Blockchain: The new messiah for musicians?

Well, streaming services are making good progress: paid streaming subscriptions crossed, globally, the 100-million mark last December. Spotify controls almost 43 per cent of this market, followed by Apple Music (over 20 per cent). But, courtesy digital revolution, the recording industry has become a mixed-format affair. There are myriad forms of music distribution now: streaming, downloads, CDs and vinyl.

In 2016, the recording industry’s nearly $16-billion revenues came from multiple formats: digital revenues accounted for 50 per cent of revenues, physical format sales for 34 per cent, performance rights for 14 per cent, and synchronisation for 2 per cent.

That said, the music industry still stares at an uncertain, chaotic future, very different from its heydays in the 1970s and 1980s. For instance, Adele’s album, “25”, sold about 6 million copies in its first month: it was not available for streaming. But then Red Hot Chili Peppers’ ‘Blood Sugar Sex Magik’ sold 13 million copies in 1991!You get the drift.

And in this new era, creative artists are a confused lot. They often end up being offered zip for their work as they are vulnerable in an environment where tracking digital sales, streaming etc. are complex. Collaboration also becomes very difficult.

There is an emerging strand of thought now, reflected in a recent HBR article by Grammy-winner Imogen Heap, that a blockchain-powered rights and payments layer could help musicians license their works and collaborate with musicians, users and businesses across the globe and earn revenues. Usually, songwriters, producers and musicians have no idea how their royalty payments are calculated because they don’t have access to data on how and where people are listening to their work.

Exactly. Paul McCartney recently sued Sony; so did Duran Duran (the band lost it) and Taylor Swift had a wrangle with Spotify. All these highlighted the artists’ demand for transparency. It’s here, says Heap, that blockchain technology can help create a globally verified registry (there is none, as of now) to which they can upload works via blockchain-verified profiles.

For the uninitiated, blockchain is a distributed database or a digital ledger that powers services like Bitcoin. It is a chain of digital blocks containing digital data, which has information about all the transactions it involves, right from the start to the latest. In the music industry, this will help artist’s track the dissemination of their works.

Heap says blockchain technology has a few advantages. First, each party on a blockchain has access to the whole database and no one controls the data. Second, communication occurs directly between peers instead of through a central node. Blockchain also offers ‘transparency with anonymity’: every transaction is visible to anyone with access to the system. Yet, there is anonymity as transactions occur only between blockchain ids. And once a transaction goes into the database and the accounts are entered, the records can’t be changed. Finally, given the digital nature of the ledger, users can set up algorithms that automatically trigger transactions between nodes.

Yes, but it’s still early days. In all likelihood, the industry may not like the ‘openness’ involved in this project. But the power of blockchain technology is evident: look at how it is transforming the world of global finance. If the music industry continues to ignore it, it will eventually have to face the music.

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