What is the ideal Music Stack?

Isn’t it time we asked this incredibly obvious question

Who’s driving.. and where are we all going?

I use the term ‘Stack’ in the same sense that is used by Joel Monegro from @usv when they have referred to the The Nomad Stack or The Blockchain Stack. You could see it as another way of representing a value chain diagram, except that it structures layers according to their enabling fundamentality.

So, before we get on to music, let’s understand this enabling stack and why USV thinks it is so significant

The USV model (above) is very bullish on the Bitcoin Blockchain as the foundation of ‘shared data and protocol layers’ which enable a whole new range of higher API’s and applications, and that benefit from Bitcoin’s open ethos and network effects.

Nobody controls these parts of the system, and they’re accessible by any person or company.

Joel makes the comparison with traditional open, decentralized technologies like HTTP and TCP/IP (being the underlying protocols of the web) and how the ‘shared data and protocol layers’ in this Blockchian Application stack present the prospect of a much deeper decentralized framework than that which underpins the web.

..if you were to graph the current internet application stack like above, those open, decentralized protocols would probably only make up about 15% with everything on top being private and centralized.

Behold the new politics of the Bitcoin Age..

Most of us already know this, obviously, but, to put it simply, ‘Decentralized and Open’ now trumps ‘Private and Centralalized’. Joel continues:

Companies like Ebay, Facebook and Uber are very valuable because they benefit tremendously from the network effects that come from keeping all user information in centralized private silos and taking a cut of all the transactions. Decentralized protocols on top of the blockchain have the potential to undo every single part of the stacks that make these services valuable to consumers and investors.

So, the clear implication is, that if you want to make a valuable company in this new era you will need to work out how to disrupt the legacy centralised models by leveraging new network effects in decentralised systems. The very few Startups which can achieve this may become the next ‘Unicorns’, and the VC funds that back them can make billions. This is the same logic that drives the investment industry and is the implied narative behind USV’s ‘Blockchain Application Stack’.

So, let’s run that algorithm over the Music Industry..

If we had the chance to take today’s best technologies and our best understanding of the web and the internet, and with that knowledge, design the best possible system for a global music economy with optimal distribution, inclusiveness, music discovery and remuneration..

Does anyone seriously think it would look like this?

“Working in music, the flow of rights and royalties” [LINK]

Clearly not.. The existing industry is a tangled mess

But if we follow the model proposed by USV and apply it to music, we would likely end up with something radically different. So, as an exercise let’s use those guidelines and see what might be the result.

The optimal configuration for the ideal Music Stack..

would clearly have to leverage the network effects of the most dominant Blockchain, which of course would be the Bitcoin Blockchain.

An open rights system..

It would then implement an open inclusive rights system, in keeping with the Decentralized & Open principles stated earlier. Staying well clear of the legacy rights industry that we have already identified these models could “undo every single part of”

So, the best fit would be to use Creative Commons licenses instantiated (given material form) by being embedded in the Bitcoin Blockchain.

A Trading and Earning System..

Then, with such a broad and open framework to build on, it seems innevitable that a generically new financial trading/earning system could be implemented to offer new kinds of value to the most fundamental actors in the creation and consumption of music. i.e. time for the big broom.. sweep out all the clutter that is not actually needed for creators to deliver music for the rest of us to consume.

A job tailor made for Bitcoin

Any new music trading system is arguably the natural territory for Bitcoin, and with payments being such a problematic issue in the music industry, this could be the most important attribute of any new music platform.

The possibilities for innovation are breathtaking..

The disintermediation process [LINK]

Most disruptive innovations that manage to profoundly change the status quo, do so by removing layers in a value chain. This process is called disintermediation. (The term was originally applied to the banking industry in 1967; disintermediation occurred when consumers avoided the intermediation of banks by investing directly in securities)[1]

Bitcoin implies a decentralized disintermediation

Bitcoin is now having a widely decentralized disintermediating effect on Banking in that it is arguably replacing the need for Banks themselves. This is quite different to the centralized disintermediation effect Amazon had on retail bookshops for instance, which concentrated market power in the hands of one Company.

So, in relation to payments/earnings in music and the role that Bitcoin could play, and following @USV’s model, everything points to the innevitablity of a radical shift in the commerical relationship between ‘supplier’ and ‘buyer’.

Artists and Fans have the power in this equation..

and the only logical conclusion is that there be a cooperative sharing of remuneration here between the forces of demand and supply.

So what does the ideal music stack look like?

It has a foundation built on the Bitcoin blockchain, an open rights system leveraging the scope and simplicity of Creative Commons and a payments and earning system that incentivizes both Artists and Fans while stepping aside from as many previous industry structures and systems as possible.

Now.. can you guess where (almost) all Music Blockchain Startups are focussed?

Yep.. right into that mess of a tangled music industry referred to above.

Why? Because doing otherwise is full of risk and uncertainty. Seeking to partner with aspects of the main stream music industry may seem like low hanging fruit, but will it lead to a lasting solution?

Disclosure: I am the Managing Director of Bittunes and we have always been on the path to the ‘ideal Music Stack’, since before @USV’s article on the Blockchain Stack was written, and even before Satoshi’s White Paper. Disruptive innovation is never easy, and on the way, your service may be seen as ‘not good enough’.. that is part of the territory. Eventually different technologies and forces align and enable the mission to unfold. Knowing the mission and never wavering is the hard part.

See also: ‘Why we started Bittunes

[1] https://en.wikipedia.org/wiki/Disintermediation