Blockchain in the Music Industry - the Ecosystem

 Streaming is dominating more and more, with a doubling of streaming between 2014 and 2015. It’s clear that digital is king and will only continue to grow. According to Glenn Peoples of Billboard, “People are consuming more and more music yet less money finds its way to record labels and artists.” The music industry is a mass of counterparties that stand between the consumption of music by the fans and the artist. Figure 1 shows some of these parties, and is by no means exhaustive.      

Figure 1: Counterparties to a streaming service contract.

(source: https://www.flickr.com/photos/148573509@N03/30266407840/)

The ecosystem gets increasingly more jumbled as you look at contractual relationships between these entities. New artists may have a very limited claim to the content they produce and older artists may demand bespoke agreements to maintain control. With a reported revenue of $0.005786 per stream, the small paychecks going from the Digital Service Providers like Spotify and Apple is immediately trimmed by the intermediaries in Figure 1. The go-digital trend will only increase as more providers look to offer online music consumption methods.    

There are numerous initiatives in place to begin addressing the disparities between income for musicians pre-streaming to today. The spectrum spans industry consortiums like the Open Music Initiative with dozens of the largest companies to small startups toying with new innovations, all with the goal of repairing a broken system.    

While the list of grievances directed to the industry is out of scope for this post, the income reduction of modern artists has its roots in the poor management of metadata. A quick glance at the image above can provide insight into why. The most recent innovation garnering an excess of attention is called ‘blockchain.’ Applications of this technology are sprouting up left and right in almost every industry and music is no exception. Though Blockchain is revolutionary, calling on these new applications is like asking a young prince to rule a kingdom. There is much to be learned before we see true change in the way the music business operates.  

Berklee School of Music is spearheading a project called the Open Music Initiative (OMI). Panos Panay of the project notes  

incomes for all those involved in the music-making and producing process have dropped precipitously in the last two decades. There are many reasons for this…but one thing is clear: the infrastructure on which our business has operated for the last century is not adequate to address the new ways music is being produced and consumed today — and even more so, tomorrow. 

The OMI’s main objective is to establish a repository of rights ownership. Berklee, MIT Media Labs, and a dozens of partners are banning together to build this shared ledger, citing the advent of distributed ledger technologies as a catalyst to unite the industry. With most major industry stakeholders backing it, the OMI has partnered with Intel to stand up a distributed ledger using Intel’s distributed ledger offering - Sawtooth Lake.    

Mediachain is a startup looking to toss their hat in the metadata ring. The startup claims motivation by three insights: 

• We believe in a future of fully democratized self-publishing, but we also recognize that at the near horizon most entities publishing media and metadata will be organizations — of different scales (record labels, studios, collectives, archives, galleries, hosting services, media platforms, etc) 
• Systems that privilege “first to file” authorship claims exclusively cannot meaningfully incorporate the billions of existing works, and create unhealthy pressures for plagiarism and false claims, harming less technically savvy users
•  A fully open platform with the most accurate metadata provides network effect value to applications, creators, and consumers 

True to the claim made above, the first order of business for Mediachain is the metadata store. Handling metadata searches is the Resolver layer, and addressing conflicting statements about rights ownership is done through a combination of the Reconciliator and a Reputation System. Mediachain has a broader scope than the OMI. In addition to musical works published on Mediachain, it will make use of the IPFS to handle photographs and other digital media.   

Another initiative that has gained some notable traction in the ecosystem is the dot blockchain project. Benji Rogers, co-founder, wrote “No new technology encapsulates for me the potential for positive change for this suffering music industry more than the Blockchain.” Having recently released a large code base for the project to the public, the idea for the dot blockchain project was centered around the need for make more transparent the metadata surrounding musical works. Benji envisioned a new codec, similar to a .zip file, that contained all the information a consumer of the media would need to fairly use and compensate the artists. The host of this data would be a blockchain, with the actual digital media file being stored elsewhere.    

Monegraph is a project that began in mid 2014 with the pairing of Kevin McCoy with Anil Dash at a hackathon. McCoy was an artist who saw the ability of blockchain to establish ownership of digital media. It has since evolved into a sophisticated platform for monetizing and licensing digital media. Similar to Mediachain, Monegraph encourages the licensing of audio, video, images and documents. Of the aforementioned projects, Monegraph is the only one in a production setting – offering built in payment methods utilizing Stripe and PayPal.    

PeerTracks will offer a completely bespoke solution to the issue of content licensing, starting with the blockchain employed, Muse. PeerTracks aims to craft a marketplace for music licensing, music streaming, talent discover and retail purchases. While unlaunched, the project brings together two of the bigger startups in the blockchain industry, OpenLedger and CCEDK, to build the platform.    

Ujo Music built a high-profile demo in mid 2015 spearheaded by Imogen Heap. The demo showed the ability of the Ethereum blockchain to be used for royalty distribution directly through cryptocurrency inherent to Ethereum. After the demo, Ujo was largely quiet, emerging in August of this year with a blog post which stated  

it seems that the industry heavyweights would really like someone to clean up the global metadata problem. More importantly, we heard many recurring themes when speaking with artists: the situation is dire, and it’s becoming harder and harder to be heard in an increasingly crowded marketplace. 

The writer solidified Ujo’s stance on using the Ethereum blockchain for metadata management, and added their intrigue around the IPFS.    

An artist-leader in the blockchain space, Imogen Heap, took her experience with Ujo and pivoted to craft her own solution. Mycelia is her brainchild, and as of October 2016 is simply a website with a mission statement and some articles.    

Bittunes latest blog post is dated September 9, 2014 and the rest of the official site is about as dusty. Their android app was last updated October 2015 and the most recent press release dates November 2015. The platform is well described, and has a working app for uploading, streaming, and managing micropayments for audio files. One caveat is the work must exist entirely in the closed system of Bittunes, plus payments are handled exclusively via bitcoins.    

After the metadata problem is solved, the requirement of hosting the content comes next. Maintaining the theme of decentralization of control, a number of projects are looking to address the need for artists to upload their works for consumption.    

Storj, IPFS with Filecoin, Sia, and Maidsafe are applying cryptocurrencies, blockchain, and P2P protocols to improve upon the content hosting options existing today. The cost and speed they claim rival the most popular centralized options like Amazon. However, with no centralized point of failure, these solutions will offer a more resilient method to store data. A key selling point is the inability of the host to view an uploader’s content. This is guaranteed through end-to-end encryption and a process called sharding where nodes storing the data only receive portions of encrypted information, and only the authorized parties can piece the whole file together. Effectively these project aim to eliminate the data breaches centralized platforms suffer from.    

The music industry is failing its content producers. Very soon there will be a shift in methods of compensation and rights management. Be sure to watch these projects closely as they progress!