Royalty and Crypto: Streaming in the Blockchain

No, not that royalty. We're talking about the royalties that an artist gets for letting someone distribute their art.

Remember the last time you streamed your favorite song? Behind the simple act of pressing Play is an incredibly complex legal infrastructure, built to pay both the licensees and platforms offering the song, and to get a cut to the artists and producers who created the song. In between are auditors and lawyers with their hands out, and endless paperwork scattered across databases around the world.

It's easy to think that technology has had its way with streaming services.

From humble but disruptive peer-to-peer beginnings in Napster and Kazaa, streaming services have evolved to now be owned by multinational conglomerates like Disney, Apple, and Google. Today artists entrust their music, movies, and writings to massive corporations who must spend time and energy protecting royalties and rights across the world. And the trust between an artist and a streaming platform is often paper-thin.

While Napster may have held big dreams of connecting everyones' libraries together, it was ultimately a failure in protecting the rights of artists. It allowed established artists to gain more notoriety and earn incomes from live shows and merchandise, but smaller and newer artists were unable to capitalize on a platform offering their art completely free.

And while the highly centralized platforms that replaced Napster have had no problems going public and making millions in profits, they have had very public clashes with their artists in recent years, most notably as Taylor Swift fought for artists' revenue-sharing early in the Apple Music, Tidal, and Spotify wars.

Though we've crossed from completely free platforms, to platforms owned by multinational corporations in under two decades, this industry remains largely unsettled, with lingering issues between artist and patron — and fights over payments, ownerships, and value trailing the entire history of streaming. Remember, Napster is just 20 years old today. Spotify is 12 years old. And Apple Music is only 6 years old. This industry could be considered to be in its infancy.

And technology has not wrought all the change that it will on these platforms.

Much of Taylor Swift's fight with Apple Music and Spotify was over the payments that artists would get from sharing their work on the platforms. You're familiar with the concept of a starving artist. But what if it was a multinational corporation starving you?

Apple Music briefly told musicians they would stream their entire libraries, royalty-free, for three months, before Ms. Swift staged a public revolt via Tumblr. It shouldn't come as a surprise that what's best for the platform and what's best for the artist aren't always the same thing.

These kinds of centralized platforms have shown their willingness to assert their power and control over the artists they purport to represent. And that can kind of power imbalance will continue to create instability, whether it's in producers trying to get shows made on Hulu, or a new band choosing a streaming platform early in the 21st century.

Artists want to be paid fairly for their art, and streaming platforms want to protect their shareholders.

Enter the blockchain.

If the setup here sounds familiar (centralized entities asserting control over the people they purport to represent), then it should.

Early on, investors in Bitcoin and crypto saw its ability to revolutionize cash by becoming a digital currency un-beholden to centralized banks or governments. But at its base, blockchain has the power to revolutionize all forms of transactions, especially those in which something unique is represented — such as a license to an art. The technology's impact is not and will not be limited to just currency.

Because smartcoins like Algorand, Cosmos, and Ethereum have the ability to build smart contracts on-chain, and tokenize assets, the potential impact to streaming services is immense. This means that a song or song license could be represented in a coin, and easily traded at clear market prices. A TV show could be tokenized and distributed in a dApp at reduced transaction prices. The efforts spent in auditing royalties and tracing fees would be undercut massively.

With this change, the raison d'etre for middle-men and lawyers starts to seem less intrinsic.

This is because with smart blockchains and DeFi, the near fee-less, lossless, fraud-less transactions that these infrastructures purport to offer can create a licensing framework in which artists have direct control over their assets, and can effortlessly issue licenses and receive royalties from anywhere.

Even if a decentralized platform were to exist to trade the streaming art (think something like Rarible), the gains in transaction speed and finality, and in security, would be immense. One wouldn't need to station lawyers in Singapore to track a musician's profits from Seattle. That's because these blockchains offer a borderless economy, and a transparency to transactions that "old institutions" (we're looking at you Apple Music and Spotify) simply cannot offer.

It may not be today, or tomorrow, or 2021, or 2031, but the changes that smart contracts and tokenization on blockchain will bring seem obvious when you trace the history of artists and streaming. It's hard work policing licenses and producing royalties, and it's equally hard work to produce the kind of art that the world craves.

Blockchain has the power to reduce the friction and improve the equity in these relationships.

— The Algo Post

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