Much is written about blockchain and how it will change the music industry forever; although this categorization carries real weight, is a decentralized blockchain still the best answer?
by Mick Wollman of Base rating
The complexities of the music royalty system are endless. With payments coming from multiple projects, sources, or locations, it can easily create a lot of confusion when it comes to navigating copyright law. And adding an extra layer of labels or distributors can increase the level of difficulty, especially for an artist who is just starting to break into the industry. Legal and organizational constructs have created unnecessary barriers for artists and managers, leading to the search for quick fixes and unsustainable ones.
Whenever society is faced with a new technological advancement, it is normal to explore ways in which it could solve a current problem – in this case, the introduction of blockchain has left the music industry staring. riveted on a potential solution to the ever-growing problem. confusion around the distribution of royalties. But is it sustainable? And are there ways to improve transparency without the risks of involving finance in the highly unregulated Web3 landscape?
Companies like Audius tried to solve this problem by bypassing the “legacy” chain of royalties entirely. They require fans to listen to music through their app, which directly accepts payments and then pays creators via cryptocurrency. The challenge with this is that the currency (and its underlying blockchain technology) is not yet widely adopted by consumers. Tech startups have had to get creative in their problem solving and look beyond blockchain to find a transparency solution.
“a lack of central intermediaries also increases the risk of asset and identity theft”
For example, our music technology company Base rating allows fans to buy investments in their favorite artists, sharing the benefits by entitling them to a portion of the artist’s streaming royalties. An intriguing differentiator is their decision do not to operate off-blockchain, citing ease of use and investor protection.
The question is not whether or not the management of royalty chains can be improved with advances in technology, but rather, can they be improved with blockchain technology?
While the decentralized system has obvious appeal, its lack of central intermediaries also increases the risk of asset and identity theft. At this point, something absolutely needs to be done about the reliability and complexity of royalty distribution.