Blockchain in Entertainment: A Musician’s Perspective
All of us in the music scene are deeply proud of our work. It takes blood, sweat, tears, and tenacity to write or perform our songs. All people usually see is us up on stage, bearing our souls and entertaining. They rarely see the lonely nights of writing, the painful moments when we get a studio invoice, the long phone calls on the road with our significant others, or the constant questioning of our own abilities.
Being a musician is a path that requires sacrifice and steadfast conviction. It seems more glorious than it truly is from a superficial perspective, so we must find meaning in such art ourselves. Along with this we are also tasked with making music more than just a hobby, but a realistic career.
Such is the crux of the music ‘industry’, an artifact scarcely changed in terms of legality for nearly one hundred years. I came to find this out the hard way. Despite my BA in Audio Production and my minor in Music Business and Law, I have been subject to many shortcomings in the journey that is music monetization.
I am a hired-gun drummer, a small business owner, and a registered ASCAP Publishing House. I also do a good bit of ghostwriting, which has made me privy to a very stagnant history of rights related compensation.
It has been through such experiences that I have gained insight into the past and future of this industry, and the desperate need for other musicians to be aware of our professional climate. We can’t initiate change without understanding our position.
I will be describing blockchain integration for music in the following article. This technology has enormous prospects to offer all of us, and to illustrate these I will offer analysis into its functionality. I will also detail issues with the current system of PROs, Publishing Houses, splits, and streaming.
In the late 19th and early 20th century, Tin Pan Alley was one of the major sources of American Music. This New York City collection of songwriters and publishers dominated the spectrum of legal proceedings associated with music, paradigms that exist even to this day. Namely, split-sheets (documents that define monetization rights to songs) were established as a 50/50 split between lyrics and music. Of course this made sense at the time, as a pianist and lyrical songwriter were the primary sources of musical content. Backing musicians were paid per gig and collections from album/digital sales were practically (or literally) non-existent, making a 50/50 split easy and reasonable.
Fast forward to the era of bands and album sales. The aforementioned structure of splits no longer suited bands that composed music together. While split sheets may be adjusted legally, the 50/50 precedent continued to be normalized. This meant that a five-person band could allocate fifty percent to the singer, while four people shared the other fifty.
In addition to this discrepancy let’s add in the cost basis for publishing. When placing a song for commercial use it is often necessary to utilize a Publishing House. If a performer licenses a song for a TV commercial they have to split the earnings with their publisher. The percentage splits for placements may vary, but it is worth noting that a common industry standard is (again) fifty percent.
Going back to our five-person band this now means that for a $1,000 commercial placement the band gets $500 total, the lyricist gets $250, and each remaining band member gets $62.50.
One may avoid this by becoming their own publisher, but this too has several prerequisite concerns. To become a publisher one must register with a PRO like ASCAP or BMI. This is in addition to your artist profile and incurs another, separate expense. Following this there are constant issues with PROs- including antagonization of small music venues, problems with cross PRO royalty distribution, ISRC duplicate claims, and constant hypocritical DOJ rulings.
I could go on endlessly about systemic issues with legality in music. But I only list these problems because there are possible solutions through the medium of blockchain technology.
First of all- what is blockchain?
Here is the best analogy I can come up with. Let’s say when you are licensing your song you are in a room with six people:
Your co-writer’s PRO
The Publishing House
When you sign the paper only six people have seen the contract, and they hold onto it exclusively. Additionally, only they can verify the contract’s contents or report earnings. If there were a corrupted or inefficient individual, they could easily extort money from your hard work!
With a blockchain contract this all changes. A blockchain is more like a room filled with everyone and anyone that wishes to enter. It is public information, stored on a non-exclusive visible medium. When the six people sign their contract it is laminated, copied, and glued to the walls all over the building. The lamination ensures that changing the document would prove difficult, and multiple public copies mean that there is always another version to verify the original content.
All royalties collected will also become part of the blockchain, therefore PRO and Publishing House entities can be removed from the proceedings of payment allocation. It becomes much more difficult (if not impossible) for extortion, mistakes, or double expenditures.
Examining blockchain further begs the question if PROs and Publishing Houses are even necessary. There could most certainly be a blockchain smart contract initiated by only two parties, the artist and the client. Middle-man collection positions established in the 20th century served to streamline pre-internet exchange- is it too far-fetched to think that these organizations may be outdated?
If an ASCAP writer and a BMI writer share rights they have to split cross-PRO royalties. The US Department of Justice has issued regulations stating only one PRO can get paid per license, thus it becomes the responsibility of one song writer to collect the money and split it accordingly with their partner.
I am sure we are all aware that some musicians are not the best with fiscal matters, so this places an unnecessary burden upon the community as a whole. Contrast this with the alternative: The use of a blockchain smart contract, wherein payments are received and automatically split according to the governing clauses.
Of course, blockchain serves even more uses than smart contract designations. Some of my favorite case uses are Resonate, Custos, and the GRMKT Token.
Resonate aims to compete with models like Spotify and iTunes. Through blockchain tracking of streams, one pays toward full ownership of a song by streaming multiple times. In other words, imagine a fan loves your work so much that they play your album every day. After a set number of plays they own a copy of your album!
Such an initiative employs reward for the fans and also increases your earnings for streams. Rather than the miniscule payment one receives from Spotify, a higher percentage earning is passed onto you. In the meantime your fans can feel good about paying a little more, since their money goes toward a permanent product that they can enjoy.
Custos employs cryptographic tracking of media in their services, to help identify and locate unauthorized data use. By implementing unique, traceable, and encrypted data with your song file, your music can be safe from unauthorized duplication. Getting paid for digital media is very difficult, and this creates a huge market demand for more accountable tracking.
By associating works with a public ledger and cryptographic ID this issue could potentially be resolved.
Finally, the GRMTK Token is a cryptocurrency minted by Gramatik. Gramatik is a Dance and EDM artist who has issued his own cryptocurrency, which offers a really cool perk to its users. Gramatik raised around 2.5 million dollars by releasing 25% of his token holdings to users, and in return GRMTK coin owners receive a portion of Gramatik’s royalties.
In a way this makes Gramatik into a public company, offering dividends to his ‘shareholders’ and diversifying his means of income as an artist. Ingenuity will be a determining factor for success in the future of music, and this is a brilliant way to enhance a brand or product.
Each of these ideas are still in their infancy. New models and refined methods of blockchain tech are always underway, but one thing is certain: The current model of rights and legality concerning music are quite outdated. Prospects of more efficient conduct are well underway, and to help facilitate these I hope we can all work together. Let us all manifest open minds, beautiful music, and new successes to our industry.
Jaron D Pearlman