Blockchain strikes a chord with the music industry in a bid to dodge piracy

[Len]

eMusic latest to announce token, decentralized platform for artists to get tunes into headphones

Jared Bowser was brushing his teeth, about to leave for a concert, when he heard a knock at the front door. The 19-year-old still lived with his parents. His mother, the only other person home, answered the door and walked back to the bathroom. “Her voice was the crying, shaky kind,” Bowser said. “She asked me ‘Jared, why is the FBI at the door?’”

Two agents dressed in black suits with leather bound portfolios sat at the kitchen table and asked about five songs by musician Ryan Adams they said Bowser shared on the internet. The songs had not yet been released, but Bowser had copies thanks to a friend who worked at a magazine and had been given the album pre-release to write a music review. He forwarded them to someone he knew through a Ryan Adams fan blog.

“I’m just answering their questions honestly,” Bower said. “I’m stressing that I didn’t know there was any kind of law against this.”

Bowser and the man he shared the music with were charged with what amounts to piracy under the Family Entertainment and Copyright Act. Congress passed the law just months before, to help artists control where their songs were played and thus ensure they were compensated. Bowser had been told he was the first person in the country ever charged with a crime under the new law.

The trouble of tracking music and collecting payment for every songwriter, musician and copyright holder has plagued the industry since before Bowser’s 2005 indictment. Now, there’s an uprising of music stalwarts and startups who believe blockchain may provide an antidote, ushering a new era of efficiencies for artist and listeners.

The latest—eMusic—announced plans to raise $70 million through the sale of an ERC-20 token called EMU scheduled for September 2018. eMusic says funds will build a decentralized system of simple smart contracts that will let artists publish music and manage rights and royalties. When a song gets played or sold, revenue is shared between musicians and rights holders. The transaction is recorded on the blockchain. Profits can be withdrawn.

“Today’s supply chain for music is broken,” said Tamir Koch, CEO of eMusic, in a press statement. “While, streaming has made it possible for anyone to listen to virtually any song ever recorded at any time, it’s underlying economics are financially crippling to the most vital piece of the music ecosystem: artists.”

eMusic joins a growing group within the music industry helping artists establish a copyright and get paid. Choon says 5,500 artists have already signed up on their blockchain music platform. Artist Gramatik raised $2,480,000 from an ICO of his own GRMTK token, giving fans a chance to co-own rights and royalties from his music. Tokit lets any artist copy Gramatik’s playbook. Combine your favorite content from multiple services into one dashboard with Current and be rewarded for the time you spend streaming. Or, powwow with other creatives on Mycelia, a development hub established by artist Imogen Heap who was one of the first to acknowledge blockchain could help music in the Spotify era.

“If there is an underlying infrastructure that allows you to track where your music has gone and how your music has been used, you can see how some things might get streamlined in the industry,” said Lance Koonce, a partner at Davis Wright Tremaine who supports blockchain initiatives in the music industry. “More importantly, with payment, you can track multiple parties verses a complicated royalties industry. Blockchain tech gives you a sense of returning some of the powers to the holder of the copyright.”

Koonce said he’s most excited about companies working to tackle a narrow issue and get a proof of concept into production. He acknowledged adoption, and further integration, could be slow.

“We haven’t ended up with a solution in the industry that really provides a lot of transparency,” he said. “All of these solutions being proposed with blockchain now are going to face some of those same headwinds.”

The Berklee College of Music established a consortium of companies under the Open Music Initiative (OMI) to align efforts to integrate blockchain into the industry. The initiative will not actually create its own blockchain for musicians, rather encourage companies in the industry to do so and help those companies network with each other.

“Why shouldn’t songwriters have a dashboard that could tell them in real time where their music is being heard?” said Panos Panay, a founder of the Berklee program that created OMI. “It’s not a crazy idea, but to do that, you have to be able to find out who owns the copyright. Record labels and performing rights organizations can give access to that information to everybody to increase their ability to collect money by knowing instantaneously when their music is being played somewhere.”

More than 120 companies, including Sony Music Entertainment, BMG and Netflix have signed a on to support the initiative and develop a set of best practices to implement a more open source approach to music copyright and payment. Digital streaming powerhouse Spotify has also signed on, and even acquired Mediachain—a fellow OMI participant building a blockchain—to make sure people who use media have the correct information about it.

“There will be fewer intermediaries and more direct licenses,” said George Howard, a Berklee professor and founding member of OMI. “This will allow for more revenue for artists.”

The revenue benefits would likely extend to rights holders too. Powerful music rights manager SESAC—which works to gets licenses and royalties paid on more than 500,000 adds, moves, or changes to songs every month—joined OMI on the prospect of getting payments quicker.

“We see it as something that will be introduced in the industry within three to five years,” said Brian Durant, director of licensing and data management at HFA/Rumblefish, which is part of SESAC. “People need to see examples of it in use.”

Blockchain technology, if ever widely accepted in the music industry, would help artists like Ryan Adams track their music and fans like Jared Bowser avoid the feds. Bowser ultimately pled guilty to the charges for a reduced sentence, which included two months on house arrest with an ankle monitor.

Since then, the digital era of music has changed everything since Bowser was originally charged with piracy. Streaming services and social media have have changed how fans access songs and how artists distribute their work. Bowser, who is a musician himself, says he understands artists still need to get paid. “I don’t know how you can protect it or prosecute it at this point,” he said.