How does blockchain, which has moved other people's "cheese", change the music industry?

The music industry has been in constant turmoil since the launch of the Napster music-sharing platform in 1999, with revenue skews, lack of transparency, piracy issues and battles over profit sharing.

Music companies hate streaming services, streaming services hate file-sharing services, and just about all artists and content creators hate the idea of ​​getting so little in return for their hard work.

With so many competing interests, it can seem like no single service or business model will satisfy all stakeholders. But now, after years of enduring a thorny and complicated relationship with the tech sector, the music industry may finally have found an opportunity to move in a positive direction: by leveraging blockchain technology.

Blockchain technology has already attracted the attention of a large number of investors and professionals from all walks of life, and is now showing promising signs of being able to transform the music industry in a way that suits everyone’s needs.

Why is blockchain a great technology for music distribution?

At its core, a blockchain is a distributed ledger that verifies and registers transactions without the need for a central authority. This ledger does not belong to any one person - it is propagated across the nodes that make up the network and is publicly available to everyone.

The information stored on this ledger is linked to each other through cryptographic hashes, which makes the information irreversible and tamper-proof. In short, this means that all parties can safely exchange data, currency or other valuable things peer-to-peer.

In the music industry, blockchain has the potential to transform the distribution and monetization of music, as well as the relationship that artists have with their fan communities.

First, music can be distributed on a blockchain ledger with a unique ID and timestamp that is somewhat unchangeable. This approach solves the historical problems of digital content being downloaded, copied, and modified. Each record can store metadata containing copyright information in a transparent and unchangeable way that everyone can see and verify. This ensures that you can get paid when your content is used.

Blockchain technology can revolutionize the monetization of music. Music infrastructure is based on smart contracts and programs, and can run on the blockchain along with payment transactions.

Blockchain-based cryptocurrencies such as Bitcoin and Ethereum enable micropayments that are inefficient with traditional payment media due to transfer costs. Blockchain can therefore support a new way to provide on-demand music services. Users can pick the records of their choice and immediately reward stakeholders with the cryptocurrency underlying the service.

Finally, one of the benefits of blockchain ledgers is that they enable a more direct relationship between creators and consumers. Composers and artists will no longer have to go through purchasing platforms and financial brokers - who usually take a large portion of the revenue - they can be compensated directly every time their songs are played. This will undoubtedly be a boon to amateur producers who do not have the support of major record companies.

Startups and musicians embrace blockchain technology

Companies like Benji Rogers’ online music platform PledgeMusic have released a comprehensive roadmap for the Fair Trade Music Database (FTMD), a global decentralized blockchain ledger that will address issues of ownership, payment, and transparency.

Creators will be able to upload their music and its associated metadata to the ledger. Businesses and consumers will be able to search and play the music of their choice from the ledger, while smart contracts will ensure that the use of the content is automatically paid to the owner. The database will store .bc or 'dotblockchain' records, which Rogers describes as 'a codec that cannot separate copyrights.'

PeerTracks is another music startup that is making a big bet on blockchain as it prepares to launch its own platform. PeerTracks is an artist equity trading system that makes it easier to manage royalties and revenue, especially for artists who can’t afford to pay someone else to manage it. The system leverages the MUSE blockchain, a ledger designed for the music industry.

The company claims PeerTracks will enable artists to instantly claim 90% of sales revenue, rather than the 15% they currently receive.

PeerTracks has also introduced the concept of an 'artist token', a limited, tradable cryptocurrency that artists can distribute to fans, which will find value in the creator's popularity. The higher the demand for this cryptocurrency, the higher its value will increase. According to PeerTracks CEO Cedric Cobban, this token system 'can be thought of as crowdfunding, fan engagement, talent discovery, and community building like we've never seen before.'

Another blockchain startup, BitTunes, hopes to address another problem — digital music piracy — with a carrot rather than a stick approach, said Simon Edhouse, managing director of the company. The company offers a peer-to-peer file-sharing platform based on Bitcoin that enables ordinary people to distribute their own digital music — and make money from it.

Last year, musician and songwriter Imogen Heap began working on a new music ecosystem she calls Mycelia. The platform, based on blockchain technology, will be able to pay artists directly, giving them more control over how their songs and related data circulate between fans and other musicians. She describes the work as "an attempt to take the power away from the top down and give it to, or at least shift it to, the artists to help them shape their own future."

Is blockchain the silver bullet for the music industry?

Like any solution, blockchain is not the best solution for all the problems facing the music industry. But at least the technology can level the playing field somewhat. Artists, composers, performers and musicians – the real owners of the industry – will be the main beneficiaries, as they will finally be able to own their work and be rewarded for their efforts.

However, not everyone is welcoming this, especially those in the music industry who profit from a lack of transparency, or large technology companies that prefer monopoly to sharing. If blockchain gains traction and real development in the music industry, conflicts may ensue.

However, Rogers explains in a follow-up to his original article,

“The money on the table is dwarfing the money being made off the table.”

That is, a transparent system would generate more revenue and create more opportunities than the actual damage it would cause.