Blockchain is revolutionising the way companies handle digital data, contracts, money and transactionFor the music business, streamlining these areas could completely transform the relationship between artists, labels, managers, publishing companies, and streaming services—a relationship which has been somewhat rocky over the last few years.
The music industry has gone through a big change in the last decade due to the growth of the Internet and the availability of a number of streaming services over the Internet. This is impacting everyone in the music industry-artists, labels, publishers, songwriters and streaming service providers. The process by which music royalties are determined has always been convoluted one, but the rise of the Internet has made it even more complex giving rise to the demand of transparency in the royalty payments by artists and songwriters.
The current player’s records labels and publishers are benefiting from what I can call a managed Chaos because it takes months and years to pay out royalties to artist and composers, in some case they receive a peanut or nothing all for the starters.
Music is one of the most complicated copyright environments with one of the worst database practices.
Currently, the information’s related to music composition, songs are located in over five thousand individuals’ publishers owned databases which are certainly not an efficient system.
I believe there should be a rethink music initiative in Ghana and the world as a whole to give birth to a Creative Entrepreneurship that will spend time in examining the practices of the music industry in its report “Fair Music Transparency and Payment Flows in the Music Industry”. According to this report, 20% to 50% of the money generated by streaming services never goes back to those artists whose songs were played. The relationships among rights, royalties, processes, and participants are hopelessly complex and outdated.
It is important to note that royalty payment distribution is overly complicated-money only makes it to artists and songwriters after passing through a number of intermediaries, each with its own accounting processes, timelines, fee structures, and reporting standards. This means that artists and songwriters are completely oblivious to their rights and how they are paid for their performances.
A quick primer: Every time a song is streamed or played; two types of royalties are paid. The larger chunk goes to the performing artist or, more precisely, to the company that owns the rights to those royalties, usually a record label. The other chunk goes to the songwriter or, again to the company controlling the rights. Streaming service providers sometimes do not even make direct payments but rather rely on organizations that manage royalties to large groups of copyright owners. A part of the royalty payments goes to these intermediaries.
We can clearly see the reason why most our artist in Africa are poor even though they have the talent and they are using it to make people happy. We can’t sit and watch we have to rise up above all the limitations and provide solutions.
There is a need in the music industry eco-system that tracks songs being played and various rights associated with each played song. Also, there is a need to link this to a payment method. Music Industry basically needs simplified rights ownership Information: who made it and who owns the rights to it. Currently, there is no central database available that keeps track of this information regarding music. In reality, the information about who did what on a given record almost always exists in distributed databases that do not sync with each other.
This is where the Blockchain can play a role by maintaining a comprehensive, accurate distributed database of music rights ownership information in a public ledger. In addition to rights ownership information, the royalty split for each work, as determined by “smart contracts” could be added to the database. For instance, each song, rights-holder, songwriter and payer would have its own unique address on the ledger. The “smart contracts” would define relationships between different stakeholders (addresses) and automate their interactions. Each time a song is played, the money would be automatically split among the stakeholders according to the set terms, and each stakeholder’s account would instantly reflect the additional revenue.
A solution like this will promote talent and also give an opportunity to people in the industry to benefit from their hard labour. Your talent is useless if it only helps others and doesn’t add value to your life. Let us embrace the blockchain Technology.
Spotify was sued in 2015 for $150 million by a group of artists who claimed that the service had reproduced and distributed their music without permission to Tidal over inflating streaming numbers in 2018, the lack of transparency across the board seems to be a major issue that is holding the industry back. The good news is, emerging technologies are providing new innovative solutions to clear the murky waters of the business. And many labels, both public and privately owned, are listening and adopting.
For instance, a recent report by Deloitte Private found that 45 per cent of private companies are evaluating blockchain and expect to implement it at some level in the coming year. If this is any indication of how music companies are preparing for the future, the music industry could see a much more transparent business that opens up new advance models, more transparent royalty payout systems, and new artist monetization opportunities built around blockchain technology.
One area where there is massive opportunity lies in the use of cryptocurrencies. By creating a cryptocurrency that ties to a specific song or album, artists could create a virtual “stock market” where fans could buy into pieces of the song’s rights while receiving money accrued from the streams. This compound revenue model would be handled by the security of smart contracts built within blockchain technology. Solutions like this are creating new opportunities for artists to monetize their creativity.
Overall, the music business must scale blockchain technologies if the industry wants to create a more transparent playing field for the creatives of the business.