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Can blockchain technology really fuel music without the middlemen?


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Blockchain, huh? What IS it good for, apart from fuelling umpteen music-industry panel sessions debating whether it’s the saviour of the digital music universe. To find out, we held a panel session debating whether it’s the… Oh, wait.

No, Music Ally’s ‘Blockchain: Music Without the Middlemen?’ event tonight tried to get beyond the hype to understand what blockchain technology really means for musicians and the music industry.

Our panel comprised: Simon Edhouse, MD of one of the world’s first bitcoin music platforms, Bittunes; Maria Forte, an independent consultant who’s worked on everything from EMI’s sampling department to Radiohead’s In Rainbows campaign; Benji Rogers, founder and chief strategy officer at PledgeMusic; Alex Amsel, blockchain consultant and co-founder of Ownage; Mark Douglas, CTO of music-licensing body PPL.

The first speaker, though, was industry veteran Dr Jeremy Silver, whose report ‘Blockchain or the Chaingang?’ was published today. He started looking at blockchain technology in mid-2015, as the industry buzz around its potential grew.

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The more that I read about it, the less I understood. So I thought ‘this could be quite interesting!‘,” he said. Silver spent six months interviewing experts, reading up on the topic and attending related events, in order to write his “snapshot” of what’s happening in this space.

He noted that blockchain isn’t one technology, it’s a set of technologies – “all of which are extremely complicated… and now we have to try to understand it!” – showing a slide explaining the basics:

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Silver noted that cryptocurrency bitcoin has been seen as “rather disreputable” due to its association with various nefarious darknet services, from drug-dealing to illegal weapons-buying. He described blockchain as “bitcoin’s respectable progeny”, adding that it was born from disillusionment with the traditional financial services industry – and the realisation that it had applications beyond cryptocurrency.

It may actually be able to change the way we think about democracy. I read one book that refers to the ‘emerging cryptocitizen’,” said Silver. “I don’t know whether any of you think of yourselves as an emerging cryptocitizen, but there you go.”

Silver said that the music industry is ripe for experimentation with this kind of technology for several reasons: its “troubled past and present” including the post-Napster crash in trade revenues, and the conundrum around how to make streaming and subscription services pay off.

“Consumers love it, and we all as music consumers love services like Spotify, and some of us may even love Apple Music,” said Silver. “Music publishers have been a little bit less convinced about this because  they’ve looked at the size of the royalty cheques they’ve been getting… and even unhappier stil were artists and songwriters who looked at the cheques they were getting and realised they needed to get a million plays before the revenues they were getting even started to look respectable.”

Music is still in many ways in crisis… from a business model point of view, and from a data point of view the music industry has been an absolute nightmare, catastrophic, totally incapable of enforcing codes to identify music” – by which Silver meant setting up the systems required to identify unique songs, as represented by the failure of the Global Repertoire Database (GRD) project.

Hence Blockchain technology being acclaimed as a saviour, even though the music industry might not seem like the obvious place to start. “It’s small, it’s awkward, its business model seems quite broken, so why would you do that?” said Silver. Yet he added that experimenting with blockchain technology around music is less risky than, say, doing it within the electricity industry.

“The possibility here for us, in terms of the sorts of things that blockchain could sort out, are really quite varied,” he said. From cryptocurrency platforms for bands to efficiencies and savings for labels, digital music services. It could even become ‘the Global Repertoire Database 2.0″ he suggested.

“You might imagine we might see a Sony/Universal blockchain appear, or a Spotify/Warner/somebody else consortium appear. These groups of consortiums getting together and creating their own private blockchains… is a distinct possibility too… Even Apple might say ‘our stock is languishing, why don’t we tell everybody we’re going to put iTunes on the blockchain?.. All of these things are possibilities.”

Silver stressed that he thinks it will be 10-15 years before blockchain has a real impact on the music industry, but that there will be benefits between now and then to be had for early movers. “The challenge is going to be that to make any of the projects that are currently underway really effective, they are going to need some degree of critical mass,” he said. “A thousand flowers blooming? Actually, they’re little green shoots and they probably haven’t even budded yet, let alone turned into flowers.”

He added that the roots of blockchain in something that is fundamentally transactional – financial services – may be challenged in a music context. “The transactional element, when you translate it out of the financial context into the music context… we all know the new model, the new paradigm in music is subscription. That doesn’t depend on individual transaction at a track level, so how would blockchain sit in respect to a Spotify or Apple Music?… why would they get involved and where would they sit?”

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Over to the panel. Edhouse started by talking about Bittunes, which launched two years ago, born from an ambition to create an independent digital music market “for all the people who are marginalised by the current industry”. This was at the tail-end of the influence of the first big wave of peer-to-peer filesharing applications.

“Right in the middle of that period along came Skype,” he said, noting that the P2P applications had a couple of Achilles heels. First, they were distributing copyrighted music, which brought lawsuits flooding in. Yet Skype was just as worrying for the telecommunications industry as Napster and co were for the music industry. Yet the telcos couldn’t do anything about Skype because it was legal.

So, the problem for the P2P services was they were dealing with copyrighted music, and they had no way to monetise it (for rightsholders). Edhouse and his colleagues have been working on a way to use the bitcoin cryptocurrency to correct some of those flaws. “A pared-down vision that has nothing stopping it: there’s nothing illegal going on there, which is very significant,” he said. “It’s small, but it’s functioning as a global, independent marketplace.”

Over to Alex Amsel, who gave his outsider’s view of blockchain technology’s potential for the music industry, having spent 20 years running a game development studio – which is what led him into bitcoin, when a fan asked to buy one of the studio’s games using the cryptocurrency.

Ownage is a platform for game developers to register and sell their content via the blockchain, with buyers then able to prove they own it via the blockchain, and sell it on if they wish – whether it’s early access to a Kickstarter-backed game’s special edition, or purchases of in-app items.

“We can let people buy the content, we can outsource some of our economics onto a blockchain – because we need to retain some control – and have people sell on their virtual items,” he said.

Amsel admitted that music isn’t exactly the same as games, but said that blockchain technology “is a great way for people to demonstrate what they own, with issuance numbers” – in the same way that people collect physical music albums, blockchain technology could make digital music similarly collectible.

Can we create extra value from the fact that you were one of the first buyers of my music?” he said. “Can you sell on that, so you can sell it on to another fan? There are a lot of interesting business models that can be worked around this.”

Benji Rogers, who has been working on his dot.blockchain initiative, joined the conversation via video-call at this point. He stressed that he is keen not to develop a ‘let’s burn it all down and start again system”: rather he would like to see blockchain technology used to make digital music more efficient and transparent.

“The way of looking at this is if there was a global distributed database of rights every time a song is created… then we could create an amazing transaction tree that only ever amends forwards, not backwards… it’s all tracked back to the central point of truth that anyone in the system can look at,” he said.

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Rogers has created a public benefit corporation to deliver a minimum viable product (MVP) of dot.blockchain for the music industry to use. “We create a format in which we the industry say, this is how we present our digital gold to you,” he said.

Maria Forte chimed in with a rightsholder’s point of view on whether all this is realistic. “It depends on who is going to be putting the information in, and who’s controlling that information. In my experience working with writers and artists, they don’t want to do that. They want to create, but the nuts and bolts side… it’s just not something they want to do with their time,” she said.

“So is the publisher going to do it, is the writer’s manager going to do it? Do they know how it works? It depends who’s going to drive it basically… the problem is you’ve got disparate groups who don’t join together.”

Forte was involved in the GRD project. “The more we talked about it, the more we talked about how it fit together, the more you realised how difficult it was,” she said. “When you try to fit it all together, it did your head in basically.”

Forte noted that with blockchain technology, everything starts with the song (and thus the songwriter), but she noted that often, a song has several songwriters, and thus several publishers. “You start getting an evolution of people all joining into the party, and all those people have to be considered when it comes to how it [blockchain] is going to work,” she said. “I agree with Jeremy: we’re going to be looking at the long-haul on it.”

Douglas gave the view from PPL, which is one of the middlemen that could be disrupted by blockchain technology – but which also could take advantage of it. He noted that the GRD’s failure was “absolutely nothing to do” with the lack of blockchain technology.

“Blockchain is a bit of a smokescreen,” he said. “Actually we should be talking about ‘what are the real problems in our industry?’… There is a naivety about the conversation.” He noted that PPL has 300 people collecting money and managing repertoire data. “When somebody says ‘I play guitar on ‘Hello by Adele’ I need proof of that. Somebody writing that into a blockchain is a terrifying prospect… there is no counter-party to asserting that you played guitar on a recording.” In other words, blockchain is not the sole answer to these problems.

Rogers said that the key here is starting at the “workstation level” when songs are recorded, exporting them as a file that includes the necessary metadata on who wrote and performed on it. “The point of this is to heal everything forward,” he said. So blockchain technology cannot solve the metadata problems of the past, but it can be used for new songs being recorded now.

I believe that the rules should be we as the music industry will not broadcast our music onto YouTube or Spotify in changeable formats,” he continued, suggesting that encoding the details of songwriters and performers into songs before they are distributed to digital services is key.

Silver chimed back in at this point, asking Douglas about matters of commercial secrecy: “In itself, opening up the data and giving other people access to it, whether that undermines your business model, or whether it would strengthen it in some ways?” Douglas pointed out that PPL doesn’t own the data on music rights: it belongs to rightsholders. It’s not just about knowing who has the rights to a song in a particular market, but when those rights began and ended.

Knowing the end date of somebody’s rights becomes very commercial sensitive,” he said, suggesting that knowing when a band has come to the end of their contract with a rightsholder is not necessarily information that the latter would want to share.

“Unfortunately, the people who own our business don’t want us to give that data away for free… We’re not living in cloud cuckoo-land here,” he added.

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Forte shifted the conversation to America, and the class-action lawsuits against Spotify over publishing rights, which she described as “nonsense”. Record companies in the US have data on who the songwriters and publishers are for every song, which they need for every track they sell through a download service.

“But Spotify don’t know, when it comes to streaming,” she said. “They don’t know who the publisher is because that data is not passed through from the label to the DSP. Rightly or wrongly they made the music available, when they should have licensed it… Surely the solution to this would be labels pass this data on to digital services, whether they’re a digital downloads store or a streaming store?’

None of which requires a blockchain,” interjected Douglas.

Amsel questioned whether the music industry can change. “Perhaps it’s Google. Perhaps it’s Spotify. Those guys saying ‘now we need this done properly’,” he said. Amsel also addressed Douglas’ points, suggesting that the music industry can have “as much information public or private as you wish” in a well-designed blockchain system.

Rogers said this is his idea of “minimum viable data”, born from a world where “labels and publishers don’t trust each other” – Forte said “you can add collecting societies to that too” – but Douglas said the blockchain evangelists have yet to answer his worries about the “fundamental challenges” involved.

Silver said that the problem for now is the lack of good examples of blockchain technology being used for more complex areas – like music – tacitly agreeing with Rogers’ ambitions to get something live that works, even if it’s simpler than the wider potential. But Douglas returned to the challenges. “I could share my database to the whole world tomorrow. It’s not the absence of blockchain that prevents me from doing that,” he said.

Edhouse said it is clear where the momentum is within the music industry for experimenting with blockchain technology, and equally clear where the “inertia” is. “These things take years and there are disruptive processes going on,” he said. “Blockchain predisposes that it encourages transparency. My first reaction about the music industry is there are vested interests there… as Mark says, who for competitive reasons don’t want that information known.”

What do the major labels think of blockchain technology? Silver was unable to get any of them to comment for his report. “I think it was normal corporate communications: if you haven’t got anything to say, don’t say anything,” he said. “Just because they didn’t talk to me doesn’t mean they aren’t doing anything… There are all sorts of signs that companies associated with the majors, and consultants linked with them, were making enquiries and doing all sorts of research.”

Rogers added that he has been overwhelmed by inbound interest from the music industry – “players both large and small… otherwise honestly I would have stopped a long time ago, because it is an uphill battle”.

A sharp question from the audience wondered what the benefit is for music fans from blockchain technology: is it just a way of putting the “digital genie back in the bottle”? “In a blockchain environment, digital rights management does become kind of feasible,” admitted Silver.

Rogers said that his proposal will see artists able to “digitally express their rights” when releasing music. It’s about artists saying what they want to happen with their work, which he thinks should not be seen as a negative thing, despite the DRM arguments of the past.

The advantage of blockchain is that the public will know who owns what, where,” he said. And they’ll know what they can do with it. “From my point of view this is about massively increased participation,” added Edhouse. “You end up with this massive redistribution of wealth that is not socialism or communism. It is just free trade… letting the purchasing of that music flow with zero friction, which is massively exciting.”

Stuart Dredge

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