Blockchain: The new music industry?

Well, that is exactly what is happening at the moment. Remember: the Blockchain is a decentralized database, completely transparent and able to process crypto currencies. All transactions that are done on this database are regularly sealed and archived until doomsday. Transactions not only refer to monetary exchanges. Almost any process can be written into the Blockchain in data form as a transaction, like digitally stamping files to prove one’s ownership or registering as a voter. The lack of a central entity, full transparency and crypto currencies: these three features alone can help solve virtually all of the challenges the music industry currently faces. And that’s not even talking about smart contracts yet.

For quite some time now, British singer, songwriter and composer Imogen Heap has been dreaming of a digital ecosystem centered around the artists who keep complete control over their works. Heap’s revolutionary vision turned into reality with a little help from Ujo – we’ve reported about this service, which takes advantage of Blockchain technology. What sounded a long way off has actually turned into a functioning prototype. Playing around with it for a couple of minutes will have you cry tears of joy; it’s simple, elegant and transparent to use. It’s what an artist hub of the future could look like.

‘Tiny Human’ - a song Heap dedicated to her daughter - serves as a sample for the Ujo prototype, which you can launch on ujomusic.com. Besides being able to buy it, you are able to read through all sorts of information about those involved in the production of the song. The planetary design of the whole page is quite fitting. Once a couple of thousand artists have become part of the Ujo galaxy, every band, artist, composer and producer, as well as every individual song, will be a node in the grand scheme.

But let’s focus on the present for now. What separates Ujo from other platforms is its limitless openness. Whoever wants to buy a song can choose between a number of licenses. Individuals could go for the regular download while shops like iTunes are allowed to add the song to their catalogue providing they forward 90% of the revenue ‘Tiny Human’ generates to the artists involved. You may think that Apple isn’t going to bow to the demands of one individual artist. This could change, however, once other prime artists start using Ujo.

The same goes for streaming services. Heap set a licensing fee of 0.6 cents per stream for ‘Tiny Human’. And even if there is no streaming service out there at the moment that could afford to pay out more than half a cent per stream, Phil Barry, one of Ujo’s developers, is certain that sooner or later there will be someone who’ll make it work.

Producers who want to remix ‘Tiny Human’ can buy the Stems package, which will include all individual tracks of the song for $45. There’s another tier covering commercial usage via sync deals, though this form of usage requires you to get in touch with the artist via email. Heap even disclosed details of a deal she made with Sennheiser, who are allowed to use her song for marketing purposes.

All of these different types of licenses are typed into a smart contract resting on the Blockchain. These contracts not only ensure that licensees can get the license they need with no more than a click, smart contracts also make sure that the licensing fees – the sales price – are transferred to each participating person’s account automatically (the individual shares were agreed on before setting up the contract). Clicking on the policy button will show you how much each artist involved in ‘Tiny Human’ (1st and 2nd violin, viola, cello, trombone, horn) and its mastering engineer Simon Heyworth will receive. There’s even a balance sheet indicating how much each musician has earned thus far.

Each and every sale is documented, including the anonymous ID of each buyer. This is a way of proving at any time that you’ve already paid for the license of any given song – something that may come in handy if your hard drive implodes and you have to re-download all of your music, for example.

Since the Blockchain is able to process crypto currencies, every transfer is done in a matter of seconds. At the moment you’ll need ETH units (named after Ethereum, the Blockchain on which Ujo was built) to be able to pay for purchases on Ujo. Setting your account up to be able to get a hold of ETH units isn’t rocket science. Still, Barry and his team are in talks with credit card companies to offer more payment options in the future.

How is an entire industry supposed to be convinced of using Blockchain technology to handle its business going forward? An industry, mind you, that isn’t primarily known for embracing new technology. Most progress in the tech sector is based on open source and the sharing of ideas. The music industry on the other hand has specialized in controlling works, that’s how it’s made most of its money. This control manifested itself as a monopoly on distribution, split between a few large players in the ‘80s and ‘90s. Whenever a new technology threatened to break this monopoly, the majority of those working in the business panicked.

Today new technology pops up at a rate that makes it impossible to kill - a strategy that was already bound to fail back when the MP3 made its splash. What speaks for the industry’s commitment to participate in (rather than dominate) the Blockchain revolution is the fact that Robert Ashcroft (CEO of British collecting society PRS) and Christophe Waignier (Director of Strategy and Resources at French collecting society SACEM) took part in a panel on the Blockchain at the Fair Music Open Forum in Boston last month.

A great number of businesses working in the music sector justify their existence by claiming to negotiate the best deals for artists. Others make sure artists are properly marketed. Whoever brings value to the ecosystem will also be of relevance on the Blockchain. What can no longer be justified, though, are excessive commissions being charged to keep an outdated apparatus alive. Non-disclosure agreements will be a thing of the past too.

A lot of these old-school businesses are still operating within an old-school framework. You, for example, won’t get played in radio if you’re not part of long-established structures that will ensure the programmers hear your song. These processes need to adapt, which will happen if there’s interest in models like Ujo. Once the fairness and transparency of such systems have become common knowledge and once a significant amount of artists use the system, even radio stations will start signing smart contracts to license songs via the Blockchain. And it could well be the independent sector that leads the charge here. After all, there are many people working in the music business that want nothing more than to bring good music to the people, in a manner that will ensure everybody involved is able to make a living.