How to solve the big data problem in the music industry has been a question for many years, but emerging blockchain technology might provide the solution the labels, producers, and distributors are looking for.
It’s an old joke in the music industry that every overnight sensation was actually years in the making, and the same could be said of product some are predicting will be the savior of the business. The concepts behind blockchain technology go back many years, but it’s only with the rise of bitcoin that people have really started paying attention and thinking about how the blockchain can be applied more globally. In the span of a few years, the blockchain has gone from a something associated by many with illegal purchases to a technology that Goldman Sachs is predicting will “change everything.”
Can the blockchain solve the music business’s big data marketing problem?
Right now, many artists face an asymmetric information problem — while their fans know where to find their music and offer financial support, they have very little data about those fans. Most of the data offered by labels and streaming services is too general to be really useful, especially for smaller artists — knowing that women age 25-45 who live in Nashville like your music is all well and good, but knowing the a 29-year-old woman named Lisa loves your tracks most of all, and where to email or call her, is worth far more.
On the flipside, many people don’t want all their data to be shared with the artists they listen to or the labels who release them. The blockchain could allow direct to fan distribution that puts the fan in control of how much information they share and allows the artist to reach out to superfans. It will also allow for a greater range of pricing — if someone wants to pay more than $1 for a track, or $10 for an album, they can contribute whatever amount they want.
Right now, the amount of data being shared with artists and labels is enormous, but very little of it is all that useful or applicable.
Blockchain will make payments more transparent
Many artists are frustrated with their payments from streaming services, and rightly so — they get a report of how many times their tracks have been played, and then months later, they get a check for a seemingly random amount. Streaming services right now pay the labels, and then the labels divide up the take among artists, but the accounting isn’t transparent. While no one is accusing the labels of doing anything wrong, the process is complicated and slow.
The use of smart contracts on the blockchain will help solve many of these problems, Revelator CEO Bruno Guez explained recently at the Future of Money summit. Artists will be able to register a composition and/or recording on the blockchain, and that can be associated with a smart contract that details who gets paid what amount. Payments can be turned around much more quickly; artists and streaming services will be able to see exactly where all the money is coming and going; and labels can spend their resources more wisely.
The more information that is uploaded to the blockchain, the better — right now, there is no central database for copyrights and song registration. If the blockchain can become the central repository for music metadata, it means more artists will get paid.
Given the momentum, 2016 is likely to be the year that labels, producers, and distributors start taking the blockchain seriously.