Copyright Tangle Looms in the Blockchain
On the eve of updating our century-old copyright laws, emerging blockchain tech leaves Congress behind.
You’d be excused if you haven’t heard of the Music Modernization Act of 2018 (MMA). It’s approximately 15,000 words amending two sections of the Copyright Act of 1909. This 109-year-old law predates most physical recordings, let alone digital downloads and streaming services. Needless to say, it definitely requires an update.
There are two points of particular interest in the MMA for those of us not in the music biz: the law would set up a Mechanical Licensing Collective (MLC) to handle blanket licenses for digital services, and it would create a publicly accessible database of ownership information.
Mechanical licensing covers reproduction and distribution of music, a rather clunky term in the streaming era, but nonetheless a huge sticking point for streamers and rights holders. Spotify recently settled with some songwriters, but they still face further lawsuits over whether or not streaming is reproduction. Artists are unhappy about not getting paid, publishers are unhappy about royalties slipping through the cracks, and streaming services want more clarity around their core business models. It’s no wonder it passed nearly-unanimously in the House and Senate.
The Mechanical Licensing Collective
The text of the bill mandates the MLC be governed 50/50 by publishers and self-published songwriters and streaming services paid for via administrative fees from the digital services that require the licenses. The efficiencies gained here will most likely go to rights holders, but the bill also gives services like Spotify immunity from being sued over mechanical licenses in the future.
A key part of the MLC’s mandate is a transparent and publicly-accessible database housing song ownership information. The MMA makes no comment on how or when this will happen, and though the MLC will be in charge of this effort, the agency is yet to exist. We’ll have to trust that the Copyright Office knows what they’re doing.
In the wake of their licensing disputes, Spotify acquired Mediachain to help them facilitate royalty payments. It makes sense, especially in light of the MMA, that they want to reduce their compliance cost with automated attribution and payment to artists. But, it also seems to be a way to onboard more musicians and podcasters into their vertical.
As Liz Pelly, writing for The Baffler, put it:
Spotify recently signaled its plan to license music directly from independent artists, which would make the streaming leviathan resemble, of all things, a monstrously huge record label.
It does seem like Spotify is following in Netflix and Amazon’s footsteps. Fine. Listen to their exclusive songs and artists, or don’t. But, will Spotify’s rights ledger be public as Mediachain originally intended? Can a musician download her rights data and take it with her? Will there be an MLC database for all necessary music copyrights?
Blockchain for intellectual property
This use case is tailor-made for blockchain: tons of automatic transactions around the globe, multiple stakeholders, the need for transparency, and a trusted database that tracks ownership. A grip of blockchain startups have noticed this including Binded, Everledger, Pixsy, Mediachain, and Rightsledger. It seems like a half dozen announce and disappear every week.
Aside from the generalized IP ledgers, there are plenty of music, art, and content-related blockchains to go around. It’s a dream of a use case, where creators and consumers can manage an overly-complex process in a direct, decentralized, trustless manner.
For those of us in the gaming industry, especially one that licenses others’ content, this is especially pertinent. With distributed teams of designers, programmers, artists, and musicians, managing all the assets alone is a pain. Tracking non-sanctioned use of these assets once the game is live? Good luck.
Some of the processes of digital rights management should be automated. With a reliable, verifiable distributed ledger and some well-thought smart contracts, we’ll start to see peer-to-peer distribution of digital media outside of the traditional publishing modes. Creators and fans seem to value convenience and transparency. Eventually, blockchain-based solutions will provide the former. The latter, well, maybe the Music Modernization Act MLC database will show us the way.
What about copyrighted content itself on the blockchain?
The industry machinations behind intellectual property rights aside, let’s take a step back and focus on a fundamental issue for all (or most) blockchains. If we can arrange bits in such a way that it becomes the unique property a creator, what happens when those bits (or some derivative thereof) ends up in a public, distributed ledger?
If you took copyrighted digital content and added it to a block that gets written to a public ledger, what happens next? Is the entire immutable blockchain now tainted? This might hinge on how data is stored.
Storing content on-chain
Copyrightable content is stored directly on the blockchain. Any IP created and stored will have a creator and a timestamp that is public and verifiable. How will takedown requests work? How do you “locate” the infringing work? If the ledger is “permanent,” what will happen? How do we deal with other illegal content like libel, unprotected speech, and obscenity? In Europe, the new General Data Protection Regulation (GDPR) includes the “right to be forgotten,” which requires that databases have the ability to erase personal data. This makes the use of a public blockchain tricky for consumer-facing companies.
Off-chain storage of IP
The questions above make off-chain storage more attractive, but it, too, is not without drawbacks. A hash of a URL pointing to copyrighted content, one could argue, is not infringement. You’ve solved one big liability, but now transparency in the metadata on the blockchain is lost, and attack vectors are increased. This adds complexity. Once data has been stored off-chain, you efface some of the primary advantages blockchain: transparency, efficiency, and veracity.
Summing up
Lots of digital ink has been spilled writing about the ways in which blockchain will thwart piracy, democratize ownership, and cut out middlemen between creators and consumers through automated rights management. This may be possible, though it depends a lot on who controls these blockchains, and what remedies might be available to the infringed.
It will be interesting to see how that plays out. However, what might be more interesting are the questions about content vis-à-vis blockchain-based services themselves. It appears like they will once again create a copyright headache just as the industries try to ‘modernize’ copyright legislation.
