What is blockchain and how can it help the music industry? Liz Stokes sits down with PledgeMusic founder and blockchain advocate Benji Rogers to find out26 February 2016 - Press release
In July 2014 we put the Global Repertoire Database to bed. A project that had started with almost all major publishers onboard had unravelled due to reported missed deadlines, lack of funding and collection societies pulling out - among further issues. It wasn’t our first attempt at centralising music data either; the International Music Joint Venture was formed in 2000 by a group of collection societies but ultimately failed and, in 2011, the World Intellectual Property Organization attempted to create the International Music Registry (IMR), which also failed to materialise.
There is universal understanding that a centralised point for music rights data is desperately needed, and with streaming only growing there is also willingness to discuss our options. The latest potential has been propositioned by PledgeMusic founder Benji Rogers, and thanks to his readiness to discuss it with the industry many a time, blockchain has already established itself as one of the key buzzwords of 2016.
As a concept of technology it’s not new, the bitcoin blockchain has been creating transactions since 2009 and David Balfour considered its possibilities in the RotD magazine last year. However, with Rogers pushing forward full of enthusiasm and, crucially, answers, its prospective future for the music industry is beginning to be talked about at conferences, in the offices of the PROs, the headquarters of the BPI and further globally. Most interestingly, it appears as though it can bypass several of the given reasons for the GRD’s failure two years ago.
Blockchain is essentially a giant online ledger, recording transactions as it goes. It has gathered momentum due to its attractive possibility to remove the need for third party regulators. Instead, the blockchain relies on a network in which all nodes must agree a transaction is legitimate and then uses a complicated underlying system of mathematical codes to avoid corruption. Simply put, when someone makes a transaction, in bitcoin for example, it is broadcast as a maths problem across the network, when someone in the network solves the problem they record the transaction and then broadcasts it further to be verified as correct. Some believe this system has the ability to be cheaper, more transparent and more reliable than employing outside regulatory bodies to monitor operations and is being trailed within the diamond provenance space and mooted in the distribution sector and beyond.
So, how will it work for music? It’s being hailed as the ideal solution to the rights data issues that have plagued the industry for years. An already-built system in which, theoretically, we can store the licensing and rights data to the world’s songs and create a smooth interface for payments and usage. While its final aim is exactly that of its GRD predecessor, Rogers suggests that the predicted incoming VR/AR boom makes the need for it far greater than before – and the technology is ready for us to use. The significance of the Virtual Reality possibilities is not only in its potential scale but also the fact that there’s currently no standard music codec for it. Rogers explains that if the industry can come together to agree on a .bc (blockchain) codec for use in the VR/AR space it could be a “Trojan Horse” for its roll-out across the rest of the digital world and the beginning of a global database, accessible by all.
It’s a concept Rogers is so certain of he’s started proceedings to patent “a blockchain anchored codec for VR and AR media formats” as a way of protecting it. If granted, he plans to either give it away or entrust it to an academic body or consortium when the time is right.
“Think about Facebook 360 video – it already has the biggest platform. If you can hit 100m people over night and Facebook has control of that, that’s massive” Rogers comments. “If Facebook decides that 360 video is the gateway to VR or they start pushing Oculs Rift onto you, they’re going to get to you. Option A is that they push it as is. Which means some .wav file which is picked up from somewhere is pushed into there [the content] and is potentially licensed, potentially not – who would know? How would you check? Option B is that we create the format that they use.”
In order for .bc to work, Rogers stresses that the industry must come together to agree on a Minimal Viable Dataset; an agreed set of data that must be present for a song to be registered in the database. This could include, he suggests: name, song name, contact info, rights ownership, publishers and payment information - amongst others potentials. As well as the MVD, rightsholders could later add rules as to whether the music can be used on anything from wedding videos to adverts and beyond – essentially a ‘smart contract’. The further rules are set within the blockchain and can be added to at any time. This MVD is important not only to ensure the correct rightsholders are paid but also because it bypasses one the contributing factors Berklee College’s Klementina Milosic gives for the GRD’s failure - the fact that data would have been coming into the GRD from a number of different sources, each of which used its own data standards, making it difficult to provide consistent information.
“The thing that terrifies the majors and the PROs is that all the transactions are going to be taking place and there’s nothing they can do about it. That’s not the case. If you put a certain amount of the information in it wont happen, you can add as you feel but if you don’t start with the raw data you can’t add to it”, Rogers notes.
In order for the rightsholders to prove the music they input is their own, Rogers envisions using audio databases from the likes of Shazam, Dubset, Gracenote, PRS and/or Omnifone to scan the database and flag multiple entries as they go in. If the same file is attempted to be entered by two different rightsholders, an issue would be flagged and resolved. And who resolves the issues? Rogers proposes a consortium made up of labels, managers, PROs and the like. And this is perhaps where the idea could crumble. In an ideal world the music industry can come together as one and work for a common goal, but history has not so far painted that picture. By Rogers’ own admission, “this needs publishers, coders, Digital Service Providers, labels, trade bodies, PROs and everyone else on the same page. That’s terrifying. If you’ve ever tried to get everyone in the same room to agree on a publishing split, you’ll know it’s about as bad as it gets. However, I think it’s possible.”
One of the other contributing factors to the GRD’s failure has often been cited as its massive costs. By the time the project stalled it had reached a huge spend of £8m and was reportedly reliant on a further input of £18m to get fully off the ground. While we don’t have the breakdown of where the £8m or further funding was planned to be spent, it wouldn’t be out of this world to suggest a significant sum was to go in to the technical build of the system’s mainframe. The beauty of blockchain is that the system is already built, it’s out there being used every day and has many years of development behind it. That isn’t, however, to say that its use within the industry will come without a price. Consortiums will need to be used to deal with disputes and there will need to be teams to oversee legal aspects and general decisions. Representatives from each sector will need to potentially take time out of their day to day jobs to address issues and new hires will almost certainly be necessary. Further to this, some kind of search engine must also be built on top of the blockchain in order to find songs, artists, labels etc within it. As well as these costs, the miners that solve the problems that keep the blockchain moving and confirm the transactions need a reason to do so. At present they receive bitcoins for their efforts. Rogers suggests that the industry offer shares but comments that it’s something we all must agree on to keep the system moving.
Elsewhere around blockchain chat, the notion that its widespread adoption will kill the need for PROs has been murmured. This idea was also present around the GRD, with some suggesting it would remove the need for collection societies if publishers would start to license songs directly. Rogers notes: “They [PROs] are the on-ramp. They’re how this data gets into this thing. What I picture is: someone comes out of the studio and the first thing they enter is their PRO number [into the blockchain with the song] because then they don’t need to enter any of their own data - the PRO already has it stored, it’s automatic. The PRS is the body that is going to keep this thing honest, they need to be there. Coders always tell me that to make this work we need: the labels, the PROs, publishers, artists and managers all at the table. Otherwise it isn’t going to work.” Rogers also mentions that if smart contracts were taken up via blockchain later that PRS and the like could “make these incredible deals with different venues and you can tier what’s possible so they can maximise revenue for their members.”
Further concerns have been raised around the transparency of the blockchain. While many are hailing a future industry built on visibility at all levels, there is still a world of NDAs and arguably some deals that need to been done behind closed doors to ensure competition can keep those deals turning. While there is an element of transparency in the basic idea for blockchain use in the business, Rogers also explains: “NDAs don’t have to be damaged because you don’t have to show everything, you don’t have to expose your deal. You’re not going to expose every single transaction and you couldn’t flood the blockchain with the number streams going on on Spotify at the moment – it wouldn’t make sense; it would just jam the network up. There has to be a web framework which handles the majority of that stuff.”
“A smart contract could mean that any deal over $5,000 would be done in a different way. It’s about obligations and permissions. You have permission to see this and obligation to pay this. We only know about the details of Spotify’s deal with Sony because it leaked. It didn’t change anything. In the blockchain you could write in that “this is the per stream rate” or you could choose to ask a licenser to contact you. There has to be a central point for this. The blockchain is just the repository for the information.”
There are yet more questions around this, but as Rogers notes, “the questions I’m getting from the music industry aren’t around whether this can work, they’re around implementation.” There’s a sea of curiosity circling this concept but unless we move swiftly as one, it’s an opportunity that will pass us by. Rogers predicts that we have a maximum of six months to agree on the MVD before it will be too late and blockchain joins the GRD, IMJV and IMR on the list of failures.