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Bitcoin for Rockstars: How Cryptocurrency Can Revolutionize The Music Industry


December.15.2014 0 Comments

bitcoin-rockstarsThere is an incredibly boring problem in the music industry for which bitcoin offers a potentially fascinating solution. In fact, I think this might be one of the coolest and most immediately worthwhile applications of distributed ledger and payment network technologies such as bitcoin.

The problem is simply that no central database exists to keep track of information about music. Specifically, there are two types of information about a piece of music that are critically important: who made it and who owns the rights to it.

Right now, this information is fiendishly difficult to track down, to the great detriment of artists, music services and consumers alike.

Decentralized, open-source, global cryptocurrencies such as bitcoin and Ripple (full disclosure: I am an investor in Ripple Labs) offer a model for how we might address this bedeviling status quo.

By applying the technical breakthroughs of these networks, we can sensibly organize data about music for the first time in human history and, more importantly, reinvent the way artists and rights-holders get paid.

The credits conundrum

The first category of interest is “credits”. Almost all recorded music is a collaboration between songwriters, singers, musicians, producers, recording engineers, mastering specialists and others.

Everyone knows who Adele is, but few people know that Chris Dave played drums on her bestselling album “21”. And you won’t discover this great musician’s contribution by buying the song on iTunes or listening on Spotify or YouTube. It’s a shame.

In the past, the lusciously expansive packaging and liners of vinyl records and later CDs were the paradise of behind-the-scenes talent. Anyone buying an album could page through the notes and find out who contributed what to the music. But in our digital-first market, these personnel are orphaned into obscurity.

On today’s digital services, all one can see for a song is superficial data: the main artist’s name, who wrote the song, the name of the album it’s on, and the date of its release.

It’s much more difficult to get work if no one knows that you were responsible for that amazing drum performance or that brilliant mix.

As Spotify’s artist-in-residence, I’m extremely interested in fixing this problem for the unsung heroes of recorded music. But I’ve now witnessed the challenge from the inside.

It’s not that services such as Spotify and other retailers don’t want to know about the music on our platforms; it’s that we struggle to obtain it. Artists and record labels have sent us over 30 million songs. Although we ask that they package it up for us in an organized and informationally rich package, what we actually receive varies widely.

Digital services rely on a number of third parties to help piece together better information about their catalogues.

For example, ROVI has a massive database of credits information that it will, for a price, share with customers in a highly controlled manner. Others, such as MusicBrainz, crowdsource data and share it freely or at a small cost. A number of other corporations, unions and nonprofits also keep a tight grip on music metadata.

For instance, in the US, the American Federation of Musicians and SAG/AFTRA are unions that represent large numbers of musicians and singers, and they attempt to keep tabs on their members’ every recorded performance. They care about this information because it allows them to ensure that their members receive union-negotiated fees (and that the unions themselves, in turn, receive their dues).

In short, the information about who did what on a given record almost always exists somewhere in the world, but it is typically fragmented between a large number of databases that don’t sync with each other, and whose owners have conflicting views about what should be public and what should be private. This forces digital services such as iTunes and Spotify to invest internally in cleaning up and organizing the information they receive, a burdensome administrative necessity.

The riddle of rights

Though getting credit for one’s work is a big deal, getting paid for it is an even bigger deal.

Let’s look at Katy Perry’s “Dark Horse,” one of the biggest songs of the past few years, as a case study. From a legal point of view, the first thing to know about a song is that it’s not one thing. It encompasses a diffuse constellation of conceptual properties, each with numerous potential owners.

The biggest two buckets of rights are 1) rights in a song or composition and 2) rights in a recording of a song.

“Dark Horse,” for example, was written by Perry, Max Martin, Juicy J, Dr Luke, Cirkut, and Sarah Hudson. Each of them theoretically owns a piece of the underlying song, although they can assign their ownership to one or more third parties. Because Perry first recorded the song, she owns that recording. Whenever someone else records the song after Perry, that individual will own that recording, but the six original writers will still own the song itself.

That being said, artists and songwriters often sell these rights to record companies and publishing companies. Perry, for instance, has a publishing deal with the company Warner/Chappell (a subsidiary of the Warner Music Group) and a record deal with Capitol Records (a subsidiary of the Universal Music Group). When these rights generate earnings, contracts between Perry and her partners determine how these earnings are shared.

But publishing and recording rights are just the beginning. When Perry and her collaborators wrote “Dark Horse,” they also originated additional rights in the public performance of the song. These rights entitle their owners to be paid when a song is publicly exhibited – when it is, say, played on the radio, performed live or broadcast over the speaker systems at the Staples Center or Chipotle.

The slicing and dicing of rights doesn’t stop there. For example, Katy Perry might choose to sell one company the rights to her general publishing but another company the right to make sheet music for her songs. She can also assign rights to different owners in different countries.

In short, if someone writes and records a song, they effectively create a basket of rights, which they can sell to all sorts of actors all over the world.


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