Rethink Music study claims cryptocurrency system could help to ensure musicians get paid fairly and quickly for their work

This article is more than 5 years old

This article is more than 5 years old

The music industry should explore blockchain technology used in cryptocurrencies to ensure musicians are paid fairly for streams and sales of their work, according to a report published by the US-based Rethink Music initiative.

The report, which is being widely circulated within the industry, suggests that embracing cryptocurrency technology could bring more transparency to the debate about musicians’ income from streaming services like Spotify.

A blockchain is a public record of all transactions that have ever taken place in a currency, the most well known example is its use in Bitcoin.

The report suggests the music industry to create an accurate database of music rights ownership - who should be paid for sales and streams of any given song - then builds a cryptocurrency system around it to automate royalty payments.

“In addition to rights ownership information, the royalty split for each work, as determined by a mixture of statute and contracts, could be added to the database,” suggested the report.

“Each time a payment is generated for a given work, the money would be automatically split according to the set terms, and each party’s account would instantly reflect the additional revenue.”

The report uses the example of a song bought from Apple’s iTunes store, with $1 left for its rightsholders after Apple has taken its cut of the sale.

“This money would be split between the two different works contained in the song, with a 9.1 cent mechanical royalty going to the musical work, and the remaining 90.9 cents going to the sound recording. Next, if the contract between the publisher and songwriter specifies a 75/25 split of revenue from downloads, the publisher would receive 6.825 cents and the songwriter would receive 2.275 cents.” With an identical split at the record label, The label would receive 68.175 cents, and the recording artist would get 22.725 cents. The blockchain network could also further divide this 22.725 cents between the members of a band, if applicable. This entire process would take place in less than one second, allowing all parties to access their money immediately after it is generated.”

According to Rethink Music, such a system would also ensure that music labels and publishers do not hold on to royalties before passing them to musicians and songwriters, which would “eliminate concerns about accidental or intentional underpayment of royalties”.

There are several hurdles in the way of setting up this kind of system, starting with the ambition to create a comprehensive, accurate database of music rights - a noble ambition that has foundered several times in recent years. The most recent attempt by music collection societies to create a “Global Repertoire Database” was scrapped in 2014.

The company that might be best-placed to supply such a database now is YouTube, thanks to its Content ID system that requires music rightsholders to register rights information in order to identify videos using their music that are uploaded by users.

YouTube’s up-and-down relationship with the music industry would make expanding its role into wider royalty-tracking unlikely - although note that its parent company Google’s investment arm recently led a $60m funding round for music company Kobalt, which is cited in the Rethink Music report as a case study in improving transparency for music royalties.

It is also unclear who would take responsibility for setting up and overseeing a blockchain network for music payments, with cryptocurrency expertise rare within the existing industry bodies.

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Rethink Music’s report makes several other recommendations, including a “Creator’s Bill of Rights” setting out key principles of fair payment for musicians and songwriters; a proposal to certify digital services and labels alike as “transparent” if they treat creators fairly; and more education for musicians about their rights in the digital world.

The report has already been welcomed by musician David Byrne, who has spoken out several times about musicians’ rights and streaming music.

“The picture the study paints is spot on and fairly devastating - as it should be. It’s essential reading, and given the lack of vested interests at work it should be explosive and wide ranging in its impact,” said Byrne.

Brian Message, who co-manages Radiohead, PJ Harvey and Nick Cave, also backed the report, encouraging politicians in the US and Europe to heed its suggestions and support musicians against “the practices of major rightsholder corporations who distort the music market for their own gain”.