#ADE 2017: The potential power of the blockchain

The blockchain is at the peak of the hype cycle. There are believers out there that are convinced that this new technology is going to change the world. That it will change banking, it will change real estate, it will change government, it will change everything. We see the potential too, but see a lot of hurdles to take as well. In this post, we take a look what it can mean for the music industry. Where can it have an impact?

For ADE (Amsterdam Dance Event), Paradiso Labs joins forces with Paylogic, curator of the one day event ADE Tech. Warming up to the event, we write a series of blog posts about trends and new technologies and their potential impact on the music industry. Do you want to visit ADE Tech on October 19th? Here's more info about the program.

Fundamental and practical

There are two main reasons why the blockchain is interesting:

  • A fundamental reason. The blockchain has the promise that it can make this world a better place. More honest, more transparent. It can help give people the money they deserve, can make fraud difficult, etcetera.

  • A practical reason. The blockchain has the promise it can make this world a more efficient place. It can help with faster transactions, more automation, etcetera. It can make business cheaper.

Both reasons are interesting for the world of music. With the right use of the blockchain and massive adoption (that will be an important issue) artists, publishers, record companies and other parties involved will get every penny they deserve. And with the possible automation involved (for example if a track is sold for one 1 dollar, tell the blockchain to immediately sent 5 cents to the publisher, 10 to the label, 25 to the musicians, 50 to the songwriters, etcetera), no one has to wait for ages for money anymore.

So far the promises, it's early days yet. Let's dive a little deeper in the blockchain. What is it?

A platform of transparency and trust

It is easy to go really technical with the blockchain. It's easy to use a definition to describe what it is and does that drives most people away. To be honest, that's what a lot of specialists do. They are not able to explain in plain English what it is and how it works.

But maybe that is not even necessary. Not a lot of people know how the internet works, but we all know what we can do with it. That it is a platform for information and communication. That makes it easy to write in a way that everyone with the internet has access to it. Of course, the internet is a lot more. But to understand the power of it, it is enough to know this.

If we see the internet as a platform of information and communication, the blockchain is a platform of transparency and trust. "The blockchain allows us to trust strangers", writes Mike Bullock, general manager at Fujitsu. "Blockchain is a technology that means you can buy, sell, and transact with a stranger and know that you aren’t going to get ripped off."
So for example, if the blockchain can help in proving the authenticity of products, it can play a role in secondary ticketing. It can help us prove the realness of a concert ticket we buy from a person we don't know.

Daniel Scott, co-founder of CoinCorner says it like this on Quora:

Think of it as a public spreadsheet that everybody and anybody can add a row of information to, but cannot update or delete anything. Anybody can view this spreadsheet and read information from it, they can even save a copy on their local computer which will automatically get updated with everybody else's latest row adds. Obviously, there is lots of clever logic, coding and encryption happening under the hood, which makes it capable of doing what it does in a secure manner.

alt Samuel Zeller

Cut out the middleman

A crucial element of the blockchain is that it can cut out the middleman. It is a decentralized system. There is not one party owning the data, it's distributed via a network of computers. The classical example of the middleman would be a bank. If you send someone money, the bank checks if you have enough to do so and then makes sure the transaction takes place. With bitcoin, the digital money based on the blockchain, you don't need a bank. You can send someone money when the bitcoin database says you are the owner of that money. Of course, you see and feel that there are opportunities here in the music industry considering rights management and payments.

Tim Lea, blockchain entrepreneur and author of Down The Rabbit Hole describes the Blockchain like this:

Blockchain is a very powerful peer 2 peer database that is immutable (i.e. cannot be changed)

Smart contracts

So the blockchain is a trustable and transparent distributed database where you store all the relevant data about products, transactions, etcetera. That's really valuable, right? For example, in an ideal world that would make it easy to know who has which rights concerning a song. Try to find that out now ;-) And it is a way for an artist to keep control of its music. A good example is how Imogen Heap did this with help of UJO Music. DJ Hardwell was the first dj to enter the blockchain space a year ago.

But there is something else that's interesting about the blockchain: you can add rules to your digital files. You can make so-called smart contracts.

So for example, with concert tickets in the blockchain, you can say: this tickets can only be resold for the same price. And with fingerprinted songs in the blockchain, you can say: the sampling of this track is allowed, but only for 3% of the sales or credits or whatever. And you can describe who of the writer, label and publisher gets what. Rules and smart contracts are a really powerful element of the blockchain.

Examples

So what is happening around the blockchain and music? It's going to be a crowded market, but they all have to prove themselves. Have a look at these startups.

  • UJO Music: "Blockchain-based shared infrastructure for the creative industries."
  • Dot Blockchain Music: "Dotbc is a new file format and technology architecture, designed to modernize rights management."
  • Guts: "Say farewell to secondary ticket fraud & disgraceful prices."
  • Viberate: "A crowdsourced live music ecosystem and a blockchain-based marketplace where we're matching musicians with event organizers.
  • Opus: "The world's first decentralised music platform built on Ethereum and IPFS."
  • Rightsshare: "Solution for open standard music licensing."
  • Blòkur: "Blokur reduces costs and increases revenue through automation and better data, enabled by blockchain technology and machine learning. alt Sanwal Deen

What does the blockchain mean for a club?

  • Fundamental. Secondary ticketing can be a nuisance. Because ticket touts make money that belongs to the artists. And it is a risk factor for fans as well. They can never be sure a ticket is real. If the blockchain can play a part in this (it's a promise, but we want to see it before we believe it as well ;-), that adds value for a club, a festival, an artist, a band.

  • Practical A Dutch club pays money to rightsholders association Buma/Stemra that then distributes that money to concerned parties. The club has to provide the Buma/Stemra with the information of records played and live songs performed. Say there is a future where the fingerprinting of music is a fact in all its aspects (every recorded and live track in the blockchain), then all the relevant data would be real-time available without the club doing a thing. Tha would not only be a win for the club, but for all parties involved. Everyone would automatically get its honest share of the pie.

But ...

Yeah, there is always a but, isn't there? Well, there are few in this case.

  • It's early days yet. The technology is new, most startups are young or still in beta. The promise still has to prove itself.
  • Massive adoption is needed. This only works well if all of the parts of the chain are included. What's the point of a song in the blockchain if Spotify, YouTube and Facebook aren't connected?
  • Garbage in, garbage out. People see blockchain as a platform of trust. But if we look at the start, the point of data entering, how do we know that we can trust that data? Lykle de Vries shared a quote of Nick Szabo: "Blockchains don't guarantee truth; they just preserve truth and lies from alteration."
  • Who is migrating the past? If we would start all over again, we could start with a nice data model in the blockchain. But we can't start all over again. There is a huge legacy. All the information of all the tens of millions of tracks available need to be transformed from their present databases to the blockchain. Who is going to do this? And why? In what data model? Different parties in the chain have different interests.
  • New middlemen may stand up The blockchain has the promise of independence, of democratisation. Cut out the middleman sounds good. But the history of the internet has shown that we get new and maybe even bigger middlemen. Google, Facebook, Apple, Amazon, you know them. Who will be the new middlemen in music? Or will the blockchain, in the end, be nothing more than a more efficient operation for the present big players? We'll see!

The blockchain is an interesting technique. We'll keep on following the developments closely. Join the conversation at ADE Tech in october. Or let us know what you think about the blockchain in the comments. And if you have examples of articles we should read or videos we should watch, drop the links!

The top picture is by:
Mr Cup / Fabien Barral