Could Blockchain save the music industry billions?
25 April 2018
The music industry is growing at pace for the first time in years, with global digital music leading the charge with revenues worth US$14.5 billion, forecast to grow at 11.8% CAGR to US$18.6 billion by 2021. Is the industry ecosystem keeping up with the pace?
You call up your favourite playlist on your smartphone when you start your run. You tell your smart speaker to play your favourite song while you’re cooking dinner. Your friends in New York, Tokyo or Liverpool sends you the link to a new artist or song that reaches you in nanoseconds. In all kinds of ways, music listeners have made a smooth transition to the 21st century.
Meanwhile, in the parallel universe of the music business ecosystem, it’s still the 1990s in certain respects. Music ownership is registered country by country. Sales are far from transparent. Royalties still travel to artists along very slow and circuitous paths, with many opportunities for error as a payment makes its way from a digital download or stream in Sydney to an artist’s bank account in Seattle.
Progressive change in mechanical copyright laws
Significant steps could be made through the Music Modernization Act on the mechanical licencing side (which includes streaming and on-demand mechanicals) in the US. As it stands, this covers Spotify, Apple Music etc. who pay both performance and mechanical rights to artists and rights owners. For the first time in years, the music industry and intellectual property regulators have a real opportunity to build on this and other demands in the market to bring the music business into our millennium. The bill, which passed the House Judiciary Committee on 11 April, by a 32-0 vote is now on track to go to the House. If it passes the House and Senate, and the President signs it, a new era will begin for music creators in the US. A key provision of the bill is the creation of a central exchange that will allow artists and songwriters to track usage and collect royalties when digital services use their work. Initially, this will be good news for songwriters and artists in the US, but it could mark the beginning of something wider if it’s built in the right way.
This bill by definition, focuses solely on mechanical rights. However, demand led initiatives are taking place on the performance rights side. ASCAP, PRS for Music and SACEM are currently exploring the use of Blockchain in a joint initiative to create a shared system for managing music copyright information across their jurisdictions for performance rights. The times, it seems, are a-changin’.
Why does it matter? Blockchain has the potential to save the music industry billions by revolutionising the rights and royalties process, ensuring artists, writers, publishers and everyone in the music industry value chain is paid appropriately. The financial services industry has been quick to see and implement the benefits of Blockchain, coming together to develop a standard approach across the Global Financial Services sector through the platform Corda. The Insurance industry has also launched B3i, the Blockchain Insurance Industry Initiative, which has reduced payment and settlement times from weeks to days. A Blockchain registry for music rights would be tamper-proof and error-resistant because a change made once would be a change made everywhere. Building a global music rights system in Blockchain should make it easier for all parties to collaborate across borders, bringing the day we see an efficient and fair global music market a little bit closer.
At PwC we see a lot to like about these distributed ledger systems and we also understand the challenges of adoption; we are the first Big 4 to offer Blockchain audit services and recently accepted bitcoin payment for our advisory services.
Lately, a lot of the public debate about technology has framed it as a zero-sum game in which more work for the robots means less work for people. But technology done right can be a win for everyone. Here, better rights management will mean more reliable payment for artists, and in the end, a fairer playing field for artists will mean more music for all of us.
Click here to find out how we believe blockchain could help the music industry.