Too good to be true – what the Blockchain means for the music industry

Is this really the digital age? Especially if you are a musician or songwriter you have every right to challenge this fact. What with labels presenting you with contracts that seem to have been written in the middle ages and distributors asking for cuts that were established in an era when you had to transport CDs across the oceans on a ship. It takes months for collecting societies to transfer the money they owe their artists, oftentimes it isn’t even clear who should receive the royalties in the first place, because of badly kept databases. Most of the time the artists don’t even know what’s going on because transparency is an alien concept in the music industry thicket.

This won’t go on forever though, as the next digital revolution is already well underway. And the traditionally stubborn and conservative music industry isn’t going to slow it down, let alone stop it altogether. The technology behind this revolution is called the Blockchain.

What exactly is it?

The blockchain is a digital platform for recording and verifying data that no one can edit but everyone can access. It’s is a decentralised, democratic, digital space with no central authority governing it. The servers running the Blockchain are scattered around the globe. Anybody can observe what’s going on in this digital space, everything is completely open and transparent. The Blockchain is able to process cryptocurrencies that have certain advantages over traditional money transfers. Cryptocurrencies are transferred instantly, because no intermediaries are involved between buyer and seller; Intermediaries that do nothing but hoard the money and even charge an arbitrary transaction fee for this “service”.

All information that is fed into the Blockchain – songs, writings, pictures, it doesn’t matter – receive a unique ID.

All information that is fed into the Blockchain – songs, writings, pictures, it doesn’t matter – receive a unique ID. They are thereby attributable to the author, which already solves one of the biggest problems the music industry currently faces. If only one note of a song is changed, it would receive a completely new ID. So even remixes are unequivocally assignable, which solves one of the greatest bugbears of the electronic music sector, where many artists aren’t being paid because their music cannot be captured by the current tracking systems used by collecting societies. There may be no system that gathers the usage of music via Blockchain ID right now. But once the advantages of this technology dawn on everybody involved in music, it will be a matter of time until someone develops it.

Smart technology

Today, if a song by a British act is played in Japan, a collecting society in Japan collects the royalties. This collecting society, as well as the publisher administering the rights in Japan, take their cut. The money is then forwarded to the artist’s collecting society in London. This process causes transaction and exchange fees. The collecting society in London and the artist’s publisher take their cut. That’s how money owed to artists is rapidly decimated. Those days are numbered and cryptocurrencies only make up half the solution. The other half are smart contracts.

Smart contracts determine how many authors and musicians have a stake in a track and how much royalties each one of them is owed. Musicians and authors decide for themselves what licences to grant and how much the licensing fee should be. Nothing stops them from making music available to private consumers for free, while charging for commercial usage. If a radio station decides to play a song, the royalties are automatically and instantly transferred to and split amongst the rights holders. All transactions are visible to the public, no one can steal you blind anymore.


Ujo: a blueprint for the music industry of the future

All of this is less of a pie in the sky than one might think. Phil Barry from London and a team of technologists from all over the world are currently working on a platform, that could serve as a model for what the music industry could look like in the future. Barry, a musician (Mr. Frogg) and label boss (Kicking Ink Records) himself, had to find out the hard way how arrogantly many players in the music industry sometimes decide over the heads of artists: back when YouTube struck a deal with Barry’s collecting society PRS, he was left in the dark about the terms of this deal. He was the artist, but he wasn’t allowed to know at what price his music was being sold. This was a key event in realising that something had to change.

The solution he and his team are currently working on is called Ujo (Esperanto for container). It is supposed to be a platform making life easier for anybody working in the creative sector and having to deal with rights. Thanks to Blockchain technology and smart contracts. Ujo aims to implement all of the things mentioned above. Additionally, artists will receive tools to organise and vote on the terms of smart contracts themselves. “So if I as an artist say, I’m not happy with streaming today paying 0.0007 pounds per stream but I would be happy with half a pence then somebody else on the platform – the next generation Spotify – will come up with a business model that makes it work.”


“A powerful idea”

Anybody can develop a new business model on Ujo as long as it creates value for all involved, the openness of the Blockchain takes care of that. Non-disclosure “agreements”, personal gain at somebody else’s cost, won’t be possible anymore in such an environment. The ways creative people of all kinds will be able to interact with each other are almost boundless. Barry is convinced that Ujo is going to spur the emergence of new business models. Models we can’t even imagine yet.

That’s the fundamental thing of a decentralized system: it’s low cost and free of the need to make profit

The plan is to launch Ujo this year. It will be free to use. “The problem with building a system privately is that you will be charging money if people want to use it and we’ll fall back into the existing situation. But the Blockchain allows it all to be open and free to use. There’s no need for anybody to own it or say what should happen, because people can agree on what should happen themselves. That’s the fundamental thing of a decentralized system: it’s low cost and free of the need to make profit”, says Barry, before adding: “If everything is decentralized you don’t need eBay in order to tell you that you’re going to get payed if you sell something. You don’t need Facebook to make sure that people’s profiles are legitimate on social media. People can just self-organize. It’s a powerful idea.”


Until the Blockchain finally gets the traction it deserves, you might want to make the most with what is available now. Here are a few tips:

5 Successful Ways to Promote Yourself as an Indie Artist

5 Ways to take your destiny as an artist into your own hands

Three ways to monetise your Music on YouTube

Five things to keep in an eye on when signing a music contract in the digital age