Music 4.5: Blockchain - Jesse Grushack
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The business case for blockchain adoption by the music industry Jesse Grushack, Product & Business, ConsenSys Aspirations and fears of the industry acting as drivers and barriers to adoption of blockchain technology. Who benefits from blockchain adoption? Where’s the money really being made?
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Music 4.5: Blockchain - Jesse Grushack
- 3. 0. 4. 8. 12. 16. 20. 2009 2010 2011 2012 2013 2014 Globalmusicrevenue($bns) Physical Digital The music industry is increasingly digital Source: IFPI 0% 8% 15% 23% 30% 2007 2008 2009 2010 2011 2012 2013 2014 %USRecordedrevenuefrom streaming Consumers are moving from ownership to access Source: RIAA The music industry’s 100 year-old infrastructure is unsuited to today’s on-demand digital reality
- 5. Creators publish ownership information and use policies on the blockchain - a permanent string of transactions viewable by everybody on the network
- 6. Anybody can use the registered content provided that they meet the terms of the policy. The right to do so is transferred automatically through a smart contract.
- 7. Payments are delivered instantly and automatically using smart contracts and digital currency
- 8. An open platform facilitates infinite potential roles, applications and business models
- 12. Current System Super fans Fans ARTIST
- 14. 70 million new songs and 130 million hours will be created in the next 7 years 0 25 50 75 100 2015 2016 2017 2018 2019 2020 2021 2022 Millions of songs on streaming services - Forecast Existing catalogue New content 0 33750000 67500000 101250000 135000000 2016 2017 2018 2019 2020 2021 2022 Millions Hours of new online video content - Forecast *Source: Spotify internal forecast *Source: YouTube per-minute upload data
Editor's Notes
- Hi Everybody. My name is Phil Barry. I am one of the founders of Ujo, which is a decentralised music platform built on the Ethereum blockchain. Now I have a bit of a confession to make, which is that I am not a developer; I am not a programmer; I am not a cryptographer; I am not a mathematician; I am not an architect. In fact I am not any kind of technologist. So please accept my apologies for what I realise is an existential failing on my part. My background is in the music industry. I started out in music almost exactly ten years ago working in record labels, before embarking on a career as an artist and producer, and subsequently starting my own independent record label. After eight years on the creative side of the music industry I had achieved a lot of the things that I dreamt of doing as a teenager – I toured in thirteen countries, I performed on live TV, my music was played on the world’s biggest radio stations, my music was used in films and TV shows – and I made almost no money doing it. And this made me realise that a) I was probably somewhat deficient in the talent department but also b) something was up. And so for the last two or three years I have been focused on finding out what exactly it is that’s up, and coming up with solutions. Last year I spent several months working on the release of Radiohead singer Thom Yorke’s album Tomorrow’s Modern Boxes via BitTorrent and release strategies for the next Radiohead album. Then I discovered blockchain – and here I am.
- The weaknesses in the system have been further exposed by the rapid digital transformation of the last decade and a half. We are no longer selling twenty-dollar CD albums, but individual plays of single or even partial songs and videos. As a result, the amount of data that needs to be processed is doubling every year, and the number of music uses is well into the hundreds of billions. A hit song now generates as many as seven hundred thousand different revenue streams. Seven hundred thousand revenue streams for a single song! So it is clear that we are entering a fundamentally new paradigm not just for music, but for all content. And new systems will have to be developed in order to deal with the sheer quantity of information arising from the on-demand model.
- So I guess we had better start talking about some solutions. I believe that blockchain can provide a solution in two parts: a definitive decentralised database of music rights that provides more accurate, more easily accessible information; and an automated smart contract-based licensing system that radically reduces the need for intermediaries. These are the two core principles behind Ujo, the platform we are building. And beneath those two core principles are four main functions.
- First, creators publish ownership information and use policies for their works on the blockchain. This is the decentralised database part of the solution, and it can bring about a single, definitive source for rights information.
- Second, anybody can use music as long as they meet the terms of the policies. This is a fundamental shift in approach to music licensing that can facilitate a proliferation of new business models for content. And it’s made possible by a smart contract that transfers the right to use music on receipt of the appropriate compensation.
- Third, and at the core of the automation piece, payments are delivered instantly and automatically to the stakeholders in musical works according to the stakes recorded in the decentralised database.
- And finally, Ujo’s core infrastructure is designed to be open and adaptable to almost any use case. It is the fundamental pipes through which rights and royalties travel.
- Now the prototype is clearly limited in scope, but the net effect of all this is that we can create a fully automated licensing system that directly addresses the structural problems in the music industry and which we believe has the power to wreak untold havoc on the old ways of doing things. It is fundamental shared infrastructure that allows creators and their customers to do business with confidence and free of intermediaries. I will open it up to questions in a moment, but first I would like to say a word or two about adoption. One of the most compelling criticisms of a platform like this is that it can not thrive unless it can persuade rights holders to extricate themselves from their existing contracts. The argument goes that the web of rights and intermediaries is so deep and so complex that unpicking it all is a challenge bordering on impossible. Now I come to think about it, that actually is a pretty depressing thought. Fortunately, when I said “compelling”, what I really meant was “deeply flawed”.
- And here’s why. Today there are thirty million tracks on Spotify. Spotify estimates that this number will increase to one hundred million over the next seven years. That’s all the new songs that are going to be written, all of the new bands that are going to be formed, but also all of the remixes and mixtapes and sample clearances and user generated derivative works that are going to come online over that period. Meanwhile, 35 hours – 35 hours - of video content are added to Youtube every minute. So we don’t have to solve these problems for every song written or recorded in the last hundred years. We only need concern ourselves with the 70 million new tracks and 130 million new hours of video content that are going to be created over the next decade. And if we do it right, 30 million tracks suddenly looks like a minority.