An interesting experiment in the use of blockchain technology was announced last week at the MIDEM music conference in Cannes, France. It involves the Israeli music blockchain startup Revelator, working with the music recognition service BMAT and the Finnish music collecting society Teosto. The application is payment of performance royalties to composers for radio airplay, and the prototype promises to make the process much more efficient.
BMAT, based in Barcelona, runs a music recognition service that uses fingerprinting technology to identify songs being played in various places. It’s best known for monitoring radio and TV signals and reporting plays to collecting societies in dozens of countries. Revelator maintains a blockchain platform called Original Works, based on Ethereum. It uses smart contracts to implement rules that convert play data into royalty payments for rights holders.
In the prototype, Revelator sends queries to BMAT every two hours. When BMAT returns play data for one of the compositions involved in the prototype, Revelator deposits a transaction on its Original Works platform through a smart contract that determines which rights holders (songwriters and music publishers) get paid and how much. There is a wallet for each of the rights holders involved; payments are made in Original Works tokens, which rights holders will be able to convert to the fiat currencies of their choice once the project reaches that stage.
This system enables near-real-time payments for public performances of musical works, instead of the conventional scheme of payments made 45 days after the end of each quarter. The scheme can be extended to other types of composition royalties, such as mechanical (reproduction and distribution) royalties on downloads or streams, or performance royalties for live performances.
Teosto is doing this in order to offer better service to its rights holders in an increasingly competitive market for collecting societies in the EU, now that European collecting societies are allowed to compete across borders. Collecting societies like Teosto need to be innovative to compete with the big ones like SACEM of France, GEMA of Germany, and (for the moment) PRS of the UK. Of course it’s possible to process payments this quickly without a blockchain, but an ownerless distributed database could result in a more cost-efficient way of doing so if it can scale. Teosto and Revelator will find out as they expand the project in future phases.
This project is evidence that experimentation with blockchain technology for rights management is entering the next phase in its market development. In the first phase, we’ve seen raw technology implementations such as DotBlockchain and Content Blockchain — sets of capabilities that can be used to build rights management and licensing solutions. Technology market development theory tells us that the next phase is one in which innovators build solutions to specific business problems that the new technology enables — or what tech market strategy guru Geoffrey Moore has called the “Bowling Alley” phase. Niche solutions such as Revelator’s are bowling pins to be knocked over one by one; each pin that’s knocked over helps in knocking over adjacent pins. Mainstream adoption of the technology comes after enough bowling pins are knocked over — if it comes at all.
Another interesting bowling pin solution for music compositions using blockchain technology comes from UK-based Blokur. Blokur has been building a blockchain-based repository of information about music compositions, in order to solve the longstanding problem of a lack of an authoritative and up-to-date database of this information to drive royalty payments. Efforts to build a centralized database, such as the Global Repertoire Database project, have failed because of — among other things — a lack of trust in and financial incentives for a single entity to build and run it.
Blokur’s solution takes advantage of two inherent features of blockchain technology to overcome these limitations. One is that it’s distributed and ownerless, meaning that it’s much more efficient to maintain as well as more transparent than proprietary databases. The other is that it uses consensus algorithms to create trust and a collective source of truth about whatever information is stored on the blockchain. Currently, Blokur gets input from over two dozen of the largest music publishers in the world; and because many compositions administered by those publishers have multiple owners, it gets information about those other rights holders as well. In all, the blockchain stores information about more than 20 thousand rights holders.
Of course, Blokur is a for-profit startup, not a non-profit registry with a governing board such as EIDR in the video industry. But Blokur’s “freemium” model makes it accessible to rights holders in ways that the databases of individual collecting societies do not. Anyone can search the database, submit their catalogs, and report incorrect or missing data for free. Blokur makes revenue by offering various paid data analytics services. Blokur is currently in beta and has a few major customers.
It will be interesting to compare Blokur’s solution with the mechanical rights database that will become available in the U.S. with the implementation of the Mechanical Licensing Collective (MLC) under the Music Modernization Act in the coming years. The MLC is a non-profit, is overseen by a cross-industry governing board, and is required to maintain a publicly accessible database of this information and to accept data submissions in order to improve accuracy and currency. For rights databases, trust and governance are as important as efficiency; and blockchain technology has the potential to improve all of these areas if it can scale.