Can Blockchain Technology "Drain the Swamp" Inside the Music Industry?

It can be argued that those in the center of the music industry, the artists, will become some of the greatest beneficiaries of blockchain technology. There are many hindrances that artists face when trying to make a living from their music. Music needs to be created, produced, marketed, distributed, managed, copyrighted, licensed, protected from fraud, so on and so forth. These tasks are too complicated, time consuming, and cumbersome for artists to do on their own so each task is outsourced to intermediaries/middlemen/3rd parties, however you'd like to call them. This outsourcing creates too many members in the supply chain, each having to get paid. By the time everything is said and done, the artist's cut is too small and so is their say in the matter. Here are just a few intermediaries involved in the music supply chain: the publishers and the performance rights organizations, the producers and the studios, the venues, the concert tour organizers and promoters, the wholesalers, the distributors, and the agents, "each with its own contract, accounting, and reporting system".* 

To help reduce this adverse outsourcing, blockchain tech is here to give artists control of their music through blockchain based music platforms like Ujo Music and Mycelia. They can be viewed as all-in-one platforms that allow for most tasks mentioned above to be accomplished effortlessly, cheaply, and quickly.

Why the music industry needs to incorporate blockchain tech

Today, artists must sign their rights over to too many intermediaries, most notably record label companies, which is the only option artists see for progression. It is estimated that around 80% of the music industry is controlled by three record labels: Universal Music Group, Sony Music Entertainment, and Warner Music Group. Advocates of blockchain tech consistently claim that it will replace the middlemen of multiple industries, which is true, but such a replacement doesn't settle well with those being replaced. Especially the countless amounts of middlemen that make up the music industry. These middlemen don't want blockchain to be implemented in the music scene because they believe they're the ones doing the important and irreplaceable tasks of promoting, managing, marketing etc. for artists. Thus leaving the artists to focus on creating music.

I'm not going to argue for "draining the swamp" of the music industry by cutting out the middlemen. They have many roles that run deep, and a blockchain shakeup to oust such people would be long and arduous. I'm proposing to regulate the people and entities within the music industry who are not the artists, to regulate those who are benefiting off of an artist's creation. The artists form the foundation of the music industry and are the ones who provide everyone else with jobs to fill. Blockchain tech will provide transparency in this industry where talented people are being taken advantage of and are continuously getting the short end of the stick. The middlemen suck up all the money made from the music, leaving the artists with too small a slice of THEIR pie. Sure, an artist can go down the independent route, but it is very challenging for anyone trying to make it on their own in any industry. At some point, any artist will need outside help and most turn to record labels and other 3rd parties for such assistance. Those who profit by offering assistance to artists aren't going to disappear anytime soon, so blockchain tech should be used to safeguard an artist's importance when dealing with entities larger than themselves.

Besides some of the problems with intermediaries, the issue of payments and piracy are other problems that advocates of blockchain hope to solve with this tech. However, some argue that the current way to access music (through streaming services) is already accustomed to consumers and that trying to introduce a new way to access and pay for music won't catch on. Why would consumers revert back to paying for a single track or album when they can stream their favorite music for free (thanks to piracy) or through a streaming service like Spotify that only requires a small monthly subscription? One answer is that people are more than willing to support their favorite artists, especially if they aren't that well known and not making large amounts of money. Blockchain tech is here to aid those artists just starting out, those who are small and want to expand, and any artist that wants to take back their control and take the independent route. There are even benefits for already well-established artists to use blockchain, one being to help combat piracy since data inputted on a blockchain is impossible to hack, steal, and duplicate.

As discussed so far, there is certainly a place for blockchain tech implementation in the music industry so there can be more transparency, regulation on the middlemen, combat of piracy, incorporation of better payment processes, and creation of an industry that is more artist-controlled. 

How the blockchain is being utilized by Ujo Music and Mycelia

Parting from the whys, let's now move into the hows by examining a platform called Ujo Music. Straight from their website homepage, Ujo Music utilizes the Ethereum blockchain to, "create a transparent and decentralized database of rights and rights owners, automating royalty payments using smart contracts and cryptocurrency." Basically their objective is to digitize most aspects of an artist's music career and then put it on the blockchain to enable transparency thanks to a secure and public ledger "thus enabling new applications, products, and services to license their catalogs and pay artists directly with minimal friction."  Through Ujo Music's Creators Portal, an artist can upload their music and get paid in Ether from listeners. This portal, currently in beta, is also where artists can control licensing options and set distributions. Paper-based accounting systems, hard-to-find rights databases, untrustworthy contracts, and slow payment processes are all problems of the music industry that Ujo Music is hoping to solve with their platform. For a detailed technical explanation of how blockchain tech is being used "under the hood," I recommend giving this article a read. 

Another powerful platform that is also aiming to resolve the aforementioned problems is called Mycelia, founded by a brilliant artist named Imogen Heap. Similar to Ujo's Creator Portal, Mycelia has Creative Passport, a "digital container for verified profile information, IDs, acknowledgements, works, business partners and payment mechanisms for all music makers (creatives). Its aim is to become a digital identity standard for music makers, collectively forming the Creative Passport Database and evolving into the essential connective hub for all music related services...using emergent blockchain technology, featuring template ‘smart contracts’, the ‘Creative Passport’ will enable quick and easy direct payments, to simplify and democratise collaboration from meaningful commercial partnerships to creativity." Like Creators Portal, Creative Passport is free for the artists. The database consisting of artists' creations can be accessed through a paid subscription service which is in the best interest of individuals and/or companies to use and offer their services to the artists.

Incentives for consumers

So what are the incentives for consumers and artists themselves to use these music platforms rather than Spotify, Apply Music, or SoundCloud? As stated above, for consumers, knowing that you are fully supporting an artist when purchasing their music is always an incentive, especially when buying music from a lesser-known artist trying to make a living off their work. Another brilliant incentive for consumers that exists thanks to blockchain are unique reward tokens that can be distributed to the early consumers of an artist. Ujo Music is experimenting with tokenizing social capital, "being an early supporter of an undiscovered artist carries a certain gravitas that in many ways functions as an informal reputation system within social circles. In some sense, our musical affiliations form the basis of our creative identity. With the minting of a unique ERC20 token with each purchase of RAC’s Ego, Ujo Music is taking a small step towards turning this informal reputation system into a tangible form of social capital. Your support of the RAC x Ujo project is forever memorialized in this token as a reputational badge that is verifiable, exchangeable, and most importantly, valuable on the Ethereum blockchain."

RAC is the stagename used by the Grammy winning producer and DJ Andre Allen Anjos who has partnered with Ujo Music to showcase their platform. Hypothetically speaking, imagine this platform and blockchain tech existed when major artists like the rapper Eminem first started out. Say you discovered him in the very early stages of his career, and bought his album using the Ujo Music platform, and in return for the purchase you receive a unique ERC20 token. Such a digital token cannot be replicated, so the token's authenticity cannot be questioned. Also add the fact that only early purchasers of Eminem's music receive these tokens so there aren't many in circulation, rarity too adds value to the token. Now, fast forward to the height of Eminem's career where these unique tokens are worth a lot of money. Such an incentive program isn't only a way to express your support for an artist but to invest in them that their future music career is going to be very successful. Thus making the tokens a collector's item thanks to the authenticity, limited supply, the ease of trading, and the popularity of an artist.

Incentives for artists

The incentives for artists have continuously been mentioned throughout this post, but the most significant is that music platforms running on blockchain are truly artist-centric. Being in control of your creation, whether it be music or anything else that exists outside your brain, is the most important. More and more people are going to continue creating a vast amount of music, there will be more artists on the come-up, therefore more opportunities for blockchain based music platforms like Ujo Music and Mycelia to succeed in improving the music industry. 

In the highly recommended book Blockchain Revolution, Don and Alex Tapscott, father and son, said it best: "we're not saying that there is no role for labels or technology companies, and that artists could just make it on their own in a purely peer-to-peer ecosystem. Rather we're talking about a new kind of music ecosystem centered on the artists, where they control their own fate and receive fair compensation for the value they create. Blockchain technology will not create a new standard for how artists get compensated. Instead, it will liberate them to choose and customize an infinite array of solutions that work for their specific needs and beliefs. They can give it away for free, or micromonetize everything--but it's their choice, not the label's or the distributor's."** 

For optimal gains in the current music environment, it'd be best for an artist to utilize a popular streaming service to upload their music to so that it has a higher chance of being heard by many people. At the same time, utilize blockchain based music platforms to also upload music AND utilize the platform as a home base for independently completing the tasks which would otherwise be done by intermediaries. Decentralized applications using blockchain technology are all about building better systems for tomorrow and improving people's lives. Help your artist friends out, and introduce them to the world of blockchain. 

From the book Blockchain Revolution - How the Technology behind Bitcoin Is Changing Money by Alex Tapscott and Don Tapscott: *Pg 229 **Pg 236-237