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The various factions that make up the global music industry must learn to trust each other if they are to benefit from ‘blockchain technology’ to make royalties payment more efficient, secure and faster.

That was a key conclusion among speakers at a Music 4.5 industry debate in London called Blockchain Technology and Data on Monday (12 October).

Blockchain technology is effectively a digital ledger that international financial services and legal cryptocurrency users apply to register, record and manage accurate and transparent money transactions.

In a fragmented industry notorious for the lack of transparency in business dealings, it can take an average of two years for royalties to reach artists and other rights owners after fans have paid for the music.  

Music tech experts at Music 4.5 argued that a standardized database system based on blockchain tech could be the most pragmatic solution. It would ensure owners of a musical work are properly registered and therefore identifiable for payment.

In fact, some argued, applying blockchain tech properly could mean seeing their music played on a TV show and learning how much they are owed in royalties via their mobile handsets in seconds.

“The end game is to have musicians on their own get their royalties as it comes in, hence using blockchain technology to create your own database,” said Evan Stein, founder of London-based metadata specialist Quantone (formerly Decibel Music Systems).

Maddening music monetization
Monetizing music rights is complicated and convoluted. The music business’ labyrinthine structure means that one artist’s recorded track requires a host of information (metadata) to ensure it is correctly identified wherever it is performed.

You need consistently precise spellings of the artist’s name and the song title. Also vital is the copyright registration of the songwriters, the lyrics, record labels, music publishers, the sales territories, the different rights (for the master recording, public performance), the different countries’ copyright collection societies, and even the actual recording studios used. All laborious to gather, but necessary to prevent someone else with a similar name collecting the paycheck.

In some worst-case scenarios, the rights owners never see a penny despite their music’s popularity. As one Music 4.5 speaker noted, the acclaimed 2012 documentary feature Searching for Sugar Man summed up the potential flaws. US singer-songwriter Sixto Rodriguez (pictured below), despite obscurity in his own country, had his recordings played and bought as hits for 20 years in South Africa without him knowing anything about it.

Blockchain to the rescue?
The robust infrastructure that blockchain technology offers to digitized databases could have helped track down the struggling Rodriguez and earned him some income.

“Blockchain technology offers clarity; it is usable, unambiguous and artists can always be located. And now that we would know whom to pay, we can concentrate on what to pay. The next move would be (recording) contracts that are amenable to this activity,” Quantone’s Stein added.

UK-based artist manager Jimmy Mikaoui, co-founder/managing director at independent music company Marathon Artists, supports blockchain’s potential. “It registers all transactions, sets rules for music licensing and ensures instant cash flow. This will enable artists to self-publish their music, and set the rules for where that music can be used,” he said.

Global database conundrum
Establishing such a solution is even more imperative because the emergence of hundreds of streaming and other digital music services means the number of performances for musical recordings that need to be tracked are now in the trillions.

In an era when we can access a song in one smartphone click, why are numerous music creators unable to make a living despite the huge popularity of recordings?

Paul Jessop, founder of media and entertainment consultancy County Analytics, noted recent disastrous attempts to find an answer via global databases packed with information on every song ever recorded.

Examples of the “graveyards with metadata tombstones” cited by Jessop include the Global Repertoire Database, set up by leading collective rights management (CRM) organizations and publishers but scrapped last year after an investment of more than £8m (US$12.4m). And the International Music Registry inspired by the United Nations’ WIPO (World Intellectual Property Organization) has its critics.

However, he is not totally disillusioned. There are centralized music copyright database systems offering hope, he said. They include ISWC (International Standard Musical Work Code) by CISAC, the global umbrella body for the world’s collecting rights societies; the US CRM organization SoundExchange; and California-based MusicBrainz, the free-to-use crowd-sourced “music encyclopedia” set up in 2000.

But another message repeated during the debate was that any database system can yield results only if those operating it can be trusted. As one speaker put it: “If a database is run by people who are crooked, it won’t work. And the music business is a low-trust industry. Alliances are fragile so lobbying pays, if you want to avoid paying royalties.”

Phil Sant, co-founder and chief engineer at Omnifone, the UK-based international cloud-technology digital music service provider, says overcoming trust issues in the industry will be tough.

“Had I known how difficult this industry could be 14 years ago, I would not have touched it with a barge pole. The industry didn’t realize then that the size of data that needed to be handled would be in the trillions. But the music industry has shown that getting together to form a consensus doesn’t work.”

Kieron Faller, general manager at international digital music platform Consolidated Independent, made a radical suggestion.

“Who do we trust? Maybe we should trust Apple,” he declared. “Since iTunes was launched (in 2001), it probably has the best standing database of sound recording rights in the industry. It is by far the most active in enforcing (data) quality. But can we trust a single commercial organization to be responsible for the whole industry’s needs?”

Music 4.5 was held at Clifford’s Inn, the London district that is home to nation’s leading law firms.

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