Music Tech’s future: from sexy to radical
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The end of the Music Tech gold rush is upon us. Apparently.
While an elite handful of streaming services (Apple, Spotify, Tidal, Youtube, kinda-Soundcloud) have calcified into the dominant market players, smaller more fan-focused products have been imploding, showing entrepreneurs and their deflated investors alike the limits of mainstream market demand for niche or fan-focused music services.
Why? Money… Always, the money.
As a starting point, when there’s an oceanic supply of free content, it’s mad difficult to get people to pay; however even more challenging, even if someone wanted to pay the digital payment mechanisms we currently have don’t connect with the way we can consume music. Despite the endless ways music may be consumed through digital means, there are really only two ways to get their users’ cash: charge their cards/paypals or show them an ad. Throw into the mix that the major labels and rights-holders have cooled on their issuing of licenses to start-ups and all of a sudden, it looks like the bus is full for consumer-facing music tech products.
But stress not, there is enormous room to innovate behind the curtain in the way the music industry acquires, administers, distributes and collects remuneration for musical works. Notwithstanding the possibility of VR renaissance, my bet is that the next major phase of music tech development will not happen in the “front end” of how fans consume music, but rather in the structural “back-end” of how the underlying business itself works. Why you ask? Because the back-end of the music industry may be the very definition of a clusterfuck.
Music’s Back-end: A Burning Dumpster Fire
As a starting point, it’s worth revealing what anyone who works in Music regards as obvious: the system of rights licensing and administration is a hot mess. In one song, you may be looking at up to 6 layers of rights that could be owned and controlled by completely different people who will all have to sign-off before usage may occur. And these rights-controllers will often transfer their rights or outsource the administration of said rights to a myriad of third party institutions. They, in turn, will sub-license to third party institutions in other countries to administer the rights in the territory they operate in. Which will be thrown into an enormous mix-bag of other songs to be managed and negotiated en masse. In short, an already complex Intellectual Property Product (thanks to copyright law) enters a system of rights management institutions which is fragmented, uncoordinated and highly inefficient (thanks to the music industry).
And this mess is a problem because rights licensing and administration is the music industry. Literally, the core value-exchange in the music industry is some people paying other people to acquire an IP right or permission for use.
We’re stuck with an awfully quaint analogue back-end in an era of universal, multi-use, high volume digital consumption. Clearly, Music Copyright itself has a UX problem.
Glimpsing the ‘Fütch’
The thing is that it needn’t be this way. The way value is remunerated should (obviously) mirror the way value is consumed.
Imagine a system wherein artists and rights-holders could easily upload a track and control their rights, issue licences for live performances (inclu. DJ sets), sync opportunities, remixes or derivative uses from one neatly indexed and centralized space where individual users or larger intermediaries wanting to license rights could easily pay and show that they have necessary license to use the music.
Such a system would minimize waste, ensure clear transparency for rights-holders and would remove obstacles and checkpoints, creating a much easier user experience for not just those on the business back-end of music but consumers who want to attain rights for uses other than just listening.
But how my man? If this was so easy surely we’d have this up and running already? Let’s not get it twisted, creating such an underlying infrastructure would be incredibly complex, requiring work and buy-in from multiple stakeholders. The thing is, we may well be standing at the cusp of a potentially enormous revolution in technology which could open the space to make such a system possible for the first time…
The Blockchain & Smart Contracts
If you read any tech writing at all you’ll know that the levels of hype around the blockchain are reaching critical heights. The technology which empowers bitcoin is being hailed as “the next internet” and while sure, a lot of the hype will deflate over the next couple years, the development of these decentralized, uncrackable public ledgers is extremely exciting. (If this is the first time you’re hearing about the blockchain, shame bubs, read this, this and this quick-sticks).
In short the Blockchain could create two key elements: flexible yet granular rights-management control and integrated micro-payment mechanisms. Jargon-y yes, but exciting nonetheless.
Let’s start with the former, in the basement of rights management.
Part of the justification for middleman institutions (such as publishers and collecting societies) in the past was rooted in the fact that monitoring and controlling the exploitation of certain rights was an incredibly difficult task. How could an artist (let alone a label managing a whole roster) follow up on every use of the music it had the responsibility to control? It made sense in such an age for artists and labels to outsource this work to professionals who they could trust to track the usage of their work and claim the fees owed to them.
The irony being of here that these third party institutions aren’t particularly good at doing this. In between opaque accounting practices, rough-as-hell remuneration calculations, paper-based submissions and collections techniques, kafka-esque bureaucracy, anti-competitive dominance and heavy-handed (in some cases bordering on authoritarian) compliance demands, they seem to be begging us to put them out of their misery.
From a technical perspective though, the blockchain could radically obviate the need for such institutions: In short, we will be able to register the copyrights emanating from a song on the blockchain and then with the power of smart contracts, automatically manage the administration and transfer of rights to 3rd parties. Combined with fast improving Content ID technology, following the paper trail of music usage will become fundamentally simpler and transparent. Instead of trained experts roughly working out where and for how long a work was used, we will soon be able to easily trace and target for monetization where works are being digitally consumed (covering both exact copies and UGC derivative works).And this is important because it will make the use of music (both by consumers for passive listening as well as by commercial entities such as clubs, broadcasters, or other creatives) far more flexible, user-friendly and transparent. This would lower barriers to entrance for consumers and artists alike, enable greater music usage and would trim wastage and inaccuracies.
This gets particularly interesting when married to the latter feature, micro-payments. Up until now, digital services have been stymied by two issues: the challenge of receiving payments that are below a certain size and the inconvenience of payment. Think about buying something more substantial online like a sound-system: Our payment systems work well enough here because not only is the monetary transaction big enough that the bank will be prepared to process the payment, but from a User-Experience perspective it is not a jarring break in the process but a natural end-point that we’re used to: check-out.
The same cannot be said for many other goods and services we consume online, especially creative content such as images, text or music. Chiefly, we consume these goods at too high a volume to be dragged into an onerous payment process every time we consume and even more problematically, the monetary value of these transactions (possibly as little as a cent or less) are too small for a bank to bother processing.
Bitcoin, Ether and other digital currencies however can attend to both of these problems. Because these digital currencies inherently exist and are entirely processed online, they need not going through “real-world” banking institutions and thus users can quickly and easily transfer tiny amounts of digital currency right there in the browser or on an app.
This capacity for micro-payments when combined with the flexible rights-management of smart contracts means that artists could set the remuneration conditions for access or usage of a particular right beforehand; such usage or access would then automatically be granted should a consumer meet the conditions set (i.e. paying a particular price in Bitcoin). And this by the way is the more onerous version of the transaction. This could be smoothed over even more substantially if an existing platform (like Youtube) would tap into the underlying public blockchain and integrate these technologies into their larger user experience of content indexing and payment where such consumption would naturally follow from the artist’s original upload of their work. Such an integration, apart from hiding the slightly more janky back-end wiring from the consumer would accelerate our ability to jettison a separate specialized industry of mediocre middlemen that do this work with rough back-of-the-envelope calculations.
Bringing it home: Blockchain and Music Consumption in Sub-Saharan Africa
As a rule of thumb, avoid think-pieces that have “Africa”, “leap-frogging” and “under-served” in the same paragraph. Mea culpa. However, if one was to look at the machinery of the music business in Sub-Saharan Africa (outside of South Africa and Nigeria in particular) and compare it to the amount of consumption and creation that goes on, this general point about the potential of the blockchain to radically improve the music business is even more pertinent.
When thinking about the music industry, its important to remember that at it’s core you’re looking at a high volume consumable goods market. On one side you have product distribution (music goes out) and on the other revenue collection (money comes in). Especially with the advent of the internet and digital distribution, the former side is relatively easy, it’s the latter part that is the motherfucker requiring complicated formal collection institutions and procedures.
And here’s the thing, setting up the machinery of collection is capital and human resources intensive. As a result, the music industry as an industry is biased towards big artists and big labels in big markets who have the necessary business structures, market revenue incentives, expertise and 3rd party relationships to effectively create or tap into these collection mechanisms. The obvious, simple observation is that this capital threshold is exacerbated in markets where there are a lack of existing collection mechanisms; simply put, many African musicians will not be connected to these structures like their American or EU counterparts may well be. In short, there are a lot of African musicians making music, and a lot of people consuming their music, but because of the immense challenge of tapping into institutions which can collect those royalties on their behalf, the value they have created is being unrewarded.
The benefit of the blockchain in these markets would be direct. Artists would no longer be reliant on these formal collection mechanisms to be able to collect royalties and they could monetise their works at relatively low administrative cost without being dependent on a 3rd party gatekeeper.
Looking Forward/Wider
If you’re in music this should excite you. If you’re not in music this should excite you even more. My old boss had this great line that Music is the Canary in the Digital Goldmine what happens in the music industry first will tend to happen to other information producers, and the market more generally, down the line.
If that’s the case, what we can extrapolate to more generally is that we are not at an innovation horizon event but rather at a point of inflection. And that inflection will be a shift, or a re-balancing, from the front-end to the back-end where the underlying infrastructures and institutions which structure our industries (and perhaps societies) are fundamentally changed. And because we’re looking to change such fundamental systemic conditions, now more than ever we will have to be aware of the policy and legal aspects it effects and is affected by. Copyright law itself will need to shift to accommodate these changes and its going to take a long hard slog to get the major stakeholders to buy-in and open the gates. In this way, the “Blockchain revolution” (if/when it happens) will need people not just coding and developing the technology but people on the ground, sometimes dry, legal types, pushing and pulling for uptake to happen.
Consumer-facing music startups and tech developments will continue happily along. But the predominant vibe of Music Tech as sexy and edgy may will shift to the heavy lifting needed in the back-end. The future of music tech in this way is not sexy but it may well be radical.
