Blockchain is the buzzword among new industries looking to leverage a technology which has recently been labelled by the Harvard Business Review as a ‘foundational technology’, with ‘the potential to create new foundations for our economic and social systems.’ A blockchain is a form of distributed ledger technology, best known for being the foundation on which Bitcoin and similar digital currencies are based. A blockchain is essentially a records management system, in which data (the records or ‘blocks’) is distributed across a large public network. Two features in particular make blockchain a revolutionary technology – firstly, it is a distributed and decentralized system, which insulates the data from the risks that a centralized repository poses. Secondly, the blockchain is incorruptible.

Blockchain and music industry

Transactions on the blockchain are cryptographically recorded, and provide an authentic account of any transaction at any point of time. Therefore, the provenance of each transaction can be authenticated, and any alteration without the complicity of the entire network is difficult. Both these features ensure the integrity of the data stored on the blockchain. The implications are radical transactions on the blockchain can be independently and instantly verified without the need for a central authority (like banks or stock brokers), and solves a fundamental problem of trust between transacting parties. Copyright in a sound recording primarily comprises two distinct rights the right in the musical composition, which vests in the arranger or composer of the musical work and lyrics, and the right in the sound recording, which is the copyright in a particular recording of the musical composition, which typically vests in the record companies that produce the recording. The copyright societies play an important role in ensuring that creativity is incentivized by making sure that artists are adequately compensated for the use of their work. This, in effect, means keeping track of every song that is licensed by their members, including when and by whom it is played, collecting the royalty payments and distributing them across the rights holders.

The Attribution Problem in Digital Music Distribution

This problem of attribution is what ASCAP, SACEM and PRS hope to solve. According to a press release, these societies aim to use blockchain technology, specifically the open source hyperledger protocols, to manage the links between sound recordings International Standard Recording Codes (ISRCs) and music work International Standard Work Codes (ISWCs). These codes provide standards for incorporating metadata within songs, which is a crucial step towards identification of songs for the purposes of tracking. A similar system is also being developed by Spotify, after its acquisition of the blockchain technology firm Mediachain. While the exact mechanism which they propose to utilize is unclear, some hypothetical models are described below:
The blockchain could be used to create a decentralized repository of the rights information about every song which is licensed by a copyright society or societies. This rights information would also link each sound recording to its underlying musical composition, which can be stored on the blockchain each time a song is used by a digital music service provider, to verifiably identify both the original sound recording as well as the musical work.
Potentially, the blockchain can also be used to write self-executing contracts or ‘smart contracts’, which automatically allow listeners to pay the creators as per the information and the terms encoded on the blockchain, without any third party intermediation. This could potentially also help comply with statutory directives such as the norm in India, where underlying composers have to be paid an equal share in the royalties for exploitations outside standard mediums, by including the payment of royalties as per the statutory provisions as a necessary condition for the use of the songs.