– The Problem With Streaming Services & How Blockchain Technology Can Solve It
News just broke that streaming service Tidal may have, according to Norwegian finance paper Dagens Næringsliv (DN), inflated streaming numbers for Jay-Z, Beyoncé and Kanye West thus amassing a substantial revenue for the artists and their companies (Sony and Universal).
The data that the newspaper has spent a year collecting is fairly compelling, it seems that Tidal have used real user accounts to clock up false plays, with some users having “listened” to Beyoncé’s “Lemonade” 180 times in 24 hours. Experts at The Norwegian University of Science and Technology’s Center for Cyber and Information Security examined the data provided by DN and have concluded that massive manipulation took place.
Tidal’s lawyer claims that DN “falsified the underlying data.” Sometimes a lawyer’s denial just make you look more suspicious – just ask Rudy Giuliani. “Fake news” is not a great defence strategy in this case.
What is pretty obvious is that this spells serious trouble for Tidal, and it is also a shining example of the problem with companies that “own the system”: Rigging the system when you own it is too tempting. This is why the current model of digital distribution needs to be changed. Few, if any musicians, will argue that the current business model works for them.
A New Model
So, the challenge is creating a digital music distribution system that is 1. Transparent, 2. With accurate rights id’ing and distribution and 3. Has a fair profit share model. I will argue that a blockchain based model can do all three.
What is a Blockchain?
The technology was originally invented for Bitcoin, the digital currency. It is a digital ledger of economic transactions. The ingenious part is that each transaction is stored in a decentralized network (of computers). This means that a chain cannot be controlled by a single entity and it has no single point of failure. The only way to “break in to”, or manipulate a transaction is to have the data power to take over the whole network. That’s probably even beyond Putin’s cyber army! But, wait a minute, you say, what does this have to do with music distribution?
Digital Music Distribution and Blockchain Technology
Let’s see how a blockchain based distribution model solves our three challenges;
- Transparency
- Rights Management
- Profit sharing
- The “not controlled by a single entity” is key here. The manipulation that Tidal is accused of would probably not be possible if all online streaming activity was tracked in blockchains. To accurately report and count streams, the model would need to be open and decentralized, thus preventing service providers the chance to do numbers manipulation.
- Ever wondered why Spotify and its like don’t do a better job at displaying songwriting data? I’d argue it is because they don’t have a good handle on this in their current system. In fact, Spotify acquired the blockchain company Mediachain Labs, in 2017, with the stated purpose of improving this. With shared data in a decentralised systems it would be much easier to identify rights owners and have a proper licensing management. The ledger ( for each track) could contain a “rights management key” – a code that includes data on the rights owners as well as the percentage division between these.
- Today, artists are basically at the mercy of streaming services when negotiating streaming fees. Only the multi-million selling artists have any leverage to use. With a blockchain platform the profit margins can increase substantially as it will be cutting out the middle men that are needed to work on artists’ right management, payments etc. It is also likely that the music industry would be very welcoming of additional players in the field to wrestle away some control from the tech-giants that dominate.
When I researched Napster and the MP3 revolution, maybe the biggest lessons was how the music industry completely dropped the ball on digital music distribution. By sticking their collective heads in the sand (by opting to litigate in stead of innovate) when Napster blew open the doors, they gave away the innovation initiative to outside actors. Supporting blockchain initiatives in the field of music distribution won’t change that fact, but it could be a first step to creating a more transparent, efficient and profitable digital music distribution model.
Over at Mycelia they are working on a possible solution called Creative Passports. Hopefully, this is an initiative that the industry can get behind, as a connective hub for music services could bring the industry to its next evolutionary level.