We Have The Push, Now We Need The Pull - A 'Blockchain And The Arts' State Of The Union

Guest post from George Howard, Berklee College of Music

There’s a distinct sense that the train has begun to leave the station with respect to blockchain technology being utilized by artists.

Over the past couple of weeks, I moderated/participated on three panels — The Rethink Fair Music WorkshopMIT’s Hacking Arts, and The Music Business Association’s Entertainment & Technology Law Conference. While blockchain technology was the stated theme on only one of these panels (The Music Business Association’s panel), it was the dominant topic on all of them.

As I tweeted after The Rethink panel, “If contention and passion are precursors to change (I think they are), we’re headed in the right direction.”

I believe the energy and contention around blockchain tech are heating up because: 

1. We’re seeing actual application of the technology

2. Those who don’t understand the technology/the implications are finding it harder to ignore, and are becoming defensive

Aston Motes predicted this defensiveness from incumbents who are threatened by new technology back when I started beating the drum about blockchain many moons ago, and his tweet inspired me to write a piece entitled: “Bitcoin Can’t Save The Music Industry Because The Music Industry Will Resist Transparency.”

Certainly not all of the incumbents are taking a purely defensive stance; I was deeply impressed, for example, by the open-minded and reasoned views with respect to blockchain tech expressed by Robert Ashcroft, CEO of PRS, on the Rethink Fair Music Panel.

However, change rarely begins at the institutional level. 

Rather, as The Innovator’s Dilemma observed, change starts at the margin, and (occasionally) crosses the chasm into a wider segment of users. Once the chasm is crossed it is typically too late for incumbents to embrace the technology that customers are now demanding in increasing numbers (essentially, this is what happened to RIM/Blackberry (and others) with respect to iPhone).

This is why I’m constantly telling incumbents (clients or otherwise) that they are far better off disrupting themselves (via skunkworksShooting Star  approaches) than being disrupted.

Artists, almost axiomatically, inhabit the margins. Additionally, given the state of the music industry, artists are increasingly embracing the mindset of “what-do-I-have-to-lose,” that predicates change. It’s understandable, therefore that they are embracing blockchain technology.

This attitude with respect to blockchain technology is most visibly articulated by the great Imogen Heap.

Again, many moons ago, I had the distinct pleasure of talking with Ms. Heap regarding her views on the current state of the music industry, and her then-nascent conceptions on how blockchain technology could have a role in the future.

I encourage you to read both pieces – to use crypto terminology, these pieces (and D.A. Wallach’s “Bitcoin for Rockstars“)  are the “Genesis Blocks” of the entire movement:

Ms. Heap has now put action to words and released her work, “Tiny Human,” utilizing blockchain technology. This is an actual, real world example of an artist “pushing” a work out that utilizes elements of blockchain technology – such as, so called, smart contracts, which are machine readable. 

With this gesture, we’ve now moved beyond the realm of the theoretical. 

These machine-readable smart contracts are the most exciting elements of blockchain technology.

For instance, by utilizing this technology, an artist can clearly delineate what she will allow others to do with her works, and at what price, if any.

An example is instructive:

Today, if you decide to open a taco shop, and you want to play your collection of Texas Tornados CDs or downloads in your taco shop to set the mood, there are hoops you must jump through, and costs:

From the “Licensing Help” section of the ASCAP website. ASCAP represents songwriters’ public performance rights.

There is certainly nothing wrong with those who desire to play music having to get the approval of the artists whose works they desire to play, and to compensate them fairly to do so.

The problem lies in the inefficiencies of the systems.

The taco shop owner may only want to play the music of The Texas Tornados or other music that fits the mood of his shop, but he is required to buy a blanket license that gives him the right to play anything in the PROs catalog; he is essentially paying for music he doesn’t want/will likely never play.

Similarly, The Texas Tornados might love to have their music played not just in this taco shop, but in any number of other places that would benefit from playing their music (and, really, who wouldn’t benefit from playing the music of the Texas Tornados?). The Texas Tornados, might even be willing to set a price that would encourage people to utilize their music. 

But, they don’t get to set the price. ASCAP does.

An alternative method that utilizes blockchain technology would be:

1. The Texas Tornados create a set of rules with respect to how their song and recording could be used and at what price (certainly, in the case of the Texas Tornados, there are complications around this with respect to co-writers/labels/publishers/etc. – but, as Ms. Heap has shown us, there are increasing number of artists without these institutional constraints).

2. They ascribe these rules in a smart contract on the blockchain in a manner that can be read by machines.

3. The taco shop owner determines that he wants music that fits the mood of his taco shop, and delineates a set of categories and descriptions. Additionally, the taco shop owner determines what amount he is willing to spend each year on this music.

4. The taco shop owner – using an interface – does a search for works that match these criteria (essentially an RFP).

5. When a match is found, the song is playable, and the rights holders are paid based on usage.

In this approach, there is no need for a performance rights organization, such as ASCAP or BMI. The content creator sets a price and set of usages related to his work; the content user either accepts (and pays) these prices, and is able to use the work, or does not.

This is just one – admittedly, overly-simplistic – example to illustrate the possibilities. However, it hints at the vast array of possible uses that are possible with this technology.

It won’t start at the institutional level, but it will start. 

There will be a skateboard shop (or gaming shop or coffee shop) that derives benefit – both from a financial perspective and a marketing perspective – from deciding to only use music that is available via machine readable smart contracts, that allow them to pick precisely the music they want from artists (and they won’t want mainstream artists…at first) at a price that is both fair for the skate shop and the artist, and delight in the fact that they’re connecting directly with the artist.

More succinctly: To paraphrase what my friend Andy Weissman said on one of the above-mentioned panels, “Right now, we have essentially three music streaming services. We should have thousands.”

His meaning is that blockchain technology – in a similar manner to the taco shop example (and more cogently articulated by Mr. Weissman himself in my interview with him, entitled “Union Square Ventures’ Andy Weissman On The Blockchain And The Music Rights ‘Nirvana State‘”) – will enable anyone who wants to set up a streaming service to do so.

So, this is where we are. Via Ms. Heap and others, we’re starting to get a push of content that is utilizing blockchain technology. What we need next are those – taco shops and a billion other use cases – to start creating the pull.

It’ll happen.