11 is louder than 10 spoke to Senior Lecturer in Popular Music at Middlesex University one half of duo Grasscut Marcus O’Dair to discuss Blockchain technology, which underpins Bitcoin, and the revolutionary impact it could have on the music industry.
How could Blockchain technology benefit up-and-coming musicians from across the world trying to build a career in music?
We think there are four areas in which the technology could (not necessarily will) be transformative: as a networked database for music copyright information; facilitating fast, frictionless royalty payments; offering transparency through the value chain; and providing access to alternative sources of capital. It’s not necessarily relevant only to emerging artists, although it’s easier to see how it might work for those who have yet to sign a deal than, say, for back catalogue on a major label.
In layman’s terms, what is Blockchain and how does it work?
The blockchain is the distributed ledger that underpins cryptocurrencies, which are digital currencies whose security is guaranteed through the use of cryptography. It emerged with bitcoin in 2008/9, but its potential – both on the Bitcoin blockchain and on other blockchains, such as Ethereum – is now understood as broader than financial transactions per se. Smart contracts – contractual agreement built on computer protocols, whose terms can be executed automatically – are one example of the ‘second generation’ blockchain functionality. It is important to understand that we are talking about a technology, as opposed to a product, and there are a variety of blockchains: permissioned as well as permissionless, private as well as public. This is where it can get a little complicated. What is important for our purposes is that data written to the blockchain is immutable, so it provides an auditable record of events that cannot be modified, and that an exact copy is maintained in a large number of independent locations: a ‘mesh’, rather than ‘hub and spoke’ structure. While databases have previously been discrete, creating silos of information, the blockchain offers a networked database.
Could it help new musicians circumvent record labels?
Some people have claimed that blockchain technology marks the end of record labels, publishers, collection societies and so on. And of course, recent technological developments in recording and distributing music mean that artists can already bypass labels. One reason that most don’t do so, at least if they want to operate on a commercial basis, is that they need the financial clout that more substantial labels can offer. Blockcahin technology could change that by providing access to alternative sources of capital: through new crowdfunding models; through increased transparency that could be more attractive to investors looking to model likely returns; and through ‘artist accelerators’ in which emerging artists receive access to resources, mentoring, facilities, networking and so on in exchange for a small stake in their future income, executed via smart contracts. However, another reason many artists choose not to bypass record labels is that they want to concentrate on making music, leaving other areas of those with the time and expertise. In reality, then, the demise of labels and other intermediaries seems unlikely, especially for artists who wish to achieve commercial success, although ‘splits’ might shift in favour of the artist.
What are the barriers to implementing a Blockchain-based royalties system?
There are issues with cryptocurrencies themselves – for instance scalability, and also the legal aspects of ‘smart contracts’ (which, as is sometimes pointed out, could be dismissed as neither contracts nor particularly smart). There are environmental issues with the ‘proof of work’ model used by Bitcoin, which involves a process called ‘mining’ that requires a large amount of computational power. And then there are problems relating to adoption in the specific case of music. One problem is user experience: in most cases, this technology isn’t yet very easy to use. There are also questions around how disputes would be resolved. Biggest of all, perhaps, is that fact that most people don’t understand it very well, and some regard it as a threat.
When is the earliest you can envisage such as system being used?
For music, one recent estimate put it at 10-15 years. But I suppose it depends on quite where we mark the start point.
In the meantime, what steps can musicians take to ensure they get a fair return from their endeavours? On what platforms do you recommend they share their music?
It’s difficult to say. YouTube is often slammed in this regard, yet some ‘YouTubers’ out there are earning a fortune. I’m not saying they’re representative, but they do exist. More important than anything is a diversity of revenue streams, with recorded music simply one piece of the pie.
Finally, what role do you and your Middlesex colleagues have to play in shaking up the music payments system? What are the next steps in your research?
Blockchain has become a buzz subject – the default panel topic at conferences this summer – yet the debate between ‘for’ and ‘against’ camps has at times seemed black and white: evangelists with a start-up to promote versus incumbents who can be very defensive. There is a role for academics somewhere in between, and in working towards open source standards, like the exciting new Open Music Initiative, of which we are a member. But nothing works alone here: there are a number of industry partners in the OMI, and we’re working with industry partners in our own research too. Next up? We’re working on a couple of projects that develop the ideas in our recent report and hopefully extending our scope beyond music to other creative industries. We’re interested in collaboration, with academic and industry partners, so I’d encourage anyone interested to make contact.