Is the road to blockchain paved with the Spotify lawsuit?
It was announced on Friday (18 March 2016) that Spotify had reached a settlement deal with the National Music Publishers’ Association in the U.S. While the settlement itself is highly newsworthy, it’s the issues within the lawsuit that bear attention, especially as we at 2Pears HQ gear up for our Music 4.5: Blockchain seminar in New York on 26 April 2016.
Why does Spotify stream some music without a full license?
This lawsuit pointed to long-standing issues regarding lack of transparency and reporting on behalf of record labels and publishers, especially as they pertain to streaming services. To précis the details of the suit, the crux is that Spotify does not always have full licenses for the music it streams. Part of this is down to the intricacies and lengthiness of the licensing process, but Spotify was complicit in a process where many songs were streamed before a full license was obtained. Many songs have multiple rights owners, which makes the identification of these owners and therefore the royalties they should be paid, hard to navigate.
Of course, one could argue that streaming services should simply refrain from using songs for which they have not obtained a full license. But that’s not seen as a viable solution, especially when the battle between streaming services is often a numbers game: more songs, more subscribers.
However, in the run up to the lawsuit, Spotify announced it was investing in “a comprehensive publishing administration system” to address that the “data necessary to confirm the appropriate rightsholder is often missing, wrong or incomplete.” This intent echoes that of the now-defunct Global Repertoire Database initiative, which was the closest the industry has come to a transparent database of music rights. The cause of its failure was accurately summed up by our friends at Music Business Worldwide as down to “the cost of developing the GRD [being] ultimately met by so few: a handful of CMOs.”
Who is best placed to build a blockchain database?
When 2Pears explored this issue last autumn at Music 4.5: Blockchain – saviour of the music industry?, our expert speakers presented a roster of ideas on who was best placed to build the music rights database that is so sorely needed. Apple and Spotify were mentioned, but Phil Sant of Omnifone reckoned it was start-ups who would develop the infrastructure: “The bigger players trying to get consensus can’t do it.”
The lawsuit may have forced Spotify’s hand. But blockchain and music industry experts have long pointed to the integrity of legacy data as the biggest stumbling block to implementing a blockchain-based rights database. And then there’s the trust issue. Say Spotify does build a database – will the music industry at large trust that its reporting is accurate? Wouldn’t it be better if Spotify, other streaming services, labels and CMOs invested in an industry-wide database built on blockchain technology?
Of course it would. But it would require a level of collaboration previously unseen, well, anywhere.
Has the blockchain race already begun?
In the meantime, the industry may be equally imbalanced with databases, as where Spotify goes, its competitors will likely follow. It’s the idea that different bodies might sit in different corners cleaning the same reams of data that warrants a better, alternative solution. Could one service – like Spotify or a disruptive start-up– do the hard graft of data cleansing and benefit the industry as a whole? Or is this, perhaps, a race that has now officially begun, with entrants such as Benji Rogers and .bc, Imogen Heap and the Ujo-powered “Tiny Human” prototype, and Revelator’s blockchain API in the running?
Music 4.5: Blockchain will take place in New York on 26 April 2016. View the full agenda or buy your tickets here.