Ensuring the dollars, sterling, euros, and yen from music consumers across the world end up in the hands of creators and rightsholders is an increasingly complex operation, requiring cooperation across a vast network of organisations.

At the core of this effort is data. To maintain the flow of payments we require a complete, accurate, global picture of music rights. However, music rights data is fragmented; strewn across a multitude of databases around the world and, with little commercial incentive to change and few assurances others will follow suit, the best policy to date has been inaction.

We believe it is possible to overcome this inertia by combining the following:

An incentive to share rights data A mechanism for bootstrapping supply

Data has a price, but it’s hiding

While it’s locked up in a database, data is an asset, providing residual value to the holder and, in some cases, the only path to revenue.

In the EU and UK databases even have copyright-like protection under law.

The exact amount of revenue is difficult to calculate because data serves an ancillary function and the cost is usually bundled into the price of services like administration, matching, reconciliation, or royalty distribution. You could argue there is no direct purchaser of rights data and no price.

In order to create a unified view of rights information, organisations that hold rights data, or data-holders, must have an incentive to share. We need a market for music rights data… we need a price.

Creating a price can generally be achieved in two ways: regulation, which forces everyone to share, or the free market, which incentivises sharing.

The Stick: Regulation

Efforts to regulate the provision of proprietary data to the public, such as the “Transparency in Music Licensing and Ownership” bill recently introduced in the US, seek to create a database of global music rights and provide free access to the data. In short, if you haven’t registered your copyright in this database, any potential damages you can claim for infringement are limited.

One could argue that while regulation may bring us a step closer to a global rights picture, in doing so it will drive the price of shared rights information down to zero. In economics, a well-known, but unintended, side effect of this model, known as “the free rider” problem could occur.

Photo by Teddy Kelley on Unsplash

As the costs are borne by a few but the benefits can be exploited by anyone at no cost, the system can be easily exploited.

As an example, here’s how the scenario could play out:

Data-holders submit their data to create “The Database”

All costs are borne by the public and data-holders

Anyone can consume data for free without contributing to the costs

Data-holders must supply the data, while upside shrinks

Data-holders exit the market, taking their supply of data

The outcome:

A reduced commercial incentive to collect rights information.

The Carrot: the KORD Token

Creating a digital market for data is difficult because once a copy is shared, the value is usually destroyed. Coincidentally, this is the exact use case blockchains were created to address.

Using the KORD network and underlying Ethereum blockchain it’s possible to track data after it’s shared, which allows it to function as a tradable digital asset. The KORD token allows the market to discover a price for data and automate direct exchange between buyers and sellers.

With the ability to price rights data we can incentivise organisations to share information and track attribution within the network, allowing them to capture residual value directly.

As usage grows, the demand for tokens increases, creating the network effects necessary to attract more buyers (music services, licensees, developers) and sellers (rights-holders, collective management organisations) while compensating existing participants.

In this ecosystem, the KORD protocol creates a decentralised marketplace that connects buyers and sellers of data and services. The market mechanism serves as the simplest way to incentivise participants and correctly allocate resources.

With the KORD network and KORD token we can provide:

An incentive to share rights data

In our next post, we’ll discuss the second point: Bootstrapping the supply of data.