parties can see who is making what.

Tokenized Fandom

Blockchain can revolutionize the relationship between artist and fan making for more valuable interactions and a final product that is from the artist for the fan, not from a music corporation to a broad impersonalized global market. Fans can participate on decentralized platforms in a tokenized ecosystem to purchase music directly and participate in different polls and contests to fuel the shared-economy and interact in a meaningful way with the artist.

Media Ecosystems

Speaking of music ecosystems, content platforms similar to YouTube or GoFundme can benefit immensely from decentralization. There will be no central repository distributing content creators, the fans and artists supported by the p2p will be able to exchange digital currency for crowdfunding new projects and distributing audio. This aspect makes fandom more interactive and gives artists a new revenue stream that does not depend on a third-party or has intermediaries siphoning off their profits and creativity. These platforms also facilitate direct distribution from artist to fan that empowers musicians to run DIY operations focusing only on their artistic expression and fan-base.

Decentralized Music Streaming Platforms

P2P music streaming platforms will help stop large streaming platforms like Spotify and Apple from hoarding music and providing access on a subscription basis pressuring both artists and fans into almost mandatory usage. Cooperatively owned streaming platforms will focus on paying artists more and making fans pay less using blockchain governance and tokenization systems. Pay can be consumption-based rather than subscription based. Artists will then be compensated directly based on listens.

Blockchain-based Digital Rights Management

As mentioned throughout this guide, copyright issues are a huge problem for companies and artists. The blockchain has the decentralized means to authenticate and validate copyrights bringing a new level of transparency to what usually is centrally controlled information. Distributed Ledger Technology software can verify creation with timestamps publically allowing musicians to immutability brand tracks for life as their intellectual property.

Piracy Prevention

This method of using the public distributed ledger to track who owns the rights to us can be extended to prevent piracy. The blockchain works to improve traceability across different supply-chains, and this could apply to music distribution. Tracks or albums can be digital assets represented on the blockchain with a virtual watermark signifying copyrighted media. If that digital asset is not paid for or illegally redistributed, it is traceable, and retribution can be swiftly

Conclusion

Blockchain applications in the music industry have the potential to revolutionize from production to distribution. Artists will have more agency in a decentralized model which can bring more creativity and diversity to music worldwide. Fans will no longer have to give money to third-parties or be tempted to pirate on file sharing sites to enjoy their favorite artists. They will have more access to music and fewer obstacles obscuring the artist-fan relationship.

For newer musicians decentralization could be an excellent opportunity to direct distribute on p2p streaming platforms (decentralized alternatives to YouTube or Spotify). They can use tokenized media ecosystems to funds their projects rather than ponying for a big contract with a record label.

The main pain-points we have seen in the past decade have mostly been related to copyright infringement, royalty fund distribution, and piracy. Blockchain technology can help artists circumvent lengthy legal battles and millions spent on legal resources. Distributed Ledger Technology is an excellent solution to improve transparency and automate fund distribution in real-time via smart contract.

As more and more industries become decentralized power will redistribute to creators bringing fans and audiophiles better, more accessible content and artists more direct profit from their hard work and intellectual property.