It’s Time For the Music Business to Start Embracing the Blockchain: Guest Post
"Let's not be blockheads," writes LaPolt Law, P.C. owner and creators' rights advocate Dina LaPolt. "We need to hop on the blockchain."
One thing I’ve learned in my many years in the music business is that the music industry is afraid of technology. With every new technology, from digital radio to the mp3, the music industry has dug in its heels resisting change, often at its own expense.
In the early 2000s when digital music was in its infancy, instead of embracing this new frontier, the industry rejected it, instead leaving the door open for piracy to set down its roots. Then later, again instead of embracing and harnessing the power of the new technology that made rampant piracy possible, many major companies poured millions of dollars into shutting down pirates through the slow and costly legal system. Even today we blame big technology for the downturn in revenue we’ve seen since digital music has overtaken physical product.
Don’t get me wrong — there is a HUGE DISPARITY between the royalty rates paid by tech companies and the royalty rates that music creators deserve. However, with technology growing faster than it ever has, it has become a requirement that we in turn do our part to adapt and stay educated. We just can’t afford to stay set in our old ways. It is easy to point the finger of blame at big technology companies that seemingly profit exponentially off the work of creators. Yes, these companies absolutely should pay more for the use of music, but we cannot ignore the fact that the technology community has some valid complaints. If those of us who represent music creators aren’t able to come together and find common ground with these companies, the only ones to blame for our ultimate failure will be ourselves.
Two main issues with payments in the digital age are the laws that do not protect creators and a lack of transparency in connection with payments to creators. Tech companies are only partially to blame for these issues — their low rates are in part due to government regulations and outdated copyright laws which make it impossible for today’s music creators to adequately earn a living, along with problems relating to accurately maintaining and tracking data.
Today’s music business is built around massive amounts of data — it is estimated that there is an average of 1.2 billion songs streamed every day. That’s 1.2 billion transactions that must be kept track of and accounted for to millions of rightsholders per day, not to mention all the digital song and album permanent downloads on top of that. Our systems, which were built around the accounting of physical product, were never intended to be able to process this volume of data.
Likewise, the information needed to pay those rightsholders is comparably vast and spread between thousands of sources. It doesn’t help that this information often gets lost, or incorrect information is provided to the services responsible for paying out digital royalties. This lack of information, or metadata, is what technology platforms often point to as the reason for not being able to properly make royalty payments. To make matters worse, labels, publishers and performing rights societies treat this information as proprietary and generally refuse to share it with those who need it.
Technology has the power to change this. Blockchain technology — that which is used in bitcoin cryptocurrency — can transform how we monetize digital music.
Blockchain is essentially a de-centralized ledger that tracks transactions over the internet (i.e., no one entity is responsible for maintaining the data). Its ability to support micropayments is perfect for the billions of transactions the digital music industry sees every day. The technology is also encrypted, so that each music file uploaded to the ledger would carry its metadata with it from every transaction. And because the ledger is decentralized and there is no single owner, the information held on it is accessible to everyone.
I applaud ASCAP for recently entering into this realm and hope others follow suit.
With all the problems creators face with the monetization of digital music, we cannot wait around for a change in the laws in order to give digital services the information they need to start paying the right people, and paying them in real time. Since I’ve been involved in policy making for the past several years, I understand that we can’t rely on governmental bodies, like Congress and the Department of Justice, to help solve all our problems. It is also not fair to put all the blame on technology for moving faster than we’re prepared to handle. Technologists can’t help us until we help ourselves — for example, by making data tracking more accurate and feasible for those who are responsible for payments.
We have got to come together in order to fix the music industry, and Blockchain is one important step towards accomplishing this goal. This is the new music business — where transparency and efficiency are required.
So get your shit together, people. After all, the music creators rely on us to protect them and monetize their copyrights to keep the money coming in. Sometimes it turns out that part of the solution might actually be within our own control.
Dina LaPolt is the owner of LaPolt Law, P.C. In addition to practicing law, LaPolt is a creators’ rights advocate and is one of the attorney advisors to the GRAMMY Creators Alliance and Songwriters of North America (SONA).