Analysis

Blockchain technology and music: two contrasting views


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There has been a surge of discussion in recent weeks about whether blockchain technology could be part of the drive for more transparency in the way digital music services’ payouts make their way to artists and songwriters.

A report by Rethink Music pitching a role for blockchain tech and cryptocurrencies ignited the debate, while interviews with musicians Zoe Keating and Imogen Heap have emphasised that some musicians are already getting to grips with the implications.

A blockchain is a public record of all transactions that have ever taken place in a cryptocurrency like bitcoin. A new ‘block’ is added roughly every 10 minutes, listing all the transactions taking place during that time, with any change to the database requiring the support of more than half the currency’s users, for security purposes.

It’s the engine of cryptocurrencies like bitcoin, but could it really have an impact on music? Music Ally has been canvassing opinions for our latest (subscribers-only) report, and thought it was worth giving two contributors’ views a wider airing in front of our paywall, to continue the debate.

379c7b9First, Gregor Pryor, who as partner at law firm Reed Smith, has seen the sharp end of numerous licensing deals in the digital music world – and is thus well-acquainted with the various black boxes of the industry that blockchain is seen as part of the solution to.

Pryor, though, is sceptical about the latter view, pointing out that for the kind of solution proposed by Rethink Music to come off, it would require first a widespread adoption of bitcoin (or similar cryptocurrency).

Second, it relies on the ability of music rightsholders to create a global, unified database of music rights – something that’s been tried with the Global Repertoire Database (GRD) project, which was canned in 2014.

“It became a huge white elephant, because the industry among the publishers couldn’t agree on some pretty basic things,” said Pryor. “The other comparable example is DDEX [the consortium trying to create digital supply-chain standards in the music market]. If you think about how long both those have taken to put together, you see the challenge.”

Pryor also thinks labels will have problems creating a unique identifier for many songs – especially those distributed in several versions across the world – particularly for independent labels, who may have multiple distribution deals in place for different markets.

“I would distil that problem into saying that it’s a rights management problem. So you’ve got a data problem, an adoption problem, and a rights management problem, when you start looking at this in more detail, even though it [initially] seems like the holy grail… And that’s before you think about the majority of music revenues coming from broadcast and performance, not digital.”

Blockchain? “It’s a nice soundbite, and it’s right to explore it and consider it. But as it stands, rather than a blockchain, it’s more a pipedream actually,” said Pryor, although he welcomed the debate. “The transparency that everyone’s really calling for is what are the deals between the big digital services and the rightsholders? And the blockchain thing is instructive, because it requires you to look at the way the money flows.”

For a more positive – evangelical, even – view, turn to PledgeMusic president and founder Benji Rogers, who’s been digging in to blockchain technology and cryptocurrencies for some time now.

benji-rogers“When I first got my head around this underlying idea of the distributed ledger database, I realised that it sort of changes everything,” he told Music Ally.

“It’s going to radically change quickly the way in which payments are made, and the music industry won’t really have a choice. The content industries won’t have a choice: it’s going to be a fact: all of a sudden, it will be possible to pay out hundreds of millions and billions of micro-transactions.”

Rogers added that he is not blind to the technical and business hurdles that are in the way of a blockchain-based system being adopted for music payments, but warned against drawing firm (negative) conclusions from the current market.

“The questions about the limitations are the equivalent of asking pre-Google ‘what will search look like?’ or pre-Chrome or Safari ‘what will the web look like?’. It’s like looking at Netscape Navigator in 1995 and trying to imagine Facebook in 2015,” said Rogers.

Instead, he wants the industry to view this technology as the driver for new kinds of digital music services that can break out of the £9.99-a-month all-you-can-eat straitjacket of the current streaming market – something he thinks will rely on new music formats that have the micro-transaction payment mechanisms built into them.

“It produces a way of creating low-cost, low-barrier-to-entry music services for dissemination and consumption, based on what the listener wants, as opposed to the standard ‘it’s £9.99 and you have to have it all’ approach,” he said.

“That’s where the potential is staggering: consume what you want, and in the quantity that you want. The music industry has reached its maximum point of disruption, with revenues having fallen drastically over the last 15 years. I think this technology has arrived just in time.”

The longer version of this article was in this week’s Music Ally report. Sign up for a free trial to our research service here.

Stuart Dredge

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One response
  • I’ve heard quite a number of people recently talking similar language. How can you all be building the next GRD? Here’s how…

    GRD1 failed because no CMO/PRO (quite sensibly in commercial terms) wanted to give up their (whose?) databases into a central store (as per EU edict). We’re not quite sure who’s working on GRD2 or what it might be – so let’s skip that, eh? So, we’re using a working title of “GRD3” for a set of ideas that could just bring this altogether.

    But first, a brief history… In the beginning there was the Internet and it grew and grew. And if you go back a bit before that then you’ll find a lot of intelligent people who built the Internet – and before that they dreamt about it. But the Internet was not a platform. It was (and is) a language (actually an open protocol called “TCP/IP”). Musicians know a lot about open protocols: MIDI. Anyway, the Internet (the open protocol) enables many (if not all) devices, applications and platforms to talk to each other – no matter who owns them, what country they are in, how big they are, how much they cost – and share information called “packets”. It’s like a huge distributed database. But you know this. You use it every day.

    Anyway, that’s what GRD3 is all about. GRD3 is an open protocol. Devices, applications and platforms will all talk GRD3 – they’ll all be “rights aware”. Everyone will “understand” rights splits and sync requests. The owners of the rights data get to keep their own data and decide where they store/host it and who can see it. And as a musician/artist you can store it yourself or wherever you want: with Auddly, with your high street CMO/PRO, in the blockchain, or under your mattress (as long as it’s wifi enabled). And this means that no one needs to give up their precious databases – gathered over years of sweat and toil. Everyone has the ability to express and manage their own rights data as they see fit. And then they can give explicit permission to other people to view their rights data.

    And here’s where it get exciting – this isn’t just about music. This is about all media rights. Because over in the film sector they are having the same issue with rights transparency and portability. And over in the image sector too the same. And so GRD3 can cope with mixing up different media and still rationalising who owns what.

    And even more exciting than that is that we can now define rights down to the stem and even sample level. So, in the future I will drag “rights aware” samples into my song mix and because the DAW is rights aware too, it’ll go and find the owners and send off rights clearance requests. Bingo!

    Face it, there will be no one winner (no one centralised GRD) so we all need to muck in and “interoperate”. Having a centralised database (a la GRD1) raises too many questions of trust and abuse of power. So, we need a distributed database by using an open protocol. And we have great teachers on our road to GRD3: the Internet and MIDI. Both of which have been really successful in their chosen field. So, we can’t really go wrong if we all work together.

    I have been working on GRD3-like ideas since the mid 90’s. I was one of the three heads of the fabled Cerberus Digital Jukebox. I’ve been working in Kendra Initiative to actually build parts of the puzzle. We’ve build an open source prototype dashboard app called “Kendra Hub” with help from EU and UK. You can see videos of it in action.

    Kendra Hub Overview June 2015
    Shows how a sync requests could be managed within the dashboard.
    https://youtu.be/D0D38_sfmLg

    Kendra Hub Clips June 2015
    Shows how we can nest rights information at stem and sample levels.
    https://youtu.be/ev8-23shWAU

    Look forward to working with you all.

    Cheers Daniel

    Kendra Initiative • Fostering an Open Distributed Marketplace for Digital Media
    https://www.kendra.io
    https://www.youtube.com/c/kendraio
    https://www.twitter.com/kendraio
    https://www.facebook.com/kendraio
    https://plus.google.com/+kendraio
    https://www.facebook.com/groups/kendraio
    https://www.linkedin.com/company/kendraio
    https://www.github.com/kendraio

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