In this second article by Allen Bargfrede, he shares us insight on the blockchain tech and its application into the music industry. For many, blockchain tech may seem a difficult piece to tackle, but an essential part in making processes flow. Our own crypto enthusiast Teemu Laurikainen shared his thoughts on cryptos already earlier, but how does this new and commonly unknown tech affect music?
Similar to the world-wide-web in 1994, blockchain technology is rapidly demonstrating the potential to disrupt our day-to-day lives. Most widely known as the technology that powers cryptocurrency Bitcoin, the uses of blockchain tech are still unfolding, and while it is a nascent technology, it’s not a fad and it’s not going away. Adoptions in the future may not look exactly as surmised, but the technology is too important to simply fade away.
Let’s check cryptocurrencies first
The value of Bitcoin is up almost five-fold since the beginning of 2017, starting the year at around $1,000 and peaking in August at $4,950. Bitcoin’s price is 91% correlated with Google searches for Bitcoin. In other words, as bitcoin becomes more well publicized and well-known, as evidenced by searching on Google, the price continues to increase as investors place bets on the cryptocurrency.
Meanwhile, the cryptocurrency market as a whole has swelled this year from $10bn to $150bn, with many companies choosing to offer an Initial Coin Offering (ICO) of their own tokens, as a means to quickly raise money and skirt the traditional venture capital roadshow, leading many to question if there is a bubble.
Blockchain works by storing information on distributed ledgers, which means copies of the log live in blocks on all computers on the “chain”. Like a permanent change log, the ledger can show amendments going forward but information will never be deleted because it exists across the network instead of in a single central database. There are multiple blockchain offerings too, ranging from the public bitcoin blockchain to offerings from companies like Intel and IBM. Some criticism has been directed at blockchain for being an “open network”, when in fact public and private blockchains can co-exist, protecting some information and making public others. Banks are looking at the technology for financial transaction through the R3 Consortium.
Blockchain tech in the music industry
By now, you’ve likely heard of the potential of blockchain technology to disrupt the music industry market as well. But how? Blockchain has many potential uses, but through my work on systems thinking and experience design with Thought5, I believe there are three key foci for now: 1) rights management, allowing information about ownership of copyrights to be shared, 2) ticketing, and 3) fan and data management.
On the rights side, there are more than a few companies focused on how blockchain tech can add efficiency. Mycelia, a project of Imogen Heap, released the first song onto the blockchain in 2015, and now is focused on promoting the potential uses of a “creative passport”, which contains a variety of information about a particular artist on the blockchain. JAAK, based on the Ethereum blockchain and currency, allows content creators to license their content for various uses and receive payments via smart contracts (a key feature of Ether). Finally, Dot Blockchain Media (disclosure, I am a board member of dotBC) has focused its effort on a new file format for the music industry, which would place media files in a “wrapper” that contains the rights information that references the blockchain. The solution would allow distributors and users of the music to know who the owner(s) are, and therefore, who to pay, resolving conflicts through trust and authenticity scores.
Other blockchain and music rights initiatives have already been deployed by larger existing entities. Mediachain was bought by Spotify earlier in the year, in what was widely seen as an “acqui-hire” of its technology staff. Performing rights organizations PRS, SACEM, and ASCAP recently announced the results of their proof of concept where they used blockchain tech to match their International Standard Recording Code (ISRC) with International Standard Musical Work Code (ISWC) across their relative databases.
Key to the substantive use of blockchain tech to manage rights is adoption – past efforts like the Global Repertoire Database in Europe broke down over control of data issues. I am optimistic, however, that many parties in music now realize that perhaps collaboration on data issues can benefit everyone, and blockchain tech, may succeed where prior efforts have failed by ensuring data is distributed rather than centralized.
Meanwhile, the open and transparent nature of blockchain tech may also revolutionize the ticketing market, which has been plagued by problems of ticket resale for decades. Aventus and Ticketchain, two startups focused on blockchain for ticketing, believe the technology can better track the “history” of a ticket and therefore reduce unwanted ticket resales and ticketing fraud. Ticketchain’s ethereum-based solution uses smart contracts for transactions. Tickets are electronic-only tokens on the blockchain and therefore cannot be transferred outside the blockchain “walled-garden.” Meanwhile, using Aventus, secondary tickets are sold on the Ethereum blockchain and tied to identities which must be verified at the show. Promoters can decide in advance which categories of tickets are sellable on resale markets.
Fan and Data Management
Finally, the use of blockchain tech to more deeply connect fans and artists continues to emerge. Token.fm uses jukebox-like tokens to allow fans to engage directly with artists. The blockchain-based technology allows the user to “unlock” access and opportunities from their favorite artists. Meanwhile, Vezt is planning an ICO to allow fans to buy fractional shares of songs on the blockchain, which can then track royalty distribution. Other solutions are sure to emerge as well.
All of these solutions are still in a startup/development phase, and the final result disruption of the music industry by blockchain tech is still very much up in the air. Adoption and evolution of uses may take time; however, there will be deployment in some form – the technology is too important to merely fade away. I believe it will invade our lives through almost every transaction-based system – inside music and out.