Blockchain Revolution

Auction/Dynamic Pricing Mechanisms to experiment with promotions and versioning of content, even peg subsidiary rights royalty percentages to the demand of a song. For example, if consumer downloads of a song spike, then an advertiser who licensed that song for a commercial automatically has to pay more when the commercial runs.

Reputation System that culls data from a bitcoin address’s transaction history and social media, to create a reputation score for that address. Artists will be able to establish their own credibility as well as that of prospective partners in deal making, whether among artists as collaborators or between artists and consumers, labels, merchants, advertisers, sponsors, licensees, and so forth. Using multisig smart contracts, artists could refrain from doing deals with entities that don’t meet certain reputational standards or don’t have necessary funding in their accounts.

The key point of this new fair music industry is that the artists are at the center of their own ecosystem, not at the edges of many others. “I see a place for Spotify and YouTube. I see a place for curation, and I see a place for user-generated content,” said Heap. “I see a place for record companies because we still need people to sift through the hundreds of millions of hours of music, or billions of bits of music and art all over the planet being created every day.”²² With software templates, they can engage creative collaborators, the big music labels, the big distributors, and the many smaller intermediaries as they see fit on the blockchain.

The Self-Launched Artist: Signs of the New Music Paradigm

One of Imogen Heap’s friends, Zoë Keating, Canadian-born cellist and composer, has always controlled her own music. She owns all her publishing rights and the masters to her recordings. She carefully orchestrates her own marketing, sales, licensing, and distribution strategy. Given all the complexity mentioned above, we’re hugely impressed. “An artist like me couldn’t exist without technology. I can just record music in my basement and release it on the Internet,” Keating told The Guardian. For

her, the Internet has leveled the playing field for independent artists, but her experience with the big online music distributors has not differed greatly from Imogen Heap’s with the traditional labels. “This is not just an excuse for services to replicate the payment landscapes of the past. It’s not an excuse to take advantage of those without power,” said Keating. “Corporations do have a responsibility not just to their shareholders but to the world at large, and to artists.”²³

Keating was alluding to the new contract that Google’s YouTube presented to her.

It was wrapped in nondisclosure. For several years, she’s distributed her music on YouTube and monetized third-party uploads of her material using Content ID, a program that automatically alerts rights holders to instances of potential copyright infringement. Keating wasn’t concerned about piracy, file sharing, or royalties. To her, commercial streaming was a means of promotion, reaching new audiences, and analyzing usage data. The music aggregators and the hit makers were the ones who made significant money by offering complete catalogs through on-demand services.

Not her. The largest share of her revenues had always come from hard-core fans who’d pay from twenty dollars to a hundred for a new album. She would release new work on Bandcamp first, then upload it to iTunes, and finally make selections available elsewhere—YouTube, Spotify, Pandora. That windowing strategy—making content available exclusively in a particular channel for a period of time—had proven itself effective for her and her hard-core fans. She could thank her existing supporters and cultivate new relationships.

YouTube was launching a new subscription service, Music Key, where users would pay a fee to avoid advertising. If Keating wanted to continue monetizing her work through YouTube, then she would have to agree to YouTube’s terms: include her entire catalog, and stop windowing elsewhere. It was all or nothing. She knew that the independent labels weren’t happy either about the new licensing terms, but they were more upset by the financial repercussions. Keating wanted to maintain control over her music, on her terms.

She saw the potential of the bitcoin blockchain as a technology that could ensure that goal, starting with its transparency. “I just believe in transparency in everything,” she told Forbes. “How can we build a future ecosystem without knowing how the current one actually works?”²⁴ For example, on YouTube, Keating estimates that there are fifteen thousand videos—dance performances, films, TV shows, art projects, gaming sessions—that use her music as soundtracks without her authorization. She should be able to leverage all that enthusiasm for her work, but only YouTube knows exactly how popular her music is. Nielsen’s SoundScan is only one facet of a multidimensional picture.

Like Heap, Keating wants to register copyright and leverage copyright metadata on the blockchain. That way, people could more easily track her down as the

copyright holder. She could then track derivative works through the blockchain. A distributed ledger of music metadata could track not only who created what, but who else was materially involved. She imagines visualizing usage and relationships, calculating the real value of a song for dynamic pricing, and enabling ongoing micropayments to collaborators and investors without third-party black boxes like ASCAP or BMI.²⁵

Again, we’re not saying that there is no role for labels or technology companies, and that artists could just make it on their own in a purely peer-to-peer ecosystem.

Rather we’re talking about a new kind of music ecosystem centered on the artists, where they control their own fate and receive fair compensation for the value they create. Blockchain technology will not create a new standard for how artists get compensated. Instead, it will liberate them to choose and customize an infinite array of solutions that work for their specific needs and beliefs. They can give it away for free, or micromonetize everything—but it’s their choice, not the label’s or the distributor’s.

Other Elements of the New Music Ecosystem