Centrifuge Tinlake and Paperchain join forces to accelerate music streaming revenues
Following on from previous successful pilots, Tinlake, Paperchain, and the Maker Foundation advance $60,000 USD in Spotify revenue to a Paperchain record label customer, bridging a wait of up to 6 months. The advance was issued live on stage at DeFi Summit last week and was originated in less than 30 minutes at a transaction cost of less than $3 USD 👏
Accelerating Royalty Payments
Just like many other industries, the digital media ecosystem suffers from a substantial time lag between performing a service and receiving the corresponding payment. As we have highlighted before, on average, companies around the world wait for 58 days to receive payments for services provided.
While media consumption has shifted to streaming and on-demand models, the revenue and payments process hasn’t kept up. Despite the instant and seamless consumption of music, recording artists sometimes have to wait up to 6 months to receive streaming revenues. Record labels and distributors typically have to wait 2–3 months to get paid. This delay is in part due to the operational requirements of businesses within the supply chain. Spotify needs operating capital, as do the music distributors and record labels. By the time each step in the supply chain collects its revenue, holds as operating capital and pays out, artists are at the tail end of that process. It is common for recording artists to get paid only twice a year.
Longer still is the wait for songwriters, who in some cases wait up to 2 years to get paid. This long delay is in part due to the fragmentation of music ownership, which means that a single stream from Spotify triggers a financial transaction that needs to be split in ~30 different ways through multiple levels of the digital music supply chain.
Have a look at the ownership structure of Baby Boy by Beyonce below:
Baffling, right? Understandably, the complexity of layers and intermediaries in this supply chain contributes to the delay in royalty payments reaching the artists. This is where Paperchain and Tinlake come in.
Live from the DeFi Summit
Last week at the DeFi Summit in London, a conference bringing together key players in the Decentralized Finance (DeFi) ecosystem, we advanced 60,000 DAI during a live demo.
This demo was the first step towards real-time payments for media companies and thus unlocking the $100 billion trapped across the media ecosystem in accounts receivables. Together with our partners Paperchain and Maker, we extended early payments to a Paperchain record label company through Tinlake. It took less than 30 minutes to finance USD 60K worth of royalty payments with transaction costs of around $3. You can see the Etherscan transaction here.
Paperchain co-founder and CEO, Daniel Dewar, said the transaction showed the potential for new financial solutions to solve existing media supply chain challenges. “This is a problem that record labels and artists have been dealing with for decades, and has only been exacerbated by streaming where revenue now pools at the platform level.”
He added, “By pricing the streaming data and connecting that to programmatic banking solutions like decentralized finance technology, we can build financial products that get money faster to creators at a fraction of the cost of traditional finance.”
Centrifuge Tinlake — Bringing Real-World Assets into DeFi
Tinlake is the first Dapp to run on Centrifuge. As a platform built on decentralized financial infrastructure, Tinlake enables anyone to draw loans against real-world assets, such as invoices, royalty payments or artworks. This is done by issuing an ERC-20 token that represents a fraction of the collateral, which can then be used in decentralized lending protocols such as MakerDAO. You can read more about Tinlake here.
While factoring solutions have been around for some time, Tinlake is incredibly fast compared to current products, can be done for small pools of assets, catering to projects of all sizes around the world, with full transparency.
What’s Next?
We are busy working on improving the user experience and adding new features that offer more flexibility for the borrower. We want to scale Tinlake with our existing partners, such as Paperchain, and expand our funding sources. Also, keep an eye out for a publicly available demo version of Tinlake that will be available soon.
In the meantime, if you have any questions, shoot us an email!
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