Bitcoin and Music Industry: Is the Cash Flowing? – What is blockchain, exactly? Defined, it’s the infrastructure that supports a digital currency like bitcoin, which is named for the fact that it’s made up of “blocks” of confirmed transactions that create a chronologically connected “chain.”
It is, at its core, a ledger, but it is a distributed rather than a centralized ledger: an exact duplicate is kept in a large number of separate places, ensuring that there is no single point of failure. Another critical aspect of a blockchain is that its data is immutable, meaning one cannot change it. Check out the market cap of major cryptocurrencies for 2021 to know more.
What exactly may a blockchain be used for? Although this is a relatively new technology – people initially used it with bitcoin in 2009. People only recently recognized its full potential – there are already use cases emerging throughout the creative sectors, from fine art to fashion. Our focus is on blockchain’s potential influence on recorded music, classifying people into four categories.
Blockchain technology may be able to provide a networked database for music copyright. At the moment, no one database records who owns all songs and registers copyrights. Instead, there exists a slew of databases, none of which are comprehensive. Instead of being housed in remote databases, blockchain technology would make information open to all users.
In terms of royalty payments, the blockchain might provide transparency. Some royalties are now held in ‘black boxes,’ and the specifics of many streaming partnerships are shrouded behind non-disclosure agreements, making it impossible for artists (or their managers) to judge if payments are correctly processed. Bitcoin’s main innovation is that it achieves consensus without needing a central trusted authority or middleman to validate transactions, delivering transparency to the whole value chain.
The blockchain has the potential to make royalty payments more efficient and seamless. Royalty payments might currently take months, if not years, to reach the rights holders. Because more than one performance rights organization may deduct administrative costs, ‘friction’ is a concern.
Micropayments are possible because of the cheap transaction costs of digital currencies, which is especially helpful considering the tiny size of typical payments in the streaming era. According to agreed-upon splits, music royalties might be handled virtually instantly,rather than going via middlemen, thanks to smart contracts, which are contractual agreements constructed on computer protocols whose conditions can be automatically performed on the blockchain.
Finally, the blockchain has the potential to supply artists with new forms of funding. The openness inherent in distributing music via blockchain may make it more appealing to investors, allowing them to monitor investment outcomes more readily and estimate potential returns.
The use of blockchain technology might lead to the creation of ‘artist accelerators’ with smart contracts, allowing early backers to receive a modest portion of future revenues. It might also significantly impact crowdfunding, with artists issuing their shares or tokens and intelligent contracts ensuring no pledge contributions if financing goals aren’t fulfilled.
There are significant challenges to overcome, both in the duration of automation and approval. Some regard blockchain technology as a disruption of the size of the World Wide Web, and it’s still too early to realize its full potential, as with any trouble of that magnitude. We will first seek such advancements to tackle current problems, but their actual significance resides in creating wholly new possibilities.
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