Benji Rogers, blockchain technology advocate, who will be feature don the next episode of the Musonomics podcast.
Benji Rogers, blockchain technology advocate, who will be feature don the next episode of the Musonomics podcast.

Music publishing desperately needs some form of public ledger withholding all records of whom is owed what. Blockchain -still- seems to radiate the best potential solution for an efficient transparent automated payment system and a centralized database.

This fervor clearly resonated early June this year at the annual MIDEM conference in Cannes, France. Blockchain has been a sizzling hot topic thanks to momentum generated by two articles written by Benji Rogers, founder of PledgeMusic and the driver of the dot blockchain music project. The topic of using the Blockchain as a solution to the key problems of music publishing has become increasingly popular among music industry executives and artists alike. Performing Rights Organizations (PROs), who are in charge of distributing publishing royalties, haven’t been able to keep up with demanding payment efficiencies facilitated by technology, which has been evolving faster than we can figure out how to make use of it. Yet, Blockchain still remains a batman-esque figure we keep talking about, but who we barely understand.

Blockchain became known for being the underlying technology that allows Bitcoin, a cryptocurrency that is unregulated by a central bank, to exist. For those who don’t know what Blockchain is, I recommend reading this overview of how blockchain works, and how it could be adopted by the music industry.

Most recently, British songwriter and producer Imogen Heap subdued Blockchain’s spotlight after showcasing her venture Mycelia: “ an open database that describes the whole music industry so that everyone involved can be acknowledged and rewarded.” At a first glance, blockchain might sound like an actual quasi-utopian solution for slow or lost payments in music publishing. And it might be, yet all empirical proof stemming from similar previous projects have failed to show positive results, such as the Global Repertoire Database, which was abandoned by its early supporters and shut down in 2014 before it had an opportunity to launch. So, through divergent thinking, I have come up with four vital factors that would need to be addressed for a Blockchain system to stand up to its dreamy epitome and eventually become the next (tech)platform that innovates the business realm of music publishing.

Data Standardization

The basic premise of an automated transparent public ledger is for money to travel from point A to B as swiftly as possible. But for it to work effectively and efficiently, data points (who/what is A and who/what is B, etc.) need to be entered correctly for the system to recognize them and distributing the payments accordingly. If a single letter, comma or dash is misplaced, it could mean a relapse into chaos. Each PRO, publisher, record label or anyone who owns the copyright of a musical work, would have to use the same software to enter the data. An alternative would be an underlying standard system of rules that would have to be integrated into any software that provides a solution for entering and uploading specific metadata traits into the blockchain system.

Mining Incentivisation

Mistakes are human. Entering incorrect data can always happen. That’s why there are specialists who try to fix them so that a system keeps working properly. In the world of Bitcoin (the most popular application of Blockchain), miners are individuals (or groups of people) who, among other duties, issue new bitcoins by solving complex math problems -with the help of specialized software and hardware- in exchange of a fee (commission). This allows for new Bitcoins to enter the market, thus nourishing the system. In the world of publishing, miners would need to be incentivized to clean the data that was entered incorrectly into blockchains, thus being stored in a “black box” of lost revenues. These miners would need to be granted a percentage or one-time fee of each publishing work they help mine and place in a verified chain so that the designated payment could reach the correct rights holder(s).

Blockchain Literacy

 In the United States alone there are hundreds of music publishers who distribute payments to songwriters, producers and artists. And these numbers don’t consider the potential hundred thousands of artists who manage their publishing independently. This means all of them would need to have access to this centralized ledger to input their information. And in order to do so, they would first know what Blockchain is, how it works and why it’s helpful. It might sound trivial, yet explaining the context to its users will allow for this technology to bloom its full potential.

Neutral Business Model

Just like anything else in life, a Blockchain platform would require maintenance to keep running smoothly. This could mean debugging, code fixes and any necessary firmware updates, etc. To maintain such a system that benefits numerous corporations and individuals alike, there would need to be a neutral business model set in place that would work for public benefit. A small percentage fee shaved-off from every transaction could be a solution, yet concrete numbers depend on the real costs building and maintaining such a system would incur into.

 

Where would this leave current PRO’s? ASCAP, HFA or any similar Public Rights Organization would have the potential to develop and administer such a system, yet their current business model would lose relevance. This could create tension between the archaic royalty payment distribution system in place right now and Blockchain.

There are currently two interesting initiatives, which intend to solve this problem, that we can’t lose sight of. One is the Open Music Initiative by Berklee College of Music and MIT, who also target to build a “shared way of identifying ownership.” As Panos Panay, founder of the Berklee Institute for Creative Entrepreneurship said “There’s hardly a day when you pick up the newspaper and you’re not reading about yet another lawsuit that is happening in the industry,” he said, “or yet another situation where takedown notices are being sent, because there’s unauthorized use of music on a particular streaming service.” The second one is the Dot Blockchain Music Project, which aims to create a new media format that will, as its website states: “ will provide for the benefit of all musicians, composers and people in the music and related industries, primarily through open source protocol, licenses and leveraging blockchain technology methods.”

It won’t be long until the Blockchain is better understood, or a similar technology appears, and more independent companies or individuals begin coming up with solutions that will disrupt music publishing just like Napster spearheaded the decline of recorded music in the early 2000s. That’s why our next Musonomics episode unpacks what the Blockchain is, who the key players are, and why it’s become the most talked-about new initiative in the music industry.

by Alonso Villagomez

Other sources:

http://qz.com/620454/imogen-heap-wants-to-use-blockchain-technology-to-revolutionize-the-music-industry/
http://www.wbur.org/artery/2016/06/13/berklee-mit-music-rights-database

Michael Dorf at City Winery NYC
Michael Dorf at City Winery NYC

No music startup has generated an operating profit in 20 years. Not Pandora, not Spotify.

The largest cost and greatest obstacle for music-streaming services like these is the the cost of the music they play, while prioritizing growth over profitability.  Spotify pays out 70-80% of its revenue to rights holders for its on-demand service, and Pandora about 50% of its revenue for the radio-like service it currently offers.

But music startups all across the board are struggling.  More than half of 2013’s most promising music startups no longer exist.  

Why are music startups struggling to thrive, or even simply survive?

01LOGOIn this episode, we examine several perspectives to understand why the space for music startups is so
unforgiving, and what music startups can do to be successful.

Cortney Harding, a digital music consultant, discusses the recent slowdown in the music startup space.  Edward Ginis and Brady Brim-DeForest, share of the bootstrapping approach that’s worked for OpenPlay.  David Pakman of Venrock explains why his firm has never invested in a digital media company, while Jon Vanhala, formerly of Universal Music and now at Crossfade Partners, offers insight into who can be blamed for the fact that music startups are finding it so hard to make money.  But it’s not all bad news. Music isn’t going away, it’s an essential aspect of the human experience. Our episode concludes with Michael Dorf, who tapped into the value of the live music experience and his own love of wine.  Michael is generating more profit than he ever did in the digital music business while operating and growing his City Winery locations across the country.

As always, you can listen to the new episode above via Soundcloud, or you can find it on iTunesYouTube, and Stitcher.

Eric Astor of Furnace MFG
Billy Fields, the vinyl guy at Warner Music

Hot on the tail of this year’s Record Store Day, we’re taking a fresh look at an old medium — vinyl records. About this time last year, we did our first show on the state of physical music retailing, and we concentrated on vinyl. We took a look at how Record Store Day helped revive a segment of the music industry and saved local record stores — but there’s more to the vinyl story than the retail effect.

01LOGO

In this episode of Musonomics, we look further up the vinyl production line to see how the format is maturing, and what’s still holding it back. Josh Friedlander, the RIAA’s data guy, talks about the continued growth of vinyl records. Billy Fields, the vinyl guy at Warner Music Group, chats with us about whether vinyl might be heading for a plateau.  And Eric Astor of Furnace takes us into the factory and through the vinyl manufacturing process, from finished audio to a pristine, pressed record.

As always, you can listen to the new episode above via Soundcloud, or you can find it on iTunes, YouTube, and Stitcher.

01LOGO

Songwriters struggle to get paid while the copyright system designed to protect their rights is partially to blame, but why? In this episode of Musonomics, Larry Miller takes a look at how the copyright and royalty payment system is failing a new generation of songwriters.

Continue reading “Songwriters, Consent and the Age of Discontent”

Girl Talk

Remixes and mashups will not be subject to compulsory licenses anytime soon according to recommendations presented in a white paper released last month by the Department of Commerce (DoC). The white paper is the result of a 2-year study published by the Internet Task Force created to deal with our “Remix Culture.” The remix culture, as Lawrence Lessig states in his book Remix: Making Art and Commerce Thrive in the Hybrid Economy, utilizes multimedia as its language to communicate. It allows the consumer to quote content from various sources to create something from existing content that can be considered “new.” For example, sampling, taking short snippets from different songs to create a new song that can sound completely different from its original sources — a practice widely used in hip hop and electronic music. Remixing and sampling have become vital techniques and art forms in a new-look media landscape.

Continue reading “No Compulsory Licensing for Remixes, Determines DoC Internet Task Force”

Daniel Ek

Spotify has been known since its launch in 2006 as a music streaming service, but with a move into video content, the streaming giant looks to be broadening its entertainment offerings.

In a new partnership with Disney, ABCNews, NBC, Viacom, TED, and Vice, and others, Spotify has added video content to its library. Daniel Ek, Spotify CEO, originally made the announcement back on May 20th, but the update went live on iOS and Android in recent weeks.
Continue reading “Spotify Adds In-App Video Content”

Crash The Super Bowl

Since 2006, Doritos and APM Music, the largest production music platform in the US, have run the Super Bowl ad contest, “Crash The Super Bowl.” The partnership engages online followers by offering fans and budding ad-writers the chance to create a Doritos ad spot — using APM music — and have their spot aired during football’s biggest game. Contestants choose from 21 APM tracks to feature in their commercial. The top three finalists, selected by online voters with input from advertising executives, have a chance to win $1,000,000 if their ad charts at number one in the USA Today polls.

Over the nine years that the contest has run, thousands have submitted their commercials to Doritos in hopes of seeing their ad during the big game, resulting in lucrative music licensing deals for APM and its music publishing and songwriting partners. But how did APM get drafted into such a lasting and successful deal with Doritos, a unit of Pepsico?
Continue reading “Doritos and APM Music “Crash The Super Bowl Contest” Marks 10th and Final Year”

From Adele to the streaming wars to a call for revision of arcane music licensing laws from the U.S. Copyright Office — in our final episode of the year Larry Miller talks with Neil Shah of the Wall Street Journal about the three most important music industry stories of 2015.

Continue reading “The 3 Most Important Stories of 2015”