The three major capabilities of blockchain will completely change the music industry

Digital music may actually help, as industry revenues are falling due to piracy and illegal access. Today, many singers and songwriters are still not treated fairly by music companies and streaming services. This business model dates back to the early 20th century, before the invention of digital and online services, and it has many negative consequences.

But now some blockchain entrepreneurs have proposed a new solution to this problem, which can block some inefficient middlemen in the industry and enable musicians to conduct direct transactions with audiences.

The program currently addresses the following three key issues:

1. Licensing and Copyright Management

The issue of digital copyright is one of the biggest issues facing the music industry today. It is very difficult to define the distribution of royalties among various parties such as performers, composers, producers, publishers, and record companies that own the rights to record songs.

This problem is expected to be the first area that blockchain can improve. By storing encrypted hash tables, the ledger can effectively register the lyrics, music, album description, album cover, licensed content and other information of each new song on the blockchain.

Because the immutable ledger is not owned by any one corporate entity, blockchain allows music creators to easily register ownership without the need for major record labels to get involved.

This idea is being tested and explored by several startups and non-profit organizations. One of the key players is UjoMusic, whose platform is built on the Ethereum blockchain and enables musicians to effectively manage their identities, music works, and licensing rights. Combined with the transparency of blockchain smart contracts, the system also enables consumers to license music for different purposes.

Ujo tested the platform using the song “Tiny Human” by renowned award-winning British singer and songwriter Imogen Heap, which is scheduled to be officially launched on the platform in early 2017.

Heap is also a technician herself. She is committed to developing her own blockchain product service platform Mycelia, which has a strong sense of fairness and enables musicians to more effectively protect their own songs and data dissemination.

2. Remove intermediaries

Another question is how much labor compensation can blockchain-based service platforms such as Ujo and Mycelia bring to content creators?

Currently, a series of publishers, record companies, talent agencies and streaming services will significantly cut the income of music creators, and even delay income for up to 6-18 months.

The founder of Ujo Music issued a statement:

“In the digital world, isn’t there a way for music creators to receive royalties directly, rather than through a slow, inefficient, and opaque copyright management chain?”

As a reliable p2p platform, blockchain can establish a direct connection between musicians and consumers, allowing listeners to pay for music directly and enabling musicians to receive close to the full amount instead of just a small portion.

When a user places a request on the blockchain, a smart contract directly links the song to the copyright holder’s crypto wallet. That’s why Heap describes her platform as one that can shape the future by trying to secure the rights of musicians.”

In addition to removing intermediaries, the transparency of blockchain and smart contracts will allow artists to ensure their work is properly licensed and enable listeners to prove ownership of the artist’s ledger.

What will happen to record companies after this? Heap believes that if record companies can embrace this change, they can still benefit from it. Heap pointed out in an op-ed:

"Like all new technologies, blockchain is transformative and can bring new opportunities. Record companies need more management and marketing in this situation, which can better help music lovers filter through millions of songs, as well as publishers and existing music collection channels, and conduct relevant data verification and correction. At some stage, music creators will always need to cooperate with all parties."

3. Piracy

The last problem that blockchain needs to solve for musicians is piracy. As Matthew Hawn, head of product at Audio Network, said: "Consumers believe that music should be free. Most Spotify users are in the free service tier, and only some users pay monthly for access to music content. And these people who pay for music are often the ones who use music to sell other products."

This piracy occurs because users have a wide range of ways to copy, record and distribute content without the music creators’ consent, and without financially compensating the musicians.

PledgeMusic founder Benji Rogers proposed an encoder based on a blockchain music database that can effectively solve this problem.

Rogers introduced "dotblockchain", a blockchain-based codec and player for playing content. Each song played generates a unique record in the blockchain, and it is impossible to remove any content from the codec.

BitTunes, a blockchain-based P2P file-sharing platform, has another interesting approach. It uses incentives and rewards to encourage users to publish music on the blockchain platform, which enables both music creators and distributors to receive financial compensation.

PeerTracks is another business model based on blockchain that can change the structure established between musicians and fans. It is also a streaming platform that provides download services, enabling musicians to obtain 95% of the income.

PeerTracks also introduced the concept of "Notes", which are ICO tokens associated with musicians. Notes do not give fans any shares, but fans can buy, sell, and trade notes through downloading content and blockchain data dissemination, which increases the value of the notes. Musicians can also use this method to identify their super fans and provide them with rewards, such as free concert tickets.

Notes gives musicians greater exposure and convinces fans to stay on the platform for a long time. It also creates a reasonable prediction market to discover rising stars in the music industry through the value of notes.

Challenges of blockchain implementation

However, it is too early to say whether the above effects can be achieved now, because most platforms have not yet started to implement this business model.

However, blockchain-based music solutions must overcome numerous challenges, including the migration of old licensing and copyright information to new platforms.

Audio Network worker Hawn said:

“Music labels, big and small, have failed to properly register artists’ work. These contracts are always very complex and have no clear standards. They are often ignored and implemented by interns and IT departments. When you want to move some of the infrastructure to the blockchain, it is very difficult to implement and it costs a lot of money.”

To this end, Hawn stressed that it is very necessary for relevant departments to unite on such blockchain-based solutions, rather than for their own interests.

He also said:

"This transformation can't be magically accomplished overnight by someone like Steve Jobs. It has to be solved by laying the foundations one brick at a time, rather than building a new music industry."

Hawn hopes to get support from MusicBrainz, a nonprofit open encyclopedia platform that collects music metadata, to improve the data opacity that currently exists in the music industry.

Blockchain may not be a panacea for the musicians who are currently troubled, but it can provide certain compensation for their talents. Whether they are amateur singers or platinum record stars, they can profit from it, which has profound significance for breaking the current industry deadlock.

As Imogen Heap said,

“As the source of music, music creators should be the core of the entire music ecosystem, rather than starving on the edge.”

Ben Dickson is a software engineer and founder of TechTalks. He has written a blog about the discovery and solution of this problem and discusses related technical, industry and policy issues. For more information, please follow him on Twitter: @BenDee983