A lot has been said about the Blockchain technology since it was first defined by mysterious Satoshi Nakamoto less than ten years ago. It has evolved since then and now seems to be finding its first real applications. In one of my articles on the latest law jobs site, I defined blockchain as “A shared, trusted, public ledger that everyone can inspect but which no single user controls”. Before we delve into the meat and bones of the article, I would like to point out that cryptocurrency is already a massive gamechanger for businesses operating across multiple industries. For example, Peaches and Screams, one of the largest lingerie brands in the UK worth over £70 million was the first online retailer in the UK to embrace cryptocurrencies whilst one of the biggest vape shops in the UK called The Eliquid Boutique was the first vape shop to accept bitcoin and later over 100 alternative coins. As you can see, cryptocurrencies are permeating all industries and now it has really taken a bite into the music industry.
Simply put, the idea is to build a new kind of Internet, eliminating intermediaries that suck out value from every exchange in return for providing guarantees to both parties. As you might know, that’s what companies like Visa do everytime you make a payment with your credit card. In the Blockchain, every transaction is recorded, forming a chain from the very first exchange to the most recent one, thus providing amazing transparency to all actors using the technology.
Now, let’s consider the music industry: millions of everyday transactions, on thousands of online platforms, with an endless number of intermediaries charging right owners for royalties management and collection. Often, artists don’t know precisely how much each intermediary earns thanks to their music, especially when it comes to online sales and streaming.
That is the problem that Phil Barry, musician, and Cambridge alumni, is trying to tackle; he’s been doing so by collaborating on the elaboration of different products, including the platform Ujo Music. As he faced in the past the problems he’s trying to solve now, we had a talk with him about his vision on an industry that him and many others are trying hard to disrupt.
It’s the people facing the flaws of the music industry who are innovating – and that’s refreshing
Phil Barry is not a music business rookie. He spent eight years as a recording artist and ended up running his own label during half of that time. Even if he was recognized for the quality of his music, he kept mixed feelings about his experience and that is mostly because of an old-fashioned industry, not willing to focus on the two most important actors: the listener and the artist. “I have to say that I had become extremely frustrated by the music industry’s failure to adapt to new technologies, not delivering value to creative people depending on the size of their audience”, Barry says. “That issue comes back no matter what type of structure you get to work with: the licensing system is the core problem.”
Involved in the innovative release of Thom Yorke’s, “Tomorrow’s Modern Boxes”, through Bittorent in September 2014, Barry started to show more interest in upcoming technologies that could have an influence on our current economic system. But it’s mostly after reading an article by D.A Wallach that he started working on a collaborative project, gathering creatives of different horizons with one idea: making the music industry fair again. A few months later, a prototype called “UJO Music” was introduced to the public in association with grammy-award winner Imogen Heap.
The licensing system is the core problem.
And that’s is when the story gets really interesting: a former indie musician, a prize-winning artist and software developers got together and demonstrated that the music industry could work differently. “It was kind of a meeting of minds: we got the same idea at the same time”, Barry explains. During his partnership with Heap, Barry “felt that there was an overlap between what [they] were trying to achieve and her vision as an artist towards a fair and renewed music industry.”
The idea of Ujo was simple but awesome: an open-sourced platform for artists and rights owners to sell their creations, enabling them to design and add their own services on top of the main infrastructure. Every transaction being recorded in the Blockchain, royalties are redistributed real-time in relation to the smart contract, a program automating the whole process.
The main challenge of Blockchain: drawbacks of a crypto-currency based technology
My first thought after discovering about the possibilities offered to the music industry by Blockchain was: how can you bring clarity and fairness to artists when your technology relies on crypto-currency, know for its sudden shifts in value? And who, except for experienced techies, is willing to pay with Bitcoin or Ether to buy an album?
“It’s not that I don’t believe in crypto-currencies, but it’s not what attracts me in the technology.”, Phil Barry told me straight away. “We have to make it possible, at least in the short run, for people to engage with physical currency”. The idea here is not to get into a war with the current monetary system, but to bring back compensation to the people who are creating value. And Barry is straightforward about his skeptic he can be towards cryptocurrencies.
“Many people think that crypto-currencies can replace ‘normal’ money: I disagree. At least, not for now. The value of these currencies is increasing over time instead of decreasing, as there is only a limited amount of it: what would happen if the whole world started to use Bitcoin?” If you would like to learn more about cryptocurrencies, I recommend this cryptocurrency blog.
Crypto-currencies is not what attracts me in the technology
What if the industry itself was willing to embrace change?
Technology lately has had a huge influence on the business of making, recording and distributing music. Since the 2000’s, the industry sales shredded by half and all major labels completely reorganized themselves in a survival effort, all that because of P2P downloading. Tech companies earnt a great part of the cake by providing solutions that historical actors didn’t want to see emerging: digital sales and streaming. That recent disruption is the reason why labels and right holders won’t try to “put the technology back in the bottle again” P. Barry underlines. The practice of consumption and distribution of music has already changed so much; industry players would rather take advantage of Blockchain than denying an upcoming market trend again.
But the industry’s one and biggest concern might be what makes the core of Blockchain: transparency. Indeed, with data value going up the roof and the habit of joining confidentiality clauses to every royalty contract signed by an artist, it seems unlikely for music companies to go public about their business anytime soon. Unless if Blockchain’s praised efficiency turns out to save them enough money; especially what’s spent on performing rights management. In average, that represents 12.7% of total royalties.