The music industry has changed a lot in the digital age. Streaming makes up a large part of the turnover for many artists. At the same time, businesses in the music industry have not adapted much to the digital realities facing them.

A panel of experienced players in the music industry discussed these complex topics at the recent Southern California Blockchain Summit hosted by SmartLedger. The main topic of discussion was how blockchain could improve the music industry.

The panel discussion included:

• Rick ‘Dutch’ Cousin (CEO of Centaur Enterprise Media);
• David Haskell (Advisor and Advocate in the Music Industry);
• Keith Cooper (Partner at Morrison Rothman LLP).

How the music industry has always worked

To better understand the problems that still exist in the industry, Cousin explained how the music industry works from an artist’s perspective.

He noted that artists approach a music label with their work and their personality. The label releases songs, takes care of managing the digital rights, tracking performance and reproduction and collects the royalties for these. After 12 – 24 months, the label then approaches an artist with an already completed report and accounting report and pays artists what is owed to them.

Cousin notes that this existing system is problematic in several ways, as musicians can often do little but rely on the label to do the accounting properly. He added that this is a deliberately vague part of negotiations and that artists are often disappointed with their earnings because their music performs worse than expected. As a result, many labels rely on the fact that artists or their partners would not audit the accounting, he said.

BLOCKCHAIN – BRINGING TRUTH TO THE TABLE

Blockchain not only creates transparency in terms of digital rights management, royalty collection and tracking but also completely automates the handling of this data. Notably, BSV blockchain can serve as a single source of truth.

Ward stressed that this means the whole music track can be stored on-chain and not just parts of it. This means that any playing of the music could be routed through the blockchain, creating new truths in real-time from the user’s side regarding a particular song. The data is also collected in real-time and stored immutably on the data ledger.

This helps remove many of the ambiguities from the recording and payment process as both parties no longer have to rely solely on forecasts and estimates about how a song or album performs, he said.

THE POWER OF BSV BLOCKCHAIN

A key advantage of the BSV blockchain is that a song can be stored entirely on-chain, meaning the only way to access this music is on the blockchain.

A platform that comprehensively applies this principle can thus show details such as:

• When a song is played;
• How long is being played for;
• The location/platform where a song is being played.

Accounting, digital rights management, royalty collection can also be recorded in real-time on the blockchain and made transparent while fully preserving the privacy of a user. BSV blockchain scales efficiently so that streaming music can be paid for not only in the standard practice of the subscription model but also by issuing micropayments.

With BSV blockchain, several platforms are trying to implement this principle. There are for example Soundoshi, Jamify and TicketMint. However, this technology can also be built into already existing platforms and services. Since the advantages can be realised without any trade-offs, it should only be a matter of time before they become established across the industry.

THE FUTURE OF THE MUSIC INDUSTRY

The panel discussion also focused on how music labels could continue to exist if accounting, tracking and digital rights management could be fully automated on-chain.

Keeping track of thousands of songs that are played in hundreds of movies, commercials and radio stations worldwide is too much for a single entity to do. Not only is this accounting very cumbersome and expensive, but often not very fruitful. As a result, record labels often rely on third parties to do the accounting for them.

This means they are faced with the same problem as music artists as the accounting and payments process remains deliberately vague. Therefore, record labels also have a significant interest in automating and streamlining digital rights and royalty collections.

According to Cooper, this would allow record labels to concentrate on their actual core competence which is to drive artist development and marketing. Cooper added that the payment upfront model would continue to exist, with record labels functioning as a kind of bank – investing in the artists and their success. This could also be performed more competently with blockchain, he said.