Blockchain. Can it really work in particular industries?
Written by Mark Reed on 10 August 2018« Return to Reading Room
Here is what I think, based on various articles and reports that I have read lately.
The music industry has progressed emphatically over the years, and the application of various legislation means there is more protection for artists. However, there is still room for improvement and the application of blockchain technology may help. By using blockchain, the use of cryptocurrency would be necessary because it would allow for a logged transaction stream directly between artist and consumer (note, this report is not concerned with the tax implications of payments through cryptocurrency). The connectivity for peer-to-peer transactions would give absolute transparency and the automatic nature of execution means instant, direct payment to anyone who has copyright in the song. Also, by creating a token-based economy, the value is directly derived from the artist’s work because they would be effectively turning their intellectual property into a financial asset.
The issues that have been addressed by artists such as Taylor Swift and royalty disputes with music streaming services, could be controlled better by using a log that is imprinted on the blockchain as soon as someone has clicked on the track to listen. This would then be able to, using a smart contract, automatically execute the payment stream back to the artists wallet. Legally, this shows a paper trail and confirmation of payment which would be direct and ensure artists get their deserved remuneration.
If a blockchain has logged and verified the data within, and it has been hashed to show the journey or history, then it could prove to be an asset in court. However, that is just one aspect; there is also the big problem of not knowing a tracks full history, such as who wrote it and who are the specific parties that assisted in making the song come to life. This would work from inception, and once uploaded to the block and verified, the validity of the entry ensures continuity thereafter.
A global shared database such as a blockchain ledger would allow for all the information to be stored in one place. One of the positive aspects to the use of a blockchain is that many of organisations have lots of data and don’t communicate with each other sufficiently, and their systems aren’t really talking to one another. The very nature of blockchain allows you to synchronise everyone’s databases throughout the music industry and have them accessible in one place. Also, it has been shown in previous articles that blockchain would be given protection as an electronic database under Directive 95/9 on the legal protection of databases, and the private data would attract protection as well, through the new General Data Protection Regulations.
However, there are arguments that consider blockchain to be more of a hinderance, or non-starter in the music industry which need some consideration. There are contentions that if the use of blockchain is to work, it would require extra cost that would be passed on to the consumer. The sheer size of a file may create transfer problems across the network as well, and would mean that a consumer, once they have purchased a track or album, would download it and so may take time. It may also encounter problems on the streaming circuit because people appear happy to pay a monthly fee, based on the billion people worldwide that stream daily. Reports show that consumers have surpassed the care to buy CD’s now. An album on a blockchain would surely be no different, it would be costly and mean that the consumer would have to store their downloads locally rather than just streaming a track in seconds like they can now. Ultimately, it may be desirable to an artist, and would be legally assisting for proof of ownership, and contractual certainty, but is a big ask of the consumer. Using the famous Duran Duran case as an example (as reported on a previous article), the proof of work, ownership right, and contractual certainty offered in one place on a blockchain, would remove those issues of confusion around contractual terms, and may prevent unnecessary court hearings if it can be resolved out of court.
Piracy is arguable still rife, especially for illegal download and distribution. The Pirate bay case highlighted the construction of the rights of communication to the public within Directive 2001/29 and clarified under what conditions the operators of an unlicensed online file-sharing platform are liable for copyright infringement. Surely these sites would be more easily controlled on their communication to the public if blockchain could utilise a streaming service within its network. If every aspect of the life of the track is being hashed and payments were to be accrued from one end of the block and directly sent back to the artist, then a streaming log could be added to ensure that the communicator to the public was paying for the privilege. The only major issue with the suggested process isn’t just the size of the data required, but also it cannot stop someone recording the track and then re issuing it on sites such as Pirate Bay. Undoubtedly, this is copyright infringement so would allow the copyright owner to take action if they could identify the source, but the use of blockchain may not be the fixer of all wrongs mainly based on the above point. With that said, the use of a distributed ledger such as this to store and process data through a smart contract would prove beneficial. It is a way of clarification for all parties to understand the full life of a piece of work, through to licenses, and assignments. The date stamp of ownership would leave no doubt in a copyright ownership dispute, and contractual agreements between publisher, record labels and the artist would be transparent and secure.
It is understood that there are some positive applications that could work, such as its use to follow the life of works and show a contract between parties with more certainty of terms. There is also its potential to allow artists to have direct receipt of payment between them and a user. Some of the issues raised have been that its use as storage for work because of the size of data that would be transferred between parties would not be feasible. This would also mean the user would have to download the content, of which is considered as too complex and unlikely to take effect with streaming being so readily available at the click of a button. Ultimately, it could work but, for a certain purpose and over complicating it may result in its demise. Most regulators are just holding a ‘wait and see’ approach to see if it really does take off. The use of this technology is still, in my estimation, an incredible advancement and could prove vital to the transformation of how we store and process data in a constantly evolving, technological, digital world.
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