In the mid ’90s, the Moving Picture Experts Group (MPEG) designed the MP3 format for the digital storage and playback of music, as part of its MPEG-1 and MPEG-2 video encoding standards. Without going into too much detail, the MP3 encoding algorithm allowed compression of audio files to an extent which was both acceptable to average listeners and produced file sizes small enough for easy transmission at ’90s data levels.

This was the product of years of research, development, and repeated listenings of Suzanne Vega’s song Tom’s Diner. This recording was chosen by one of the format’s primary developers, Karlheinz Brandenburg, because it was very difficult to compress. In his own words,

“I was ready to fine-tune my compression algorithm…somewhere down the corridor, a radio was playing ‘Tom’s Diner.’ I was electrified. I knew it would be nearly impossible to compress this warm a cappella voice.”

Brandenburg did manage to compress it, and the rest is history. The MP3 became standard, and the music industry fundamentally changed once more.

How to annoy Metallica in one easy step

MP3’s move from file format to phenomenon came at the hands of a teenage university dropout named Shawn Fanning, who developed and released Napster, the granddaddy of all peer-to-peer file sharing programs. Created with sharing music specifically in mind, Napster moved music from the CD collection to the hard drive, and made sharing (and piracy) a purely digital affair.

Of course, this situation couldn’t last long, and by 2001 the law had caught up with the technology, and Napster was bankrupted by a series of legal problems, mostly stemming from Metallica’s anger at an unreleased track being shared and prematurely played on the radio. They destroyed Napster — but the digital music genie was out of the bottle, and it was up to the industry to adapt — and adapt fast, because the world was about to change again.

Making a Jobs of it

Of course, the shift from CD collection to hard drive didn’t change where music was consumed — it was still usually played on stereos in living rooms. That all changed in 2001, when tech visionary and turtleneck aficionado Steve Jobs launched the iPod . This made digital music portable, and perhaps more importantly, led to the first digital music marketplace, iTunes. Now, music had truly broken free — consumers could listen to what they wanted, where they wanted, whenever they wanted.

Within a few short years of the launch of the iPod, MP3 players had become standard — first as standalone devices, then as a key function of smartphones. More importantly, they’d become an integral part of life for the developed world, as people began to carry their musical tastes with them and indulge whenever they wanted. Digital downloads began to eat into physical media sales, and the industry awoke to an entirely new form of marketing.

Stream a little stream for me

Of course, the march of progress cannot be halted, and after a decade of prominence, digital downloads faced disruption themselves. Increased access to mobile data created a demand for music streaming — free consumer choice to listen to whatever took their fancy, wherever and whenever they are. Legal providers like Spotify competed with unofficial channels on YouTube, as music rights management started to grapple with a new, messy arena.

The contradictions in streaming are inherent and challenging. On the one hand, streaming from a legal source is extremely easy to quantify and monetize — each play is captured natively on the platform. On the other hand, channels like YouTube are extremely difficult to monitor, as much of the responsibility for disclosing plays rests with channel owners — who don’t have a great track record of reporting them accurately. Whether due to ignorance or malice, this leads to music rights owners losing out on a great deal of money. In one very famous example, Rick Astley’s Never Gonna Give You Up reached unprecedented viral heights in the late 2000s, earning him a whopping $12 on 39 million views.

Of course, it gets more complicated than that.

Samples, collaboration, and confusion

The proliferation of channels, media, rights and royalties can create some unusually complex relationships, which can be further muddied by the increasing number of artistic collaborations and use of samples in music. Each collaboration, each sample entails further rights and responsibilities, creating an administrative labyrinth.

For example, consider this. A consumer watches Postmodern Jukebox perform Nicki Minaj’s Anaconda on the band’s official YouTube channel. At first blush, this seems quite simple. Postmodern Jukebox has licensed the song for performance, and pays a percentage of revenues as royalties to Minaj’s rights holder, who then pays a percentage of those royalties to the performers and writers.

Then it gets complicated. Anaconda heavily sampled Sir Mix-a-lot’s Baby Got Back. Depending on the licensing agreements, the rights holders to that song might get a percentage, too. But we can still go deeper — Baby Got Back sampled heavily from Channel One’s Technicolor, opening the door once again to potential royalties.

Of course, we don’t know how the agreements are structured in this case, but the complexities are obvious. The whole chain of dependencies started out with a performance in a format and on a channel and platform that didn’t exist when Technicolor was first performed. Disentangling this web of rights to ensure everyone gets paid is very challenging, and some money is inevitably lost in the process.

Rather a lot of money, in fact. Approximately $45 billion annually, or about the same as the music industry’s total revenues.

How do you lose 45 billion?

It’s a staggering amount of money to lose — though perhaps “lose” isn’t quite the correct term. It’s not so much that the money has been lost, as never noticed. Music consumption has spread, channels have proliferated, and revenues have slipped through the cracks. Monitoring, tracking and reporting on music usage simply wasn’t possible, and the missing revenues were simply a function of the times and the technology.

Until now. Utopia Music has developed a way to tap into these unclaimed revenues, through real-time, global monitoring and blockchain-powered data management. Previously, revenues went unclaimed because if it wasn’t self-reported and nobody was listening, nobody got paid. The play effectively never happened. Utopia makes sure that each play gets paid by essentially listening to everything, with advanced AI music recognition systems deployed across a secure, private cloud.

For once, new technology is making things simpler.

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