Nurturing the Creation of Music Through the Blockchain
The music industry still functions on an infrastructure that dates back to 1914, but blockchain technology could help to revolutionize how artists get paid.
According to a recent report from the Financial Times, music streaming is set to overtake CD and vinyl as the largest generator of income for British record labels in 2017. The report states that as more people opt for subscriptions to streaming services such as Spotify and Apple Music, revenues in the sector were pushed to a five-year high last year. Total income generated by the U.K. music industry increased by 5 percent to £925 million ($11.6 million) in 2016, from £881 million ($11.1 million).
Yet despite the popularity of the music industry, musicians often find themselves unfairly compensated.
To rectify this problem, the Open Music Initiative (OMI) and Ujo Music, among others, are attempting to change outdated modes in the music industry to ensure long-term sustainability, with the intent to use blockchain technology to support the creation of music.
Read our first article in this series: How the Blockchain Lets Musicians Connect with Fans (and Get Paid)
Open Music Initiative
Launched by Berklee College of Music’s Institute for Creative Entrepreneurship (BerkleeICE), in partnership with Context Labs and IDEO, and in collaboration with the MIT Media Lab, the Open Music Initiative (OMI) is a nonprofit initiative that is leading its more than 160 global industry members to develop open-source protocols by using blockchain technology, in a federated music ecosystem. Some of the members include Universal Music, Warner Music, Sony Music, Spotify, Intel, Viacom, Red Bull Media, YouTube and Context Labs, as well as blockchain-related startups such as dotBC, BigchainDB and ConsenSys/Ujo.
On an OMI blog, Dan Harple, who is the co-founder of OMI, the founder and CEO of Context Labs, and a trustee of the Berklee College of Music, said that the “accelerated growth of the Internet [has] radically changed the way everyone consumes media.” Imagine then the time and effort it takes for a record company to collect the small transactions from the trillions of times a song has been streamed before any royalties can be distributed to an artist.
“OMI and many of its members believe that many new technologies, such as distributed ledgers, blockchain, etc., can be applied to radically simplify the way music rights owners are identified and compensated,” he said, speaking to Bitcoin Magazine. “[This results] in sustainable and new business models for artists, entrepreneurs and music businesses alike.”
Through its OMI Method, which is considered “unique” and “different by design,” according to Harple, OMI has created an ecosystem that ensures it has the right representation involved as it works closely with music creators, producers, musicians representing organizations, and music creator management companies.
An important lesson learned along the way was that for many OMI members, a decentralized, federated ecosystem was the best.
“Decentralization allows for company-to-company interactions and enables everyone to maintain control and ownership of their respective data, while being able to decide who to engage with and which data to exchange,” Harple said.
This culminates in the open-protocol API spec that the OMI is working on, called MVI 1.0, or the Minimum Viable Interoperability. In review with its members, it will enable all music ecosystem players to engage in an open, federated model, achieving many of its goals, including to help assure the correct compensation for all creators, performers and rights holders of music, thereby providing a productive field for the creation of music worldwide.
“This federation will then enable interlinking of copyright and licensing between composers, songwriters, PROs and publishers across territories,” said Harple.
In the summer of 2015, blockchain startup platform Ujo Music launched Theproblem.wtf to start a conversation focusing on the problems circulating around the music industry. With an infrastructure dating back to 1914, the “internal plumbing” that underpins the music industry has remained unchanged; in the meantime, however, digitization and globalization have changed the way we consume and listen to music, says Ujo.
Ujo Music teamed up with Grammy-winning British singer and songwriter Imogen Heap to release her song “Tiny Human,” which debuted in October 2015, on the Ethereum blockchain. Through the prototype, users purchased licenses to download, stream, remix and sync the song so that each payment was divided on the blockchain and sent to Heap and her collaborators.
“After releasing the demo to prove what is possible with blockchain [technology], we then spent most of 2016 diving into the problems of the music industry and trying to discern what problems we were actually solving,” Jesse Grushack, product manager at Ujo Music, told Bitcoin Magazine.
Ujo is aiming to shift the power back into the hands of artists with the launch their platform later this year. Ujo wants its platform to empower artists with quick payments, to provide them with a place for their music that is rightfully theirs and to enable them to interact more closely with their fans.
However, while a neutral backbone would be of benefit to the music industry, the adoption of it remains a challenge. Not only that, but the Ethereum blockchain is still in the early stages of its development, with Ujo testing concepts and a technology that haven’t been tested before.
Yet Grushack is confident that Ujo can provide a valuable service for artists by focusing on solving problems of ownership rights. It has already attracted a growing list of artists to be part of its beta.
“If we can’t solve ownership of rights, then we have failed our main goal, [and] without solving this issue we wouldn’t be different from any solution currently out on the market.”