Chaining the Dissonance: The Legal Implications of Blockchain Technology for the Music Industry
Chaos seems to have become synonymous with the music industry as of late. Artists are taking open shots at streaming services,[1] suing publishers,[2] and feuding with each other in the press.[3] Inevitably, these spats seem to stem from the same source: money. To put it frankly, musicians have a trust problem. Imogen Heap describes such an issue in a June editorial for Harvard Business Review.[4] She feels that too often creatives in the music industry “are the first to put in any of the work and the last to ever see any profit.”[5] There is too little information available for artists regarding the calculation of royalties and how their work is consumed.[6] This lack of clarity is the reason for many a legal headache and continues to burden the industry.
Enter Blockchain. This ledger-based technology is already working to shape industries like Fintech and could provide huge benefits for the music industry as well.[7] The best analogy I’ve found for understanding this technology is to compare it with a shared spreadsheet a la “Sheets” in Google Docs.[8] Borrowing from a September Law360 article, like a shared spreadsheet, Blockchain is “a ledger of time‑stamped transactions that is operated (1) in a decentralized manner by a peer-to-peer network of unaffiliated parties, (2) through predefined consensus mechanisms in lieu of a central authority, and (3) employing military-grade cryptography in order to prevent the ability to edit or tamper with the information recorded in it.”[9] If you’re not sure what this all means exactly, don’t worry – what’s important here is understanding that Blockchain is dependable and non-modifiable. It provides a clear and accessible data and is set to solve a “global root of trust problem.”[10]
The implications such technology has for the music industry are tremendous. Take the industry’s problem of having no verified global registry of works.[11] Blockchain technology could be utilized to create such a registry and enable Collective Management Organizations, such as ASCAP, to report royalties with a much higher level of accuracy and speed.[12]
This technology could also enable owners of IP rights, such as musicians, clarity and access to information regarding their works. Banu Naraghi, an attorney at Gerard Fox Law, recently told IPWatchdog “When IP rights holders register their works to a Blockchain, the rights holders can ultimately end up with concrete evidence of ownership, which is free from tampering, because once a work has been registered to a Blockchain, that information cannot ever be lost or changed.”[13] This access would further enable third parties, creating a strong record of licenses, assignments, and other aspects of a work’s ownership.[14]
Blockchain technology also offers the use of so-called “smart contracts” or computer codes working with Blockchain technology that expedite the enforcement of contract provisions. Applied in a music setting, payments for the use of a song, through such means as licensing, streaming, or downloading, can be quickly distributed to the appropriate rights holders per the proper ownership percentages of those rights.[15]
Finally, artists raising funds for projects and tours could utilize Blockchain to their advantage. Through the issuance of tokens validated by Blockchain, artists could invite fans to invest in their income, and provide access to exclusive content such as tours and early releases.[16]
Blockchain technology is already being embraced in the operations of the legal world.[17] A panel at the recent International Legal Technology Association’s annual conference predicted that the technology “[m]ight be the most important addition to the legal infrastructure since William the Conqueror gave rise to the common law.”[18] The music industry should pay attention to predictions such as this and Mrs. Heap’s. This technology has potentially paradigmatic implications and could provide solutions to issues that have long troubled the music industry.
Footnotes
