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The music industry is booming, but its outdated and costly music rights system needs to change
The music business has always had a tough reputation. Gonzo journalist Hunter S. Thompson described it as “…a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men dielike dogs.”
That may not be accurate. However, where there is a negative reputation stems from the exploitation of artists. Stories abound of musicians not receiving their fair share of royalties. For example, Solomon Linda, composer of the song that became “The Lion Sleeps Tonight,” was paid only 10 shillings for his work. That’s about 78 pence in today’s money.
In the past, underpayment was often deliberate. But then, as now, lost income was also the result of the cumbersome, byzantine system of music rights registration and supporting laws across both performance and mechanical rights. The Music Modernization Act, passed recently by the House Judiciary Committee in the US will provide significant improvements by reforming mechanical licencing laws to fully support artists and rights owners.
Outdated, slow and often inaccurate
The title to any given piece of music and performance is recorded in multiple, often-conflicting and/or incomplete records of who owns the rights to what music in what territory and for what type of use.
In Europe alone, 28 collection societies collect royalties for public performance rights and mechanical recordings in 28 different markets. This lack of transparency combined with the centralised nature of the industry has led to slower royalty payments or paid inaccurately. As a result, there continues to exist disconnect between the owners of music content, the artists themselves, and the end consumer.
This environment has a negative impact on all participants, with high cost base of administration, revenue leakage for rights owners and complex processes underpinning a convoluted ecosystem.
Artists are not the only victims of this antiquated system. Recording companies and music publishers spend significant amounts of their overhead tracking their artists’ rights. Often, artists must wait for up to two years after their work is purchased before they get paid.
It has not gone unnoticed. There was an industry attempt, the Global Repertoire Database, which aimed to create a single, industry-standard database containing a global view of rights ownership. However, although the sentiment was borne from a desire to create a shared, authoritative means to track and pay royalties, the effort failed.
The ongoing need for a better system of rights ownership information management remains to be fulfilled and arguably the benefits and need for such a solution is ever increasing.
Until recently, data was collected and maintained manually, country by country, with a disconnect between composer and performer. Now things don’t have to be run this way. With some reengineering, the digital network that has turned every smartphone, tablet, and computer into a music store – and music into a business that is growing at pace, with global digital music leading the charge with revenues worth US$14.5 billion, forecast to grow at 11.8% CAGR to US$18.6 billion by 20211 – can also be used to protect the rights of artists, publishers, labels, and other copyright owners. This process is both thorough and secure
Blockchain technology, it really could work
In the US, the Music Modernization Act will fast track mechanical licencing laws into the digital age. This will include streaming and on- demand mechanicals. In existing US law, digital service providers such as Spotify pay both performance and mechanical rights for streaming and downloads…
Link here for full PWC article
Forbes: How Blockchain Could Start To Make Waves In Media And Entertainment In 2018 – Catenae Innovation #CTEA
Blockchain technology made big news in December thanks to the bitcoin cryptocurrency surging past $10,000 to a $20,000 peak, the launch of bitcoin futures in major exchanges, and the announcement that the Australian Stock Exchange will use blockchain technology for trade settlement. Blockchain could also start to be implemented in media and entertainment in 2018.
The beauty of blockchain technology is that it enables a digital marketplace that is both decentralized yet tamper resistant. Transactions are recorded chronologically in a distributed ledger that is transparent to its participants, but encrypted so nobody can cheat by changing or faking transactions. Agreed business rules, logic, and contract terms can also be programmed to automate transactions, known as ‘smart contracts’.
To envision potential markets that are ripe for disruption in media and entertainment, you have to think of ones where participants would benefit from both security and transparency, like payments, funding, monetization, and contract enforcement.
It is difficult to pay fairly for creative work in a digital world where it is easy to share and distribute copies, so royalty payment mechanisms are ripe for disruption. For example, music streaming sites and rights holders struggle to agree on compensation for trillions of song streams, leading to legal fights such as the $1.6bn lawsuit against Spotify.
The Open Music Initiative (OMI), composed of 200 members including the three major labels Sony, Music, and Warner, as well as YouTube, Netflix, Spotify, and Viacom, seeks to modernize royalty payment mechanisms. OMI revealed last week on CNBC that it’s considering blockchain as a foundational technology.
The vision? A transparent blockchain-based ledger that contains music assets and their rights holders. Smart contracts can then automate royalty payments based on a song’s consumption, including streaming.
Crowdfunding Of Creative Productions
2017 marked the uprising of blockchain start-ups across industries, often funded with initial coin offerings (ICOs). ICOs use cryptocurrencies like bitcoin to crowdfund new ventures.
Creative productions could also leverage ICOs for crowdfunding. In fact, last December Indiegogo launched its own ICO platform. So ICOs for films and other creative ventures could ramp up in 2018, contingent on how the Securities and Exchange Commission (SEC) applies and imposes securities laws to ICOs.
A blockchain-based crowdfunding platform can securely record funding transactions that are transparent to all investors, allowing them to know real-time where they stand in the pecking order. Upon sale, licensing, or consumption of a creative asset, smart contracts can then automate payments to both rights holders and investors.
For example, iProdoos is a blockchain platform that launches in 2018 to enable aggregation of talent for premium TV & film production, and crowdfunding with traditional or crypto currency. This allows consumers to generate revenue from the projects they fund.
Despite the ability to target and personalize ads, the digital advertising ecosystem is pretty inefficient and opaque, to the extent that 40-70% of ad dollars can go to intermediaries. Developed in partnership with Nasdaq, NYIAX recently deployed a blockchain-based ad exchange platform that allows publishers and advertisers to efficiently trade advertising contracts. Richard Bush, Chief Product and Technology Officer, states: “With valuable experience in capital markets, NYIAX has a long-term vision to create a more financially rigorous model leveraging fin-tech best practices with advertising and media.”
Madhive is also deploying an ad exchange targeting digital video content sites. Its CEO, Adam Helfgott, states: “Our platform enables ad-based monetization of video in a secure privacy-compliant way so a viewer’s private information is shared only with an artificially-intelligent agent that pulls in relevant ads.” This could come handy in the EU market, where new strict privacy laws go into effect in May 2018 that require companies to track and protect consumer data.
Piracy is one of the main headaches that digital distribution brought to media and entertainment. Phil Gomes, blockchain thought leader at Edelman, states: “I personally believe that a lot of piracy comes from friction in the legal distribution mechanisms. Blockchain technology can enable more frictionless monetization of content to better compete with pirates.” The key is to seamlessly match the legal user with the legally-purchased content, so that the payment mechanism is efficient and it is easier to compete with pirates, which by design don’t process payments.
Clearly, from the examples above, blockchain is not just about digital currencies. And whether it’s these or other ventures that succeed, all experts I talked to agree that 2018 will be a big year for blockchain in media and entertainment. Gomes stated: “2017 was full of corporate pilot projects to test applications of blockchain technology; 2018 will be the year when many of these will be deployed at scale.”
We are entering a hype period for blockchain technology reminiscent of the Internet bubble, so it will be hard to distinguish between hype and true potential. So how to know where the real opportunities are?
Keith Montgomery, Vice-Chairman at CyberOi, a consultancy that guides iProdoos and other blockchain ventures like QuantM.one and Cryptowork, states: “While in 2017 there were plenty of hype and ICOs, 2018 will be when the first business disruptions happen. The winners will focus on solving real business problems and use media effectively to create communities of mass adoption.”
So stay tuned. If you are in media and entertainment, 2018 will be a year to closely monitor and possibly experiment or invest in blockchain innovation.
Article originally written and published by Nelson Granados, Contributor to Forbes Magazine
Link to the original article here
Brand Comms CEO Alan Green talks to Nick Timms. Nick is co-founder and CEO at DragApp, a mailbox application that organises your inbox in much the same way that a CRM system organises and segments a company marketing database. In the past year DragApp has amassed over 30,000 users in nearly 200 countries, and already boasts blue chip names such as Uber, Netflix, Spotify and AirBNB on its client list. A highly successful marketing strategy sees DragApp currently generate $36 from every $30 spent. The company are currently raising £600k through FCA regulated Sentient Capital to further accelerate global growth. Info on this and investment documents can be found here