Tracking music royalties is hard, but is blockchain really the answer?

Much is written about the blockchain and how it will change the music industry forever; while that categorization holds real weight, is a decentralized blockchain always the best answer?

by Mick Wollman of BaseNote

The complexities of the music royalty system are endless. With payments coming in from multiple projects, sources or locations, it can easily create an abundance of confusion when it comes to navigating copyright law. And adding an extra layer of labels or distributors can increase the level of difficulty, especially for an artist who is just getting their footing in the industry. Legal and organizational constructs have created unnecessary barriers for artists and managers alike, leading to a search for quick fixes and unsustainable solutions.

Whenever society is presented with a new technological advancement, it’s normal to explore the ways in which it might aid a current problem – in this case, the introduction of the blockchain has left the music industry starry eyed at a potential solution to the ever-growing confusion around royalty distribution. But is it sustainable? And are there ways to improve transparency without the risks of involving finance with the highly unregulated web3 landscape?

Companies like Audius have tried to solve this problem by bypassing the “legacy” royalty chain entirely. They require fans to listen to music through their app, which directly accepts payments and later pays out creators through cryptocurrency. The challenge with this is that the currency (and its underlying blockchain technology) is not yet widely adopted among consumers. Tech startups have had to get creative with their problem solving, and look beyond blockchain to find a transparency solution.

“a lack of central intermediaries also increases the risk of asset and identity theft”

For example, our music tech company BaseNote allows fans the opportunity to purchase investments in their favorite artists, sharing in the upside by entitling them to a portion of the artist’s streaming royalties. An intriguing differentiator is their decision not to operate off of the blockchain, citing ease-of-use and investor protections.

It’s not a question as to whether or not the management of royalty chains can be improved through technological advancements, but rather, can they be improved with blockchain technology?

While the decentralized system has obvious appeal, its lack of central intermediaries also increases the risk of asset and identity theft. At this stage, something definitely needs to be done about the reliability and complexities of royalty distribution.