Bitcoin and the Blockchain

I've been learning about Blockchain and Bitcoins for about a year now and it's a very confusing topic to discuss. Right now, I even have a book open about the blockchain and it's still a little confusing. I understand that this new method of payment and internet browsing might be the way forward, but because I am so used to the web and online banking, it's hard to grasp another, new, concept.

The Blockchain, to try and explain briefly, is a piece of technology which everyone can access but no one person controls.). It uses cryptography to secure lists of records, called blocks. These blocks include transaction data and timestamps as to which transactions are performed between two parties. Because these entries can’t be changed, it verifies the data and allows it to be kept securely. Alongside the Blockchain is a digital payment system known as, Bitcoin. Bitcoin is the first digital currency which allows users to make transactions anonymously. All transactions are done peer-to-peer, cutting out the ‘middle-man’ (who in this case would be our banks and bank accounts). When transactions are made using Bitcoin, a trusted ledger is used to verify the payment. This ledger is the Blockchain.

The Blockchain links to music because, right now, artists are signed to contracts which aren’t meant for the digital age. Musicians are lucky to get 19% of royalties from their work. This is because there are many more members of the supply chain who must take a cut of the money. It can take months for an artist to get their share as they are the last to be paid.

As well as this, within the music industry, there is so much complexity to try and enforce rights and make sure everything is confidential. Record labels try to manage all of this by having hundreds of staff working on different aspects in the industry. An example of this is Universal Music Publishing Group, who have a third of their staff working solely on royalties and copyrights. The cost of maintaining royalties has increased which affects artists directly. The cost functions the same as a tax, splitting whatever royalties they would earn even further.

The implications Blockchain may have on the music economy is that it can reduce the volume of the complexity.

What this means is that by using Blockchain technology, most of the hassle of distributing royalties is taken away. Record labels won’t need to worry about hiring lots of staff to help with accounting or feeling under pressure to get the payments out. Not only this, but the tax wouldn’t be an issue because the cost of policing royalties would reduce massively. By having music on the Blockchain, artists would have more control over their music. They can decide for themselves where songs/albums are uploaded, what price to sell them at and who to. It will all be centred around the artist; an Artist-centric model. Music would be put onto open ledgers, which means everyone can see what percentage of royalties are going where and who to. At this moment, record labels keep this information hidden, therefore it is not clear how payment is distributed. Eliminating this privacy would keep royalties fairly divided and make for easier payments. Linking onto that last point, transactions would be time-locked, which means payments would be sent out at a specific time, so nobody is waiting months on end for their royalties. This is one of the major problems with record labels right now. Databases in the Blockchain would be able to keep records of all the rights holder to a song/composition, plus all information on copyrighted material. In the industry, now, it’s a difficult task to find the correct rights holders because of incomplete databases. There are multiple companies around the world who keep databases with, most often, out-of-date data and there is no central database to track the real ownership

The Blockchain would eliminate this difficult task by keeping data and correct rights holders up to date. What has been outlined above is the goal for the future. Blockchain technology is still a new, growing concept and experiments are in place right now to see if these opportunities are possible for a new, improved music economy. There are many challenges to overcome, like the transferring of data onto new platforms and finding the correct licenses and rights holders. Artists and companies would have to agree on the new platform and allow the Blockchain to use their information. Even though there are a lot of challenges, the implications Blockchain may have on the music economy is a great one; it would be a whole new industry.

#musicandthefuture