How The Technology Behind Bitcoin Could Change The Music Industry

No Comments 23 February 2017

How The Technology Behind Bitcoin Could Change The Music Industry

The music industry is in crisis, outpaced by the digital revolution and unwilling to innovate and adapt. With all but the top-earning musicians struggling to get paid, the promise of a new technology that could support artists at both ends of scale seems almost too good to be true. Josh Hall finds out how the blockchain could upend the industry.

SoundCloud is starting to look like the first dead unicorn of its generation. ‘Unicorns’ - tech start-ups with a valuation of a billion dollars or more - are rare and precarious beasts, and no company sums up that precarity better than the Berlin-based streaming giant. Attacked on all sides by legal challenges, licensing issues and excessive downtime, the company is now frantically looking for a buyer to pull it out of the quagmire. Google is the latest suitor, rumored to be mulling a purchase for around $500 million - about half what the SoundCloud founders were demanding just a few months ago.

Author: Josh Hall

SoundCloud is emblematic of a music industry that is, as it has been since the advent of Napster, in a quiet existential crisis. For the best part of two decades it has been on the back foot, buffeted by technologies that it doesn’t understand, that it has refused to engage with, and that, ultimately, have driven down margins for all but the biggest players. SoundCloud spent years trying to convince the major labels to get on board. At the same time, those same labels saw their revenues decimated by the very technologies SoundCloud was built on.

Of course, it’s not just the labels who are suffering - artists’ bottom lines are also struggling to keep pace with shifting patterns of music consumption. We’ve all seen the Spotify revenue statements showing that artists are paid just a fraction of a cent per stream, but what about YouTube? The video platform is the first port of call for many fans, but more often than not, a play on YouTube delivers nothing to the artist. Contrary to conspiracy theory, though, that’s not entirely YouTube’s fault. The blame often lies either with incomplete or absent metadata (few fans uploading a Rinse FM radio rip would bother with proper credits) or with opaque deals done by labels years before they really understood what streaming meant for the industry. Often, YouTube and their rivals simply don’t know who the rightsholders are, and therefore don’t know who to pay - and, as a result, there are huge sums of unpaid royalties sitting in so-called ‘black boxes’, doing little but generating interest.

So how can we fix it? According to some, the answer lies with the technology du jour: blockchain.

Blockchain is a distributed ledger system, but that doesn’t really mean anything unless you’re an accountant, a cryptographer or a Bitcoin investor. In practical terms, a blockchain allows people to connect and transact on a ‘peer to peer’ basis, as opposed to through a third party like a bank. Those transactions are then kept on a distributed database, or ‘ledger’: everyone on the blockchain has a copy of the database, which is also available to everyone to view, and every record that is kept on it is immutable.

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